I can pay occasionally my lunch by crediting my assets with $10 plus creating an interest-free liability for $10. Yes, and that is what the banks in effect do. And no, it is not a fraud, just a massively misunderstood thing.

Say I have a network of businesses and individuals who trust each other, or that agree to establish some way to maintain trust with each other. Say we wish to do away with banks. So a person wants to open business A, needs to buy things to get their business up and running. Rather than begging the bank for access to capital [0], I buy things from my fellow businesses in this community on credit. They agree to give me their goods in exchange for my promise to pay back (and in exchange I do the same for their goods).

This still doesn't work because of one simple reason: dollars (or your local currency) are legal tender, and you need legal tender to pay taxes. You cannot legally function on "community credits" alone.

[0]: Which in itself it's a pretty wretched thing that this is in the hands of private individuals, who can decide who gets to start businesses and who remains a wage-slave.

That's not what fraud means.

"In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right."

The reason some things are illegal and others aren't is because for the system to function, certain powers and responsibilities are delegated to certain entities. You can't own nuclear warheads, you can't kidnap people, and you can't print money. The act of doing those things isn't illegal. What makes that act illegal is the context. If those who were delegated that power are doing it, it's not crime, it's your responsibility. If you decide to build a reactor in your back yard, that's crime.

Just because someone else can do something you can't doesn't mean it's fraud.