> A loan is like that only in the very short term (though I should say this is
a topic of theological dispute among economists).
What do you mean a matter of dispute?!? You can't be serious... Is it really that bad, that no one has any clue about how the economy works? No wonder I'm in religion - at least we can claim to study theologians when studying theology becomes to weird.
> A bank makes a loan - then it needs to find the funds (either by taking
deposits or selling short-term notes or bonds) to cover the loan.
I thought these limits (deps and sells) had been eliminated (I'm almost certain their gone in Canada).
> In a credit bubble, the process can get way ahead of itself, but you can't
create money out of thin air forever without creating inflation or a credit bubble.
Without price controls (which is what happened after WWII [or was it WWI]). The price of diamonds can inflate forever for all I care - but price controls on food, shelter, education, health care and a few other material things seems to make good sense to me. Maybe not. Again, if someone can fix my point of view I'd appreciate it.