Ya, that will never happen LOL.
Actually, a more palatable version of a complete debt holiday is for the Fed to establish a facility where every one of those CDOs and Derivatives is guaranteed.
Not unlike the FDIC.
Sure, it’s printed money but all of it is anyway. And such a facility would prevent a complete debt collapse and deflation.
It’s one thing to shut down mainstreet for a few weeks, then turn it back on. But once you destroy the financial infrastructure it takes decades, even a century or more to come back.
Everyone has to know they are going to get paid. Eventually.