it is already ignited inflation that will just make money worth less. In other words, when government prints more paper bills, it does not increase total value of the bills; it makes every bill less valuable.

Do you really believe that the Feds printed paper bills to lend to the banks?

Putting that aside for the moment, are you saying that inflation exceeds the profit on repayment and therefore that it is not a profit at all? If so, could you please quantify that?

Or are you discussing some sort of preferred theory rather than the specific issue I raised and you challenged?

While the Feds may not actually burn the money, does not return of the capital cause an equal and opposite effect to whatever real or theoretical effects you may believe it originally represented? After the dust has settled, isn't there something remaining called a profit?