Fian:
It is not controversial, you are just confused as to how banks operate.
Of course if no one deposists any money in the bank they won't have any to loan out. But, there are always people depositing money in the bank. And even if no one deposited for a while, banks own stocks in the stock market, and make money off of that. They already have money in their vaults (~80% figuratively, depending on the current Federal Reserve Rate), and loan it out to make profit off of. It would take a bizarrely unusual amount of circumstances to deplete the banks of all money with how the banking system operates in this day and age.
People depositing money in the bank are not spending it. The bank goes and "spends" that money to make more money. There is a colossal difference.
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I am not sure about this, but I don't believe that the interest that banks earn on their money is lent back out in the market.
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Almost all of it is loaned out to new customers. Banks make a lot more money in interest than their operational costs and the interest they pay people with savings accounts.
The interest made on a savings account is designed to be significantly less than the rate of inflation, and so the banks minimize their losses on savings accounts.