I made no appeal to fiat, which is government declaring something as money. Gold is not fiat money, it is honest, real, market money. Money has never been and should not be considered sterile. The example I used was gold, which has use besides that of a medium of exchange. See Mises' regression theorem for this. Regardless of whether we use gold, even if we were talking about fiat money, by your definition of sterility, no goods grow, reproduce, or produce anything by themselves. Whether I denominate the loan in corn, sheep, gold, or paper, it doesn't change the analysis. My example assumed no new money creation and explained where interest comes from, namely time preference, and where the seemingly new money can practically come from, namely other loan defaults and consumption of the lender. The borrower is not compelled to borrow and the lender is not compelled to lend. There is no more theft here than in any other voluntary exchange. Do you really think the lender is not sharing in the risk of the borrower's enterprise? Even with collateral, the future is uncertain, and the collateral may not be worth what it was at the time of the agreement, much like there is no guarantee that the money will be worth what it was at the time of the agreement. This is true whether we assume honest or dishonest money. Nothing in my example assumed fiat, nothing assumed fractional-reserved banking, nothing assumed dishonest money creation from nothing. I agree that all those are bad. I also think that if we used honest money and if we considered counterfeiting as anti-social activity, then there would indeed be fewer people borrowing out of desperation. The reason is related to what you mentioned: fractional-reserve banking and/or fiat destroy the purchasing power of money and therefore create a perverse incentive to borrow or invest when simple honset money saving would have sufficed. Do you honestly use an em-dash in your everyday posts? Or am I arguing with an LLM?