That same compounding effect also works for the additional investments of the lenders. After all is said and done, the lending group will be able to use its new

That same compounding effect also works for the additional investments of the lenders. After all is said and done, the lending group will be able to use its newfound cash flow to purchase ever more investments at prices that the newly debt-free won't be able to match. Soon, the newly debt-free group will be "forced" back into debt because there is no other way to afford (say) a house. An exception would be if the interest on the debt is wildly higher than the interest gained by the investments, but even then the real problem is the high interest rates. There are better ways to regulate those than giving even more economic power to those already wealthy. You can't get away from wealth disparity by giving to everyone, eventually you have to take from some group to give to the other. The group being taken from will generally not like that.