What happens if you wipe $1,600,000,000,000.00 in a single day?
Wiping out 1.6 T of debt is like adding 1.6 T to the money supply. We’ve seen what that will do.
It is the same thing Obama did with his 4 rounds of quantitative easing back in his terms.
$85 billion a month of creating electronic scrip by ‘buying’ half of it in T-Bills (to legitimize the deficit) and half in Mortgage Backed Securities to placate the stock market. That was $1 Trillion a year.
It creates money (here, in electronic bit form) that inflates the supply (with no real value added such as increased GDP). It effectively devalues what supply was there to start.
I N F L A T I O N.
As George Marshall once famously said when he plunged the American knife into the back of Chiang Kai-Shek and the Chinese Nationalists (in FULL SUPPORT by Marshall of the Chinese Communists, lest we forget):
"As Chief of Staff I armed 39 anti-Communist divisions, now with a stroke of the pen I disarm them."
You can probably tell, I am no fan of George Catlett Marshall.
That would inject more liquidity into the system in a single day than the entire “American Recovery” bill has done in a year. Inflation would be 15-20% almost overnight.