Banks do not simply hold your money and lend it to others — they create new money through lending, multiplying the deposits they receive into a larger volume of credit. Understanding this is not an esoteric concern; it explains how monetary crises propagate, why bank failures have consequences beyond their depositors, and how the financial system amplifies both growth and collapse. The mechanism is worth understanding by everyone who uses it, which is nearly everyone.
Each step builds on the last.