I'ma an econ newbie so please forgive my lack of understanding.
I am confused as to how the money multiplier effect works. I get that the money multiplier effect doesn't actually hold true as banks don't loan out all their funds but I don't understand the mechanics behind how the multiplication takes place.
Initially I had thought that when, for example, a bank receives $10,000 from a Fed asset purchase, it is able to use the 10,000 USD to meet its (let's say 10%) reserve requirement, and can thus make 100,000 dollars in new loans. However I've just read an article by the Federal Reserve Bank of Chicago that suggests that this is not how money multiplication occurs, and instead that it occurs indirectly through many transactions (best demonstrated graphically, below). This confuses me, why doesn't the initial 10,000 dollars count as reserve money? Surely the first bank could use it to loan out 100,000 dollars, creating an asset in the form of a loan and 'creating' a liability in the form of the borrower's deposit - isn't this how money is created? Thank you in advance.