collateral based credit multipliers

"under modern legal practices, pledged  collateral  can be ‘re-used’.... collateral that backs one loan can in turn be used as collateral against further loans, so the same underlying asset ends up as securing loans worth multiples of its value."


" Of course the re-pledging cannot go on forever as collateral value to loan value at each successive  re use has a ratio  >1
these ( haircuts) progressively reduce  the credit-raising potential of the underlying asset, but ultimately, several lenders are counting on the underlying assets as backup in case things go wrong."


"the collateral  is like high-powered money, the haircut is like the reserve ratio,
 and the number of re-pledgings (the ‘length’ of the collateral chain) is like the money multiplier."

An example of a collateral chain