Thank you for this, Stephen, as I noticed I had misspelled principal. However, I am surprised that you do not know that the loan principal is extinguished when paid, keystrokes taking the numbers in the account back down. Of course until that happens it is money circulating but the payment is due each month. If you made a loan payment with cash, the cash would go into the banks cash reserves and the amount representing the principal would still be extinguished and the interest (profit) goes into the banks account. Dr. Richard Werner explains the process in more depth if you’re interested. https://www.sciencedirect.com/science/article/pii/S1057521914001434