I think you have to dumb this one way down. The core point here should be that money is not wealth; stuff is wealth. Wealth is houses and cars and meals and haircuts. In short, things that we have a use for that require scarce resources to be produced, such as iron and human labor. Money is just an allocation mechanism. Your friend thinks that scarcity exists because we lack money, and therefore when the government creates money it eliminated scarcity. But you know that the real cost of anything is the resources it uses up, not the money it costs. If a business is failing it must be using resources that have more valuable alternative uses, since somebody else is willing to bid more for those same resources. If this business fails it is not a loss to society, but a valuable mechanism to free up resources for more valuable uses. Inefficient uses of resources should cease, that is the whole point of having a monetary system. And the reason there is economic growth in the first place. When the government creates money, it does not also create resources, therefore it enables failing businesses to bid away resources from other purposes that necessarily were more valuable. In other words, resources are by necessity shifted towards less valuable uses and therefore society is poorer.