Can bankruptcy destroy money?
Consider a bank that writes down a credit card account as uncollectible. That is a charge against the bank’s assets and it reduces the bank’s lending power, hence reducing the amount of money in the system.
But you are right that there is confusion about money of different types. If Musk’s wealth increased $1 billion it doesn’t mean that he acquired a stack of $100 bills 80,000 inches (~1.25 miles) high. On the other hand, he can go to an investment bank(s) and get assets converted into spendable cash to make an acquisition.
So the differences in kinds of money revolve around the difficulty and expense of conversions from one type to another.
You should send your clarification in to Merriam-Webster. I have a hard enough time trying to use English to explain economics. I’m counting on other people to correct English where this is necessary.
People actually use the word “money” to mean wealth; as in the example of Elon Musk that you give. And, this meaning of “money” is in the dictionary.
People actually use the word “money” to mean income; as in how much money do you make. This meaning, too, is in the dictionary. I myself make no money in the sense of medium of exchange. But, I do make money.
But when economists talk about money and inflation, they’re talking about money as a medium of exchange.