Gift vs Loan really depends a lot on Time Value. If the loan carries interest at a rate that is lower than the return earned on the loaned value, it's basicall

Gift vs Loan really depends a lot on Time Value. If the loan carries interest at a rate that is lower than the return earned on the loaned value, it's basically a gift of sorts, even if not quite in the manner a lay person may understand it (a net gift, if you will (and if the interest is higher than it's capable of yielding as a return, it's a trap!). At the end of the day though, the cycle of lending money at interest in a manner externalizes the cost to the society at large, who is left to cope with an expanded money supply (which eventually can be measured as inflation), while meanwhile the party loaning the money out sees a return in the form of interest, and the party taking out the loan sees the return in the form of access to capital and a net gain. The Federal Reserve can be thought of as there to balance out the cost of this arrangement (unending inflation) with the benefits it provides (expanded access to capital by those who would otherwise perhaps never be able to raise the funds -- hard to run a business when you don't have the "machinery" that makes it go). It turns out, this is really hard. At the end of the day though, if they weren't there "picking winners" as it sometimes appears they're doing, we'd still have winners being picked, as we did under the old gold backed currencies in the past, but we'd also get to contend with the effects of banks going bust from failing to adequately navigate the markets, which would be further made turbulent by a lack of coordination between their interest rates being haphazardly determined. Presumably, those with the most money and clarity would be the only ones left after an epic game of Monopoly, and we'd be left with...a central bank, much like we have today.