Friendly aliens arrived for 10 years, built a lot of houses, produced a lot of smartphones, cleaned a lot of cities. They took a fee for all of that and then flied back to their planet taking all the money to be never seen again.
The economy literally got a lot of free stuff and obviously people are much richer than before.
Money is a promise, if someone is forgetting the promises others made to them (burning money) others benefit as they just got free stuff.
Um no? A really simple model of a healthy economy is that money sloshes back and fork and yet value is created. A more realistic variant is that the money supply also increases (loans & interest). The point is in either of these the money supply isn't going down. I'm no economist but all that money just disappearing sounds really bad. I doubt the gains to the economy from the "free stuff" would offset it.
A sign of a health economy is production. Consumption is a secondary effect. It arises from production: you cannot consume without it being produced first, and you never really need to induce consumption. I know they say it a lot, but it is crazy. The human desire for stuff in unquenchable, but getting somebody to produce is always the hard part.
The Veil of Money was used to describe the question of whether money was important to the real economy, and it brings up how money can confuse and hide.
Money is just an accounting mechanism, literally an IOU -- a claim on future production. Remove the money and see what happens: The chef and I down the clean exchange services and we agree on an equal exchange, one hour of her time for one hour of my time. She cooks for me for 5 hours, but she doesn't have any need for my help yet, so I write her an IOU saying I'll help her with her stock portfolio when she needs me. She decide to die in a horrible fire, taking with her the house and IOUs. Now I have 5 hours of free cooking and the world is no worse off for her not consuming. In fact it is much better.
If somebody worked and produced so much more than anybody else in the entire world and produced half or everything but never spent a penny and one day burned everything, yes, the dollar would double in value overnight -- fewer dollars chasing the same amount of good, deflation. All the government would need to do is produce the little green pieces of paper or double everybody's bank accounts overnight, and the world would now have all that stuff for free.
A huge part of the anti-inequality argument is that poverty prevents the consumption that would otherwise occur. The burnt/other-planet'd IOUs represent a lost opportunity to get that consumption going again.
The economy literally got a lot of free stuff and obviously people are much richer than before. Money is a promise, if someone is forgetting the promises others made to them (burning money) others benefit as they just got free stuff.