It's called fractional reserve and has been happening for years since we ever departed from a gold standard. Welcome to the post Nixon era
Fractional reserve is also a thing of the past
It is a very common and widespread misconception to think that banks are somehow limited by the deposits that they have received (what fractional reserve is essentially about). In the modern day money is created via credit (it is called credit money for a reason). Banks don't need to look back at how much they have in their vaults as they can create as much money as required to meet the demand for that money. And if you think of it, it actually makes perfect sense since this is a very effective mechanism to provide liquidity for the economy in case the latter needs it. In other words, there is no reason to limit credit via a metric which doesn't in the least reflect the actual demand for new money
Agreed, but what difference is there between creating money from thin air by using Fractional reserve practices or by doing this by creating "fake" money via credit? Adding some numbers on an internal ledger to give more credit are exactly the same as adding additional money by lending money that you did not receive via deposits.
The Banks and the Reserve Banks are cooking the books to create money from thin air and that is the crux of the matter. Bitcoin are often criticized for creating "digital" money from thin air, but this is predetermined and fixed supply, not something that can be changed without majority consensus. < This is why BankCoins are so dangerous, because the Banks have control over the supply of these tokens. >