This article from Pradeep's blog is a must read. Also read Jeff's comments on the post for educating yourself.
If someone can provide zero interest loans and ask everyone to clear their debts, people will get a fresh start. Is that but possible. At least they will need to take an admin expense
Also, todays economy means debts that you can call as assests and with compound interest make it a growing assets. And then sell them as derivatives. And insurance companies insuring these derivatives. If there is no debt, all these guys are jobless. So the cycle starts again..