I learned about this concept in college macroeconomics. I asked this exact question and the TA said “yeah I guess repaying debt is like destroying money” as if they had never thought of that before. The idea of lending money increasing the money supply is definitionally true.

> the TA said “yeah I guess repaying debt is like destroying money” as if they had never thought of that before

They shouldn't have been a TA. Modern money is destroyed in three ways: through taxation, defaults and the extinguishing of debts.

And when debt is wiped out through bankruptcy that inflation remains.