Money is not that complex

Look at inflation, down and dropping over the last thirty years.  Why? Because the longest loan is thirty years and that is the time it takes to collect principal and interest. All the money market theories try to equilibriate an incomplete set, they want inflation to settle over a four year period.

Money is, at its core, a distributed counting system, utilizing paper with numbers on them. The amount of counting needed grows at the the number of transactions increase if money is price neutral.  Those grey bars in the graph, they are the points where the fiat banker releases new fiat paper into the economy, and they subsequently account for the new fiat as an 'interest rate' loss.  So it is all rates, still, at equilibrium.  Deposit rates paid are a loss of ink and paper into the economy, and lending rates earned are a recovery of ink and paper in the economy. Principal balances are neutral.

The economy sets the principal balances.  The reason fiat banking is a mess is because those grey bars coincide with regime changes in DC.  It is Congress who has mandated that they play the major role in the distribution of fiat, hence the fiat banker is forced to operate on eight year cycles. 

Congress is not a good fiat distributer and its principal due has been accumulating.  Hence, the large private banks have to step in and control Congress using lending rates on the rollover.  They are now in charge of fiat distribution, it can be no other way.  Congress would have long since made prices way too unstable for the economy to operate. That is why rates on Congress rise when the Fed does QE, the large banks have to mange fiat distribution, and the reason the economy recovered is because Goldman Sachs does a better job than Congress.