There are many opinions on the use of punishment/correction. Dog Whisperer often says if you are angry or emotional when doing it, then it is punishment and it's a bad idea. If you are calm and under control of your mind and using reasonable methods, then it is correction. Make sure you are doing correction and not punishment. I personally disagree that ALL forms of physical correction will be bad for the dog but you do need to be careful and I also always advocate you use the minimal amount of force needed. I personally find that squirt gun IF USED CORRECTLY can work well for some stubborn aggressive dogs and most cats. Many dogs will listen out of love and respect but some dogs need a bit more incentive from time to time and many cats need incentive. In the wild, if dogs/animals do something and then some unpleasant consequence occurs, that is how they learn not to do it again. Unpleasant consequences are a natural part of life and learning for all animals and humans. THey are not bad by nature, only bad if the principle is not applied correctly and fairly and reasonably and effectly. Since most methods are often incorrectly applied, that causes most of the trouble.
Now as for the blanket chewing, sounds like you are just letting the puppy have free range alone in the house and then you come along later and see your blanket chewed and get all peaved and try to inact punishment way after the fact. This way will never work. In order to discourage a dog, you need to catch the dog in the act and THEN tell the dog NO! right at that second and make the dog stop. Usually for a puppy, they will listen easily enough. Say no and if the dog does not stop, pull the dog away. If the dog tries to bite it again, say no. If the dog doesnot listen, pull away. You can also give the dog other stuff that is good to chew on and then praise. When you are ready and feeling patient, then put that blanket out deliberately as 'bait' and then watch for mistakes and then train the dog. What you need to do is let the dog know the second it does unwanted behavior and also praise the dog and encourage all wanted behavior. But it only works if you make your response at the instant the dog is doing the behavior.
Some dogs just need 5 or 10 or maybe 20 times in a row in which you catch and stop the behavior every single time. If you can't watch the dog at that time simply close the door to the bedroom and don't let the dog in! Let the dog in only when you are watching. You do the same for any problem area in the house. If you let an untrained puppy wander unattended, then the puppy will develop bad habits cuz you are not there to train. Then you try to punish 20 minutes after a bad behavior and the dog has NO IDEA why you are mad. No type of training will ever work if more than a few seconds have past. All you will do is teach the dog to be scared of you.
This stuff will be covered in most basic dog training books of which you should avail yourself in order to train your dog without traumatizing it. Or take a puppy training class and bend the ear of the trainer. Beginner classes are typically cheaper than buying lots of new blankets. Start your dog out right from the beginning and you will save yourself a lot of grief and hassle later on down the line.
-Eva