I think the most generous interpretation of what they seem to be trying to explain is the "phantom plans" created from loaning loaned money.

A deposits 1k into bank Bank loans B 1k B loans C 500

There's only 1k in circulation, 500 in B's hands and 500 in C's, but there is technically 1500 in total loans.

I could be off base that this is what they're talking about, and I don't necessarily think it's all that relevant to the conversation, just spitballing.