The money isn't destroyed though -- it's converted into wealth as an asset.

A bank provides a loan to Andy for $100 to build a house. Andy builds the house worth $100. Once the house is paid off, the bank gets $100+interest, and Andy has a house worth some amount relative to that $100.

The $100 never disappears as a result of the loan. Whether or not the bank then chooses to destroy the money once the loan is repaid is not really a material to the discussion. Replace "bank" with "parents" and it's clear that no money is destroyed as a result of the loan.

What you're talking about is really just a side-effect of our accounting practices and/or asserting that all lending originates from the Central Bank.

The money appears and disappears as the result of fractional reserve banking. The analogy with your parents loaning you the money is incorrect because your parents cannot engage in fractional reserve monetary creation.

It actually has nothing to do with the central bank - fractional reserve banking has a much longer history than central banking.

You never specified that loans must come from entities with reserve requirements. Not all loans originate from such entities so your statement should not be taken as absolute fact.

The grandparent gets it but not totally.

He says: "All money is in the books of the central bank,[..]"

In the case of lending, it's the commercial banks where the money is created and destroyed. If enough reserves exist already in the system the central bank don't need to act.

That's true depending on the definition of money you use. Commercial banks can't create central bank money (M0). But they can create credit, and convert it to central bank money at will. And credit counts into M1+, one of the common money supply indicators.

I'd say "money" in common usage is only M0 (central bank lines) and MB (notes and coin), and the others are only technical indicators used by economists. But that's debatable.

People exchange real labour, houses and cars mostly using those "technical indicators". (Few people buy a house or car with notes and coins or with their central bank line.)