> Every single dollar was created from thin air, as a "loan"
Not quite. Minted currency isn’t created from a loan. Neither is fiscal spending.
On the other side of the spectrum, money is destroyed through taxation (by the state) and repayment of debts and defaults (privately).
The monetary hypothesis of income inequality is overly simplistic. It supposes our tax, trade and funding policies are all dictated by monetary policy, which is obviously nonsense. (That or our tax, trade and social spending policies have no effect on inequality. Which is obviously stupid.)
It is an easily-digested hypothesis. We like those, particularly when the alternative is reading lots of arcane monetary financial texts.
> Fiscal spending is still created as a loan though since the government has to sell bonds to finance it, no
Monetarily speaking, the government creates the money when it spends it. The loan then (and optionally) removes a similar amount of money from the system.
This is an enormous power, so we try to legally limit the government in how it can do this. (If we removed the Fed's independence and put it under the Treasury, the Treasury could just add numbers to the bank accounts of the government's employees and vendors. This is analogous to its minting power. We separate the Treasury and the Fed in part to fracture this power.)
I forgot one more creation/destruction mechanism above: the Fed's open-market operations. When the Fed buys assets, it creates money. When it sells them, it destroys money.
Exactly. Every single dollar was created from thin air, as a "loan".
> it seems like every year someone watches a YouTube video about inflation and deduces, with zero further thought, that it must be a conspiracy.
I've been studying and researching this for years.