I'm not so sure about this—the "unpaid debt equals destroyed wealth" part. It's important to be concrete about what we're talking about here. A society's wealth

I'm not so sure about this—the "unpaid debt equals destroyed wealth" part. It's important to be concrete about what we're talking about here. A society's wealth can't be sensibly measured in money, because currency is just a neutral medium of exchange having no intrinsic value. Central banks control its supply in an instrumental way. This is monetary policy 101. I trust we agree. So what happens if you lend me $1 million and I don't pay you back because my business goes belly-up in a month? Well. No actual wealth is destroyed if you don't get paid back. Whatever you created (a business, a book, whatever) to get so rich still exists, and society still enjoys its benefits. You say that well, it could have been invested elsewhere; there's an opportunity cost. But assuming relatively fluid capital markets, someone else likely invested in whatever you didn't invest in, and so whatever great thing was created by that other business still exists. Now, sometimes you have situations where no one trusts anyone to pay back their debts, and you have frozen credit markets. We saw this during the financial panic of 08-09. But the problem there is that real stuff---factories, people, stores---sit idle because capital markets are necessary for this stuff to function. The problem isn't that "lending isn't happening," the problem is that a society has a massive amount of idle stuff that could be otherwise productive, sitting around wasting away for no good reason. I'm not sure I even disagree with you, I've just been trying to think through these issues in a non-abstract way.