It’s not that an arbitrarily large amount of debt can be created, but the amount of debt that can be created is predicated on the amount of economic growth that can happen. Eventually growth slows down and then the debt goes bad, but it wasn’t the debt that caused growth to slow down. The growth slows down because growth, itself, can never actually be infinite. It always slows down.

That’s why markets regularly go into crisis. They need infinite growth to work, so the housing market (for example) needs to always be building and selling more houses to be a sector for growth. The problem is that you can only sell so many houses before you reach the carrying capacity of the market, after which sales fall and inventories rise, and then prices fall, and then the debts go bad. The debt, itself, doesn’t cause the crisis. The limits to growth are what cause the crisis, and this is inevitable in all market economies.

Debt is what makes an economic downturn go from “bad” to “bad”.