Again - loans are a form of credit - the loan and credit industries depend on generating profit based on interest - if there is no source of profit - to put new value into the economy - we have stagnation and deficit spending - which seems to be what we presently have because their is nothing thought to be profitable to invest in and what is profitable is moving to a monopoly state. Your account demonstrates how little most of us actually understand by our economic regime - as for the attack on the middle class - we can start with the decade long assault on the the safety net that was constructed between the great Depression of 1929 and the Great Society, then the export of capital to 3rd world countries and the globalization of corporations, the attack on unionized labor and more recently the great mortgage boondoggle (bubble) which effectively has undermined their owners equity. Now the republicans want access to the moneys that are in SS and Medicare systems which for them represent still another source of fluidity and profit - which will lead to further impovertization
Again, the money is in banks available to be loaned, which is what banks do. Banks are required to maintain only about 5% reserves, which means that they lend out $19 for every $1 they keep in the vaults. That money is used for something, but whatever it's used for, it's spent. And if the borrower spends the money on anything besides paying the interest on earlier loans, tnen the new spending goes back into the economy in the form of wages or purchases.
