Now ..of course deposits baloon out .. because let's say a bank makes a million dollar loan .. the normal practice is to send the money directly to seller through an escrow .. as in case of a home mortgage .. but the seller .. so that money doesn't come immediately back to borrower account ..

But seller will obviously deposit money for short term in his bank ( till he acquired a replacement asset ) .. this has kind of multiplier effect on money supply ..

That is why Fed needs to either inject liquidity or tighten the money supply to control inflation .. to their 2 percent target ..