Claim: Comedian Jon Stewart said this week that the loans at the center of the civil real-estate case against Donald Trump meant there were fewer loans available to other borrowers.
“Money isn’t infinite. A loan that goes to the liar doesn’t go to someone who’s giving a more honest evaluation. So the system becomes incentivized for corruption,” Stewart said.
Verdict: False.
The amount of money available for loans from banks is not diminished when banks make loans to other customers, except in the rare case of a distressed bank that is capital-constrained. A loan to one customer does not subtract from a fixed pool of loans available to the other customers of the bank.
Stewart’s comments reflect a misconception of a bank as a kind of money vault where taking some money out to lend leaves less money out for other loans.
In fact, bank loans create deposits. Those loans…
