Your example is a good example of the Motte and Bailey fallacy. Yes, if he uses that $100 to create something worth more than $5, he wins, you wins, the communi

Your example is a good example of the Motte and Bailey fallacy. Yes, if he uses that $100 to create something worth more than $5, he wins, you wins, the community wins. That's the motte. But the vast majority of loans are not that type. The vast majority of loans are fighting over zero-sum resources. Think buying land. That's the bailey. When the money supply increases in that way, while it does not immediately create inflation, as the new money will be stored in investments and those investments rising in value are not considered inflation, as soon as the down-turn occurs, that money, being liquid, becomes inflation. So when you create money through artificially low interest rates that goes to rent-seeking, you are creating inevitable inflation in the future.