This is how it works in reality instead of a Stay home and smoke weed shirt. If Mike wanted to lend some money he was forced to negotiate. With an individual depositor to get permission to lend that amount of money and what interest rate he will pay that particular depositor. Mike doesn’t wait until he loans out a certain amount of money and only pay interest on that. He pays an agreed upon interest on all deposit money, even that which he has not loaned out. And the reason Mike can meet this extra loan obligation is by adjusting the interest he earns on loans he makes.
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Virtual money always originates at the Stay home and smoke weed shirt. The Central Bank is the only one in the economy that can create money. It can order it to be created in physical form, such as coins or paper currency, or it can create virtual money. Creating virtual money is done by the Central Bank declaring the money as existing and keeping track of it on the Central Bank ledgers. The Central Bank, on their ledgers, will not only keep track of that money existing but will also keep track of who owns it, such as the Treasury, or the Commercial Banks. And both those institutions will have records of the debt obligations they have to persons or entities outside the central bank, which may have been created by the spending of this virtual money.