"The theory goes: Joe deposits $100 in a bank, the bank lends $90 out to John. Now John has $90 and Joe also has $100. So $90 has been 'created' out of thin air due to the way this works. It's simplified a bit, the actual amount of money created is not $90 because John can deposit that money, and the bank will lend $81 out of that, and so on.
The formula they teach is: amount of money created (money multiplier) = 1 / (reserve ratio)"
This is all true, but a simple statement of the fact that the nation's Money Supply is a mutiple of it's cash reserves, 10x in your example.
The bank's lending $90 to John 'creates' $90 because John can now in turn become a depositor, but John also carries an obligation to repay his loan, and after settlement, you still end up with Joe's original $100.
Rather than promote the growth of money, the fractional reserve in fact inhibits it, preventing the unlimited growth in the Money Supply.
