Simply put, when money is created by the bank for a loan, only the amount for the loan (the principal) is created and given out. The problem is that an extra fee (interest) is charged on top, but the money to pay that fee was never created.
So basically it is an impossible contract to fulfill on a macro scale. A negative sum game.
This TED talk by professor Franz Hörmann does a good job of explaining.
https://www.youtube.com/watch?v=88ksYFsleto
Simply put, when money is created by the bank for a loan, only the amount for the loan (the principal) is created and given out. The problem is that an extra fee (interest) is charged on top, but the money to pay that fee was never created.
So basically it is an impossible contract to fulfill on a macro scale. A negative sum game.