That's a great question! When you create money through "taking a loan" against property, the bank creates deposits equal to the "loan", secured by your assets.

That's a great question! When you create money through "taking a loan" against property, the bank creates deposits equal to the "loan", secured by your assets. These assets are attached by the bank (a lein), valued by an appraiser and insured against loss (at your expense). The bank creates these deposits ex nihilo; the only one in this equation that has any wealth is you, and the bank is at little to no risk. Imagine, instead, a scenario where all of this takes place; you have wealth, you insure it against all perils (loss due to destruction or theft, including title insurance against fraud, etc.), at your expense. You get it appraised, and then money springs into being. Exactly like today. Except with no bank, and no "interest" being charged. The same limiting function is used, as by the banks; the amount of money allowed to be brought into existence for a certain amount of wealth is some percentage (say, for example, 75%, or whatever). Except, this factor is dynamic; it is adjusted automatically as inflation or deflation occurs, dynamically issuing and withdrawing "credit" (the amount of money credited to your account due to the pledged wealth). The value of the units of currency can thus be established at an absolutely fixed valuation (say, relative to a basket of widely traded commodities; steel, kWh electricity, pork bellies, OJ, barrels of WTI crude, etc.). If someone needs to "borrow", in excess of the money they have created based on their wealth, they can do so on the private market; not based on some fanciful central-bank controlled interest rate, but at market rates from others with excess wealth/credit, at their own individual risk-adjusted market rate. Anyway, that's a quick summary of one potential alternative. Same highly dynamic money supply, most of the same "moving parts", but no central-bank interest stream is required to create the stock and flow of credit underlying the economy.