But it isn't. You just wrote it is created from the one dollar deposited in the bank. It begs the philosophical question, if the person takes out the $1 they deposited, and the person who borrowed $10 also takes $1 to Starbucks, how can you tell which dollar is the "thin air" dollar?
It would also help if you recognized the temporal nature of money. If everyone tried to spend all their money at the same time the banks would default.
As you pointed out, only 1 dollar exists in the bank, not 10, so how can 10 exist? The same way here in Cambridge we have 26 cars for every parking spot. People travel, they park in commercial lots, garages, etc.
If they all tried to park on the street at the same time they wouldn't be able to. That's a bank run when it comes to money.
The temporal nature is also important in studying inflation. When money moves around too quickly, too many people going in and out of parking spots, it takes more money (more attempts to find a spot) than normal times. That raises the “cost” to acquire a spot.
As for deflation, it assumes there will be more product available for normal dollars. I’ll only say that when businesses are closing left and right it's hard to imagine prices going down, long term, because supply is shrinking.
Finally, not everyone accepts the textbook reason for dollar creation, that banks lend on deposits like you said based on their appetite for risk and borrowers to take it. Some believe banks create the money first (because people HAVE to deposit money somewhere--it's a given). The lower the rate at which central banks lend money to the prime banks, the lower the secondary banks can lend out, and refinance existing debt.
Many banks aren’t waiting for high quality deposits.
Cynics say they are creating assets, to use your favorite term, "out of thin" air instead of creating new assets from real productivity (Tesla is the poster-child here).
So if one wants to be smart, recognize what history teaches, over and over again. The musical chairs will one day stop and if you don't have the money to pay the debt on a chair, you’ll be forced out of the wealth game.
Here's one of your fellow Australians I suggest you interview, or he interview you, if possible. https://www.youtube.com/channel/UCKWDscRjYFTD1KHsmow4-bQ
