When you deposit cash (Federal Reserve Notes) in a bank the bank makes a digital record that they owe you the FRN. After the deposit, the cash continues to exist but the IOU from the bank (as recorded in your bank account) is something new. The IOU didn't exist before the deposit but it does exist after. It's new. The thing with an IOU from a bank is that it spends just like the cash. It dilutes the demand for cash. It is a competitor with physical FRNs. With your deposit, the money supply has expanded because the cash you deposited continues to exist but the spendable IOU from the bank is new.
But the bank will give you an IOU for other kinds of notes in addition to FRNs too. For example if you sign a note for a mortgage or student loan, the bank will accept that and give you the same IOUs you would get if you made a cash deposit. In this case the Note (signed by you) is new and the IOUs from the bank are also new. They didn't owe you anything before you gave them your signed note. After you give it to them, then they owe you something and what you get is spendable IOUs. Brand new money with every loan.
edit: so just like OP said, money is debt. Every new debt in this system creates new money. And if everyone one day decided they were done with debt and aggressively paid off their current debt while refusing to take on new debt, the gears of the economy would grind to a halt because all the money would disappear.
When you deposit cash (Federal Reserve Notes) in a bank the bank makes a digital record that they owe you the FRN. After the deposit, the cash continues to exist but the IOU from the bank (as recorded in your bank account) is something new. The IOU didn't exist before the deposit but it does exist after. It's new. The thing with an IOU from a bank is that it spends just like the cash. It dilutes the demand for cash. It is a competitor with physical FRNs. With your deposit, the money supply has expanded because the cash you deposited continues to exist but the spendable IOU from the bank is new.
But the bank will give you an IOU for other kinds of notes in addition to FRNs too. For example if you sign a note for a mortgage or student loan, the bank will accept that and give you the same IOUs you would get if you made a cash deposit. In this case the Note (signed by you) is new and the IOUs from the bank are also new. They didn't owe you anything before you gave them your signed note. After you give it to them, then they owe you something and what you get is spendable IOUs. Brand new money with every loan.