Something I should say more often

[wufwugy]

Wait what? Wiping out student debt would be done by telling the banks you ain't getting shit? Not by the government paying the debt? Are you sure?

In that case, a primary effect would be markets would expect future taxes to be higher in order to pay for the govt debt payments. The effect would be downward pressure on the economy.

I should add to this.

There would ALSO be upward pressure on the economy from all the people who no longer owe so much in loans. Some might even say that the new debt in form of expected future taxes (bad for economy) would be offset by the reduced debt of borrowers (good for the economy). Nobody can measure the offset, so we can't know for sure.

But there is one thing that does inform what the net effect of this proposed debt payment would be:

Incentives.

We seem to get the best sense of how a policy will increase or decrease costs by what behavior that policy encourages.