The assumption that there is not enough money to pay back the loans (due to interest or whatever) is stupid. In the fractional reserve example above, and in the more realistic scenario of today with practically no reserves at all, and in the case where the central bank edits its own account balance to provide reserves, there is always a lender for each dollar loaned. Someone always have the counterparty of each dollar loaned. The assumption is just wrong. This is not the same as it is problem free to in fact pay back or require a loan to be paid back; either it is paid back or defaulted on, it will have grave consequences for the participants, the total money volume, and the productive capability of the economy. Of course it is a problem, use the 2008 crisis as an example. Still, you can not say that there is not enough money around to pay back the interest, that is a total misunderstanding of what interest is.