If you get 5% return by refinance someone's debt, it is better than sitting there and collect 0 interest
In reality, governments can never write the debt off, they just refinance, and this refinance could go as long as several centuries... Have you heard the FED reinvesting short term loan income and principals into long term loans? For those who can borrow without debt limit, the only cost is interest, and that interest could be 0 (Germany bonds already reached negative interest)
Digging this up because nobody else answered. Again, I don't think the problems I named were addressed.
Someone has paid that money, and it entered the system afterward. These people will make losses if the debt vanishes, and therefore massively raise interest rates. If this is paid with new money, the funds that were initially distributed cause inflation, as they are left on the market as extra money after the whole operation.
Can you draw a graph of how the money flow, including the initial lending, is supposed to look like? I claim this is not possible, or will show that the position at the end includes an unsolved problem.