Reply #112: what if interest/inflation were never a problem?

[Volaris]

isn't it possible to just set interest rates at zero and leave them there? that way, if the Fed makes a loan, the following happens:

1 The Fed prints (lets say) a billion Dollars to loan out to the economy at large.
2 The loan gets paid back over a set period of time (at zero interest, so no GAIN, but also no net LOSS)
3 The repaid actual currency goes into the shredder, and the net effect is that you have provided funding to grow new and different sectors of the economy, WITHOUT the problem of inflation, or the hording of liquid capital..you have effectively turned a national currency into a fully recyclable economic gasoline, (isn't that what it's supposed to be ANYWAY?)

Also, if you wanted to begin the practice of re-valuing the Dollar, you just set interest rates at say, 1% and take out a little bit extra, that way, each dollar left is worth more (I would NOT put that 1% in the shredder, I would give it to the Pentagon and mandate that it go in a vault somewhere, NOT get counted as part of the the general economy, and require that it be used to actually PAY for wars and stuff...any other possibility is equally viable)

Treasury could manage this kind of operation, (I think) and it seems to me that it would make WORK more valuable than the accumulation of currency, because the purpose of work as applied to a free-market is to turn labor into wealth (like houses for your family and stuff) and Fiat currency is the MEANS by which that transaction is facilitated; should not the Fed ALSO believe this as a standard operating principal?

If I've lost my mind, please tell me...