It doesn't make sense when your premise is that dollars are money. In a world where currency isn't scarce, I would argue that equities (and in some locales real estate) have broadly taken the place of money/savings.

Under this model, the incentives are to issue as much new "money" (shares) as credibly possible. We've seen some of the biggest publicly traded companies be cashflow negative for basically their entire existence, so that's not a part of the credibility evaluation. It's more of "do they have a compelling growth story."

From the banks, to the regulators, to the equity owners, to the lawmakers, virtually everyone involved is incentivized to perpetuate this scheme. I guess I'm not surprised anymore, because in a perverse way, it makes sense for the reality we're living in.