I'm afraid you share a fundamental misconception in relation to the money created by banks, which is in fact a credit instrument, not a debt instrument.
When private banks create credit they create a virtual IOU as an accounting object. This interest-free IOU is a 'look-alike' of the interest-free IOU issued by Central Banks, and is routinely exchanged for such notes and coin in private hands when they are 'deposited' in the banks. It is currency created as an object or thing to which account owners have title.
When a private bank lends this currency into existence it is creating BOTH the currency AND the interest-bearing loan relationship with the borrower under a debt contract. The currency is not the debt, but a credit instrument identical to those issued by government.
The debt is created in exchange for the use over time of the currency. When a private bank spends currency into existence it creates virtual credit instruments, and 'deposits' these into the accounts of suppliers, staff, management or shareholders by crediting them with an entitlement to these virtual assets.
These credit instruments/IOUs are accepted by governments in payment of taxes, and that is what gives them their value. There is functionally no difference between an invoice issued by a private business for private services rendered, and a tax demand issued for government services rendered. Likewise, the issue by government of an undated IOU redeemable against taxes is functionally equivalent to the issue by a private business of an undated IOU redeemable against goods and services. eg Air Miles, Store Loyalty points, or the well known DeliDollars.
Government IOUs differ from private ones in that they are made universally acceptable against debts by 'legal tender' laws aka by government fiat.
So in a nutshell, governments do not create debt when they 'print money' and spend it. Government IOUs are in fact credit instruments analogous to a form of undated non interest-bearing redeemable preference share.
Of course, these credit instruments must be issued and spent sensibly, and not in relation to existing assets, where they will cause inflation as the private banks demonstrated by creating the property bubble.
In my view public credit need not be inflationary if used to facilitate the circulation of goods and services and the creation of new productive assets, such as affordable housing; renewable energy and energy saving projects; infrastructure such as transport, schools and hospitals, and of course on training and education of the population to enable them to create these assets.
Such public credit creation should be professionally managed by service providers with a stake in the outcome, and accountably overseen by a Monetary Authority (as in Hong Kong, where there is no Central Bank). Once productive assets are created with public credit, they may then be refinanced by private investment in long term credit based upon their productive value (eg rental flows and energy flows).
In this way pension investment will enable the public credit used to create new assets to be retired and recycled. Likewise, the newly productive workforce will pay taxes, which again will retire and recycle the public credit which made the workforce productive.
