However, when economy eventually improved and loaning become active again, V will rise back to a normal level of 5, that will cause a 500% rise in price level if GDP keeps growing at a couple of percent per year, that will effectively crash the fiat money system

In such a case, central bank must quickly reduce the M accordingly. However, the way to reduce M is to sell their assets to commercial banks to get base money back, those assets include government bonds and mortgage backed securities, and a large sell of those assets will crash the market immediately and destroy many people's house value, drive economy back into recession