It is a common error to consider bank deposits as "money in the bank," whereas they are largely composed of credits on a ledger. When a banker lends a customer $100,000 he takes the customer's note and credits the customer's account with the proceeds. The transaction increases both the deposits and loans by $100,000, but adds nothing to the "money in the bank." Even when the customer draws his checks upon the credit, it does not necessarily follow that the money in the bank is reduced, for his checks either go to the credit of another customer of the bank or they find their way into another bank and are offset by similar transactions in that bank.

This credit of $100,000 created by the banker discounting the note of his customer performs all that actual money can perform, and practically adds that amount to the resources of the business community while it is extant. If the credit has been wisely granted, the note will be paid when due by the customer accumulating enough credit balance in his bank account and then giving his check for his note. The transaction will reduce the bank's assets and deposits by $100,000; but it will not increase nor diminish the "money in the bank."