Someone said (I think it was in Money as Debt[1]) that "if all debt was cancelled, 95% of the money in the world would disappear instantly."

[1] http://video.google.com/videoplay?docid=-9050474362583451279

correct. its not a wealth transfer. its a wealth revaluation.

or since most ppl assumed they had that money and spent other money on that assumption, it could also be called 'wealth destruction'