That's because debt IS money. Literally. If you create debt, you have created wealth. These people weren't punished so they could get back to creating new debt as quickly as possible. The problem with credit defaults, especially private credit defaults, isn't that some private creditors lose some money, it's that twice that amount of money is destroyed, and disappears from the economy entirely.

> That's because debt IS money. Literally.

OK.

> If you create debt, you have created wealth.

No, you have created money. Money is not the same as wealth. If you create money without creating wealth, then it's inflationary.

Just a minor nit. The rest of your post I agree with.