Comments by "" (@downshift4503) on "Repaying bank loans destroys money" video.

It doesn't. It just a monetary operation to drain reserves that were previously added to the system when the government spends. Everyone calls it "borrowing" but how it actually works is "draining". Even the reserves pay interest anyway nowadays.
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you pay them interest to reflect the risk they are taking by lending to you. If you default, they are on the hook.
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also paying interest isn't a problem (ts not terminal).... the bank pays its employees and shareholders out of the interest who then spend it.
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@george4059 Sure, the reason there is no risk to the banking system as a whole is because the BoE can always buy whatever assets the commercial banks have on their books at whatever price they want, swapping the assets with bank reserves. Individual banks though have to account for risk when make loans (and obviously they want to make a profit). After all, the commercial banks are offering credit. When you say "we don't need banks" I would argue that it's possible for the BoE to offer the same services as commercial banks and offer credit, but they would still charge interest reflecting that. The alternative is to simply limit money creation to government spending and have credit unions that lend out savers money, again which would mean interest on the loans.
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@george4059 I used to think exactly that, but it doesn't (compounding interest). When you pay back the principal, that disappears as its destroying money. The interest meanwhile remains within a deposit account. All that has happened with an interest payment is one deposit account was decreased and another was increased. It remains within the money supply.
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@george4059 OK I did respond but for whatever reason it vanished. I was going to edit to make my response clearer and correct something that I wrote..... The interest you pay does get passed around and stay in the money supply. If no other lending ever happened, it would become exponentially more difficult for you to pay your debt as the money supply disappeared and impossible to fully repay it. That is true. But in reality that is not what happens. If the economy slows down (reflecting the difficulty in obtaining funds to pay the loan) then the BoE would lower rate to encourage lending / borrowing or the government would increase spending to encourage activity. There is never a static situation. There are no limits to the national debt (though there are risks of inflation). There are only limits within the real world of resources.
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There is no leveraging required. The bank can just create loans and deposits. It's on the hook for those loans if the customers default and the bank gets 5% on reserves anyway. That means the bank isn't that keen on taking risks unless its lucrative. When you say "fulfilled on demand" you are only going to get a £10 note for another £10 note if you turn up and ask for it to be fulfilled. You can always pay your tax with it.
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What doesn't disappear is a persons tax liability and their need for money to simply survive in this system (food , shelter is all there, but its for sale). Most people need jobs to get money and produce far more than their own needs. It's a coercive system that happens to have certain benefits.
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