Strawman article. Money multiplier is mostly from fiscal policy.

For monetary policy, all money not stored under a mattress is money that stays in the banking system. Bank profits/capitalization does impact credit appetitite, and a certain path to profits is provided by a Fed doing QE, where buying bonds becomes a sure thing that Fed will pay more than you did. Buying bonds is a bank activity that competes with credit, but fractional reserve helps give a sends of prudence to reinvesting low deposit rate funds, and having high fees for accounts, to maximizing reserve leverage at low risk.

Redistribution from rich to poor, and oligarch to employee, is what boosts the money multiplier. Poor spend everything by definition, and employees feel confident in spending, such that all money flows back up to the oligarchs. Oligarchs trading paper does not boost economy/multiplier as much.

Hey there! Totally get where you’re coming from. It’s wild how many of us were taught the money multiplier model as the holy grail, right? That channel does a really good job breaking it down.

Think about it: if banks were really only lending out from deposits, it’d be a pretty rigid system. Instead, they create loans based on creditworthiness and demand, which then turns into deposits. It’s more like banks are magicians pulling money out of hats than just recycling old bills.

It’s definitely a game-changer when you realize how dynamic and complex the banking system really is. Just remember, economics is full of models that get simplified for teaching, but reality is usually a bit messier. Keep digging and questioning—knowledge is power!