The same way if someone steals your car, you buy a new one and the economy as whole (GDP) is in profit.

What bailout did (also via QE + ZIRP/NIRP) is prop-up property & asset prices effectively legitimising the prior speculation. This prevented resetting of prices to the levels where people would start buying again for non speculative reasons. Effect is young generation sees houses at 10x earnings whereas the average is 3-3.5x. Boomers sit on tons of unearned house equity that is only there because land prices are inflating like crazy.

For capitalism to work well there needs to be a mechanism for wealth destruction, at least for the "unrealised wealth".

He means that the government literally made a profit off of the bailout loans. One Source: https://www.washingtonpost.com/business/economy/bailout-high...

> mechanism for wealth destruction

Well, that's never going to be popular, to the extent that all lobbying is going to be diverted to making sure that it's not your wealth that gets destroyed. Have you seen how unpopular even tiny amounts of inflation are?

Getting wealth redistribution would be a start.

inflation isn't wealth destruction, it's wealth redistribution from everyone into the financial industry.

Depends on exactly what you mean by "the bailout". In dollar terms the fed's actions were much much larger than TARP.