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> The existence of credit itself is what causes monetary instability, and without credit the world would look very different.

Indeed. Credit is money; ultimately anyone can expand the money supply with an IOU.

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Money is destroyed when a loan is paid back. Private credit does not expand the monetary supply permanently. Only the state can increase the money supply.

You are neglecting interest paid. It doesn't matter who issues the credit - the Medici family or the US Federal Reserve.

Your understanding of monetary theory is somewhere between 110 and 5,000 years off. Furness had a pretty cogent explanation of a monetary system without central authority or functional currency about 100 years ago with the Yap. They even managed to have bouts of inflation without the concept of a bank or state.

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