The result would be an almost immediate spike in interest rates charged to whoever benefited most from the debt cancellation, as lenders would be forced to comp

The result would be an almost immediate spike in interest rates charged to whoever benefited most from the debt cancellation, as lenders would be forced to compensate for the risk of additional cancellations in the future. Worse still, it would create a massive moral hazard as (some) people start to take on loans they know they cannot afford long-term in anticipation of more debt forgiveness (this often happens after bail-out programs and is one of the major arguments for the "too big to fail is too big to exist" philosophy). Since retirees often live on income from loan interest (through pension funds or personal retirement accounts), much of the burden would be borne by retirees and many of them would be forced back into the labor force (crowding out the younger generations who are trying to find their first job; see e.g. Japan for a manifestation of this problem). Debt forgiveness is not nearly as simple and positive as people believe. It often winds up hurting the people it was meant to help and having long-term negative consequences.