The problems did not arise from demand for debt, rather the dealers' reaction to demand for higher yields on debt. The instruments which have been problematic

The problems did not arise from demand for debt, rather the dealers' reaction to demand for higher yields on debt. The instruments which have been problematic were specifically designed to provide a higher yield with the appearance of risk commensurate with lower-yield instruments. These were backed by credit that was pimped out to people who could never possibly pay it back and then obfuscated in a package that the buyer was very unlikely to critically examine. You are right, debt-backed securities have a future; but fraudulent securities do not. This is not a new economic phenomenon -- lies and fraud are as old as mankind.