“cancelling” debt is not that easy, with or without savings taken in to account.
For instance if as an auto company I sold by products to consumers on credit, if I am indebted to part makers and part makers have promised to pay wages and severance packages to their workers, who are buyers of cars.

Do you think it ll be easy to tell workers to forget about their severance package in exchange of forgetting about their car debt.
And what about those without a car ?
And why should each of them individually not prefer to turn bankrupt, and if that happens what happens to those securizing debts etc.

The thing is production is based on assumptions of future payment. Once confidence is gone, so goes production.

For the first time in history the world economy is poisoned by debt no-one can price to market and indeed are afraid to.

How can economies survive when the trillion dollars i thought i had turns out worthless?
How does that affect you when the trillion you loaned me was backed by garbage assets?

And I’ve always argued that “total debt” is a meaningless number that is often very misunderstood. If you save money in a bank, you’ve created debt, as the bank now owes you money.

Also money is a collective illusion. If you have the productive things there (like factories and people) then all you have to do is to figure out what computer keys to press in order to redistribute things.

A high “total debt” is very easy to fix. If I owe you a trillion dollars and you owe me a trillion dollars, then we just shake hands and we both agree to cancel each others debt. The tricky things happen when I owe you, but you don’t owe me.

So ironically, we are in good shape if everyone is indebted to everyone else. If you have A indebted to B but B not indebted to A, *then* we have problems.

Unless of course the governments enact smart policies but nothing smart as been put forward to prevent the debt build up, so I hardly see how suddenly something smart would pop up.