Money spent on debt servicing is money not spent on goods and services.

Why? What happens it? It gets buried in a hole?

The money you spend servicing debt is the money somebody else earns on their savings. And many people (retirees are an extreme example) happily spend such money on restaurant dinners and new cars.

If only it was so.

http://www.bankofengland.co.uk/publications/Documents/quarte...

Could you simply respond to the point? I already understand how modern central banks work so a reference to a 14 page intoduction doesn't help.

According to your claim, debt interest just disappears while i know for a fact that it does not since i've used such money myself (earned on my savings) in the past to buy stuff.

Earnings on savings are independent of debt repayments.

If you look at page 3 of the document, it talks about how repayments are basically an accounting alteration of the debtors deposit account.

Meaning that said account is reduced by the mount paid, but does not show up with a matching increase on any other account ledger (the banks own or any other).

Debt and savings are wholly uncoupled, no matter what mainstream economics likes to think.

The central banks pay out profits earned to their respective governments.

It depends on the amount of debt. Complex things like this cannot be condensed into black or white simplistic answers.