Money as debt

I found this video to be very eye opening as it got me to actually think about the money system that exists in our country. It is often easy to be confused as to where our money comes from. In fact, the money that we use has no actual worth itself, it just represents worth. That is because banks give out more money than they have which allows for more money to circulate than we actually have. If you think about it, if our country has such a high deficit, I'm not sure on the exact number, than how do we still have so much many. That is becasue we have created a monetary system based on debt, and as long as people our in debt to the banks, than the banks will be able to continue to loan out "theoretical money" thus allowing the system to continue. However, if everyone tried to withdraw their money from the banks at once, chaos would occur because the banks wouldn't be able to pay everyone. This is what happened during the great depression as their were no longer any loans being given by banks and people couldn't get thei money back because the banks didn't have it, causing the system to fall apart. The banks can only lend money out based on the interest of the money that people owe them. So our system only works if people continue to be in debt to banks.

2.Why create money as debt? Why not create money that circulates permanently and does not have to be perpetually re-borrowed in interest in order to exist?

Continuing on what I discussed before, the reason we create money as debt is becuase it allows more money to circulate than there actually is. If money was permanent, than however much we had is all that we could use. But by creating money based on debt the banks can give out more money than they have based on the interest that will be paid back to them. This will hopefully help the economy is more money will be in circulation and will therefore be used. However as we have seen in the past, in particular the Great Depression, under this system if the Banks Fail, then everything fails. To me it seems like creating money as debt has us walking a tight rope and the consequences can be dire if things go wrong.