>$400k and also -$400k is created ex-nihilo by the bank, balancing to $0.
Yes, over the term of a 10, 20, or 30 year loan. However, the immediate effect is such that the money supply is increased, $400k is created. The destruction of the money is gradual as the loan is repaid.
The reality of the situation is not that far off from what you're describing here.
Yes, over the term of a 10, 20, or 30 year loan. However, the immediate effect is such that the money supply is increased, $400k is created. The destruction of the money is gradual as the loan is repaid.
The reality of the situation is not that far off from what you're describing here.