Can somebody prove otherwise?

"But what I mean in other words is that, when a loan is paid back properly, its equivalent in material wealth is made available and integrated into the Economy at-large. The money for the interest does get created."

I'm confused by what point you're trying to make, especially with your last sentence. It sounds like you're using the argument that the interest money creates an equivalent in material wealth. You probably using the usual argument that the interest money is constantly reinvested by banks back into the economy. This unfortunately is an over-simplification:

Lets say for example the interest money you paid to the bank is recirculated into the economy. Another secondary lender then receives some of this interest money and loans that interest money out with yet another interest charge on top of it. This surely then makes a new demand for interest from the principal money supply on top of the existing demand. Say this is then repeated numerous times and even more interest is required from the general money supply. The amount needed for interest can never be fulfilled by the principal money supply as we see in the real world. The interest money must be outright reinvested back into the economy and constantly recycled. This however is not the case as many often use their money for investment (as we often see in the stock market) or the money is often deposited into banks which then use the money as the basis for more loans (along with the depositor receiving interest on their deposit). Our entire culture is built on the ideal of making money off of having money and therefore the notion that all the original interest money will be recycled entirely is completely unrealistic. It must be 100% reinvested into the REAL economy of goods and services in order to ensure that there is enough money in the economy. This is quite simply is not the case.