[Rottersod]

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When a bank loans money, that money is paid back to them. So no money is being created out of thin air.

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Uh....no. US Currency is not backed by any tangible items such as gold (which is really just a hunk of metal with a specific elemental number that humans assigned an arbitrary value to based on its relative scarcity and its ability to exist in a solid and liquid form without losing much mass between transformations). No bank or reserve has actual cash, collateral or metal anywheres near the actual value of their outstanding loans.

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The dollar is backed by the stabilty and strength of the United States of America and the faith people have in it. Sure it has value because we choose believe it does, but that's no different to people putting faith in gold holding it's value. Gold has value because we convince ourselves it has.

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Didn't I just write that in the post you are quoting? I wrote that the dollar is not backed by and tangible items. Faith is not tangible.