It is literally impossible for a bank to allow its demand deposits to be available on demand and withdrawn without notice from its demand deposit accounts as it promises to do. Even if total demand deposits in all member banks did not change, checks written on one bank in favor of a someone with a demand deposit in another bank are a source of instability in the economy. This essay demonstrates this proposition.

JEL E5. Monetary Policy, Central Banking, and the Supply of Money and Credit