What's the difference between money suddenly being worth far less [1] and real income dropping so individuals have much less spending power - which is something that has been happening for most of the population since the late 70s?

[1] Assuming inflation would be the result, which is debatable.

This isn't true, though, even if you restrict to the US? Here's inflation-adjusted median individual income: https://fred.stlouisfed.org/series/MEPAINUSA672N It's up 40% since the late 70s.

This started happening as soon as the US dollar was completely unpegged from gold, allowing unlimited seigniorage to banks (the first spenders of newly printed money) via the Cantillon effect.

Yes?

I mean that’s sort of what happened during Covid (savings rates increased dramatically in the short term)…

        income    net worth
       --------  -----------
    A:  $20,000           $0
    B:  $30,000       $1,000
    C:  $50,000     -$80,000
    D: $100,000     $300,000
    E: $500,000  $10,000,000

        income    net worth
       --------  -----------
    A:  $20,000     $100,000
    B:  $30,000     $101,000
    C:  $50,000      $20,000
    D: $100,000     $400,000
    E: $500,000  $10,100,000

This idea seems wildly inflationary to me, but I would love to hear why I am wrong. We have to remember that someone’s expense is someone else’s income. In other words, if all debt is paid off, then lendors will get a huge payday and have excess income to spend. In the end, this is exactly like injecting money directly into the economy like we did with covid stimulus.

A debt jubilee is an emergency surgery to deal with a critical situation. Convincing the patient to eat healthy is also important, but needs to happen afterwards.

"A nation of thirty millions of people, had been for ten years agitated by the most terrible convulsions... Conflagrations had laid the palaces of the wealthy in ruins, and the green lawns where their children had played, had been crimsoned with the blood of fathers and sons, mothers and daughters.

A gigantic system of robbery had seized upon houses and lands and every species of property and had turned thousands of the opulent out into destitution, beggary, and death. Pollution had been legalized by the voice of God-defying lust, and France, la belle France, had been converted into a disgusting warehouse of infamy. Law, with suicidal hand, had destroyed itself, and the decisions of the legislature swayed to and fro, in accordance with the hideous clamors of the mob. The guillotine, with gutters ever clotted with human gore, was the only argument which anarchy condescended to use. Effectually it silenced every remonstrating tongue.

Constitution after constitution had risen, like mushrooms, in a night, and like mushrooms had perished in a day. Civil war was raging with bloodhound fury in France, Monarchists and Jacobins grappling each other infuriate with despair. The allied kings of Europe, who by their alliance had fanned these flames of rage and ruin, were gazing with terror upon the portentous prodigy, and were surrounding France with their navies and their armies. The people had been enslaved for centuries by the king and the nobles. Their oppression had been execrable, and it had become absolutely unendurable. 'We, the millions,' they exclaimed in their rage, "will no longer minister to your voluptuousness, and pride, and lust.'

'You shall, you insolent dogs,' exclaimed kings and nobles, 'we heed not your barking.'

'You shall,' reiterated the Pope, in the portentous thunderings of the Vatican. 'You shall', came echoed back from the palaces of Vienna, from the dome of the Kremlin, from the seraglio of the Turk, and, in tones deeper, stronger, more resolute, from constitutional, liberty-loving, happy England.

Then was France a volcano, and its lava-streams deluged Europe. The people were desperate. In the blind fury of their frenzied self-defense they lost all consideration. The castles of the nobles were but the monuments of past taxation and servitude. With yells of hatred the infuriated populace razed them to the ground. The palaces of the kings, where, for uncounted centuries, dissolute monarchs had reveled in enervating and heaven-forbidden pleasures, were but national badges of the bondage of the people... At one bound France had passed from despotism to anarchy. The kingly tyrant, with golden crown and iron sceptre, surrounded by wealthy nobles and dissolute beauties, had disappeared, and a many-headed monster, rapacious and blood-thirsty, vulgar and revolting, had emerged from mines and workshops and the cellars of vice and penury, like one of the spectres of fairy tales to fill his place. France had passed from Monarchy, not to healthy Republicanism, but to Jacobinism, to the reign of the mob. Napoleon utterly abhorred the tyranny of the king. He also utterly abhorred the despotism of vulgar, violent, sanguinary Jacobin misrule. The latter he regarded with even deeper repugnance than the former.

'I frankly confess,' said Napoleon, again and again, "that I must choose between Bourbon oppression, and mob violence, I infinitely prefer the former.'

... He had two foes to encounter, each formidable, the royalists of combined Europe and the mob of Paris. The quiet and undoubting self-confidence with which he entered upon this enterprise, is one of the most remarkable events in the whole of his extraordinary career. He took with him no armies to hew down opposition. He engaged in no deep-laid and wide-spread conspiracy. Relying upon the energies of his own mind, and upon the sympathies of the great mass of the people, he went alone, with but one or two companions, to whom he revealed not his thoughts, to gather into his hands the scattered reins of power. Never did he encounter more fearful peril. The cruisers of England, Russia, Turkey, of allied Europe in arms against France, thronged the Mediterranean. How could he hope to escape them? The guillotine was red with blood. Every one who had dared to oppose the mob had perished upon it. How could Napoleon venture, single-handed, to beard this terrible lion in his den?"

- John Stevens Cabot Abbott, "Napoleon Bonaparte" (1855)

For instance, housing inflation has to do with people who have long-running cheap mortgages who don't want to sell their asset just to pay a higher monthly premium while the market is in low supply. So shouldn't your calculation also take into account supply and demand?

In this case the currency would need hugely inflated, but it would only harm people who didn't get the payment. This might lead to everyone getting a million dollar. Now a carrot might cost $50 which doesn't matter, because you got a lot more dollars.

Inflation is a problem when the costs of different things, especially wages, don't increase at the same rate or you have a lot of savings in cash.

Relatively, the wealth of the poor will increase more because, say, 100k, is life changing for a poor person but not as big a deal for a rich person.

The important part is reducing the total debt load and the exponent sitting on top of it.

Would it be perfect? Of course not, nothing is. But it's the fairest way I have heard of to broadly reduce the debt load in a manner that addresses the underlying issue of too much debt.

Additionally people would take on more debt, after freed from their current monthly payments, so you would predict consumption would rise even if the only effect were debt cancellation.