In the first part you left out something.
The source of the funds that banks lend. Now it is true that, ala 'It's a Wonderful Life', some banks rely entirely on depositers to provide these funds. However all banks that are entitled to call themselves "National Banks" have another method of raising these funds: they borrow it from the Fed.
The national bank system was set up to enable the Fed to feed money into the economy. It also gives the Fed some screws to turn to slow or to speed the expansion of the money supply. That is how money is made in America.