Cancelling bonds and paying them off when they are not callable is a violation of contract as serious as an outright default. It would have enormous negative ramifications on banks, insurance companies and private investors.
It would also be enormously inflationary as bonds are not part of the most commonly used definition of the money supply. They are not cash or checks and do not have the liquidity of either.
Our problem was not created by the banks or the government but by the People voting crooks, cranks and humbugs into office. As long as the People can be bought off nothing will change.
Most of the bonds are held by the thieves that created the debt scam by creating the “Federal Reserve.”
They deserve to lose, as as for the private investors, they lose either way; at least the nose dive would end for them. They’re never going to get snot when the whole thing comes down, as it must.
It would definitely not be inflationary. You just don’t understand the inflationary nature of govt bonds. The inflation has already happened, and the exchange would not affect total money supply, and it would almost certainly result in a steady velocity increase that could take us out of this debt caused depression.
Our problem was created by the unwholesome relationship between banks and government. The way people vote is managed by the propaganda ministry (AKA News Media) and works at the behest of the above Bank/Government klatsch.
(remember McCain-2008?)