I think it’s even more insidious than that because the money (which is everybody else’s credit) is created out of nothing. loans come before deposits. so what banks are doing is writing themselves themselves claims on real assets that it is somebody else’s responsibility to pay off.

the whole “but access to credit is important to start and grow businesses” line is complete and utter bullshit because, as you say, you need assets to be claimed against to get the loans. If you don’t have them already, you get extra pwned because you stand to lose more than you put up if you can’t pay back the loan. so you take on inordinate risk, *in an environment of dramatic capital misallocation and some or other level of price inflation* and the bank gets nearly all the benefits.

none of this would be true with equity finance. literally none of it: no collateral, no undercollateralized loan exposure, no systemic capital misallocation, no mismatched risk, no circulation credit, no inflation, and arguably no “bank” as such: just an investment intermediary that has to manage its risks with no possibility of a bailout rather than literally assigning itself other people’s wealth.