It applies to some extent no matter what you do, but with this approach the purchasing power is spread so widely that no one will even notice the difference. Also, destroying the currency or otherwise making it permanently inaccessible when the owner dies is for all practical purposes indistinguishable from the owner living and simply never spending it, so nothing really changes.

Yes, but again you could say the exact same thing about any capital or food the person had when they died, especially if they weren't extremely wealthy. But I thought we had agreed that destroying capital and food is not good. I'm just failing to understand the distinction between destroying a deceased person's capital, and destroying their money.

> I'm just failing to understand the distinction between destroying a deceased person's capital, and destroying their money.

"Capital" is the wrong word here. It doesn't include non-productive, consumable goods such as food, but it can include money as a stand-in for means of production. It doesn't make sense to contrast "capital" with "money" when what you really mean is "all goods which are not money".

In any case, the difference is utility. The value of money is (almost) entirely derived from its use in trade; it's not consumed and it doesn't directly serve as a means of production. If a factory burns down or food spoils then society is poorer for it, but if the amount of money in existence decreases then nothing of value is lost, provided it affects everyone holding currency equally. (In the case of someone dying the only one not affected equally is the deceased, who isn't around to object to the loss and thus doesn't count.) We still have all the consumable goods and means of production which we had before, and the purchasing power of the remaining currency will adjust to compensate for the change in the money supply.