saywherefore t1_iyd39wj wrote on November 30, 2022 at 2:42 PM

Yes governments can make money disappear, they do so by raising taxes and so taking money out of the economy, or by issuing bonds. These are loans to the government and so the amount that organisations give the government to buy the bonds has left the economy.

They can’t exactly do the same with student debt because it totals to zero overall. There is $1.6 trillion in debt but that is balanced by $1.6 trillion in cash that was paid to the universities etc.

If the government paid off everyone’s student debt then they would actually be adding more money into the economy; the money they would have to pay the owners of the debt (the lenders). They could in theory just cancel the debt and tell the lenders that they are shit out of luck, but that would make those lenders very angry, and would seriously destabilise any economy.

TyrconnellFL t1_iydda8f wrote on November 30, 2022 at 3:52 PM

That doesn’t make money disappear. Governments levy taxes and issue bonds to have money that they spend. They could just disappear money, but they don’t, because there’s always something to spend on.

The government could issue bonds to cover all the outstanding student debt. It’s not cancellation, it’s shifting the debt. The government could then do whatever they want with it, but it’s money they’ve spent that has to come from somewhere. Printing money to arbitrarily make it cost less is an option, but it’s one that functional governments don’t use because using inflation to make your debts not matter is a disastrous policy.