All equipment held by NPCs is destroyed upon death. Whys this?
1. A continuously increasing amount of stuff
Faction A produces weapons. They have been producing weapons since around year 7. How many weapons has faction A produced?
A rather big number, if they are selling them as fast as they make them.
This is currently one of the only ways to destroy anything in the game short of flying into a sun with a fighter. So, the devs decided to destroy equipment when an NPC dies.
2. Credit Sink
Its not a direct credit sink, but it can increase production and mining, forcing more money out of the system (however small).
These are just two that I see, there may be different/other ones.