It is unsustainable.

> They also had serious difficulties in recovering money lent to Christians because either the repayment term was after August 10, the deadline for their departure, or many of the debtors claimed "usury fraud," knowing that the Jews would not have time for the courts to rule in their favor.

“Due to the precarious position of Jews, some nobles could ignore their debts. If the sponsoring noble died, his Jewish financier could face exile or execution.”

https://en.m.wikipedia.org/wiki/Court_Jew

A lack of tribalism and a high-trust society, heavily influenced by the Church's ban on cousin marriage, is why the west was able to become so wealthy.

OK fine, it's a slightly different thesis but it's the correct one ;)

There's a theory that the faster things happen, the better - where we forgive outright fraud because it's theoretically driving commerce. In my experience, badly run (or intentionally fraudulent) businesses actually kill an entire area of commerce - by cheating and often going bankrupt on suppliers who then go out of business themselves rather than being able to provide their product to actually competitive companies who would remain in business.

Slower capital might mean more care and less fraud, but not implicitly. On the other hand, the velocity of capital through a system is at least one measure of its health and prosperity, and a system that deliberately tolerates a moderate amount of risk to min/max fraud/velocity is probably going to be healthier than one that errs too much on their side of either factor (at least in a very simplistic manner— of course there are many more factors and considerations as well)

The problem is that we seem to have entirely ignored the moral risk where some people (criminals in all but name) continually abuse the same issues. Companies intentionally go bankrupt with a ton of debt rather than trying to minimize debt when it implodes. I've seen companies buy big pieces of equipment just before bankruptcy and the machine (an excavator) was sold to pay general debts, only a small portion of which went to the seller. Management knew they were likely caput but they didn't act like it.

Mistakes can happen, but in this case it wasn't a mistake and it was incentivized - not just allowed - by our system.

If I borrowed your car and my garage burned down with it inside you wouldn't hold a grudge, but if I knowingly parked it in a burning garage you would.

I get the feeling you've never lived around Evangelicals or Mormons.

Joining the right church is a long-standing method of business/career networking.

I don't think you realize the business opportunities you're missing out on.

They aren't exclusively hiring their own, but it's human nature to trust those closer to you. I've seen this heavily reflected in the evangelical and Mormon communities, but you'd never know unless you had insight via friends or family.

From this I can gather that Sumerian kings on average didn't live very long. ;-)

Doesn't this fuck over savers who have their money parked in fixed income securities, while giving a huge boon to anyone owning equity in indebted companies? On a comparative basis, it also hugely benefits people in their late twenties/thirties who were able to take out massive loans (ie. mortgage) while not doing much for everyone else.

It does dig younger people out of crushing debt, yes. That's the point: they can start a life without exponentially increasing debt grinding them to dust. This lets them participate in the wealth of the nation and incentivizes them to work and build families, thus producing more real wealth, rather than checking out and making just enough to pay the interest and monthly subscriptions.

There is no way out of this that doesn't involve helping young people throw off the yoke of crushing usury. A modern debt jubilee is the fairest way to do that: it rewards savers to an extent with free and clear money while paying off the debt of debtors.

The catch is that debtors must use the payment to extinguish their debt. Non-debtors get the money free and clear.

This is as fair a mechanic as I have ever heard for a debt jubilee. Steve Keen is a genius.

The important part is that the borrower is now out from under exponential debt and can get on with their lives, and total debt in the economy is brought down to a sustainable level. Non-debtors get something too: free and clear cash.

Is it perfect? No, of course not. Nothing this simple could be perfectly fair. But it is simple, hard to game, addresses the core problem (too much debt) and is probably as fair as it will get, practically.

Certainly the elites would scream bloody murder if someone important legitimately proposed it. Keen has been ignored and mocked for years. That's evidence enough for me.

And is basically equivalent to “why don’t we just print more money and give it everyone?”.

And anyway a terrible idea.. why do you want to penalize people who have low interest rate mortgages for instance? Anything they’d gain would be offset by inflation…

I'd hope they'd also make exceptions for any loans under the current rate of inflation, but good luck getting that passed. Having to immediately pay off a 0% loan (if anyone still offers those) clearly is far from the optimal use of the money.

Beyond that, a modern debt jubilee isn't about you optimizing your individual financial situation.

Rather, it is about:

- keeping it as simple and hard to game as possible

- reducing total debt in the economy to a sustainable level

If you have to pay down or pay off your mortgage, sorry. On the other hand, you would own a house free and clear. So life wouldn't be all bad.

You can't get away from wealth disparity by giving to everyone, eventually you have to take from some group to give to the other. The group being taken from will generally not like that.

If all of a sudden there is a huge amount of extra cash in teh system, then prices go up alot. Lets say everything goes up 20%.

Now the poor who had debt no longer have debt but the price of life has gone way up for them.

The rich just pocket the money and the inflation doesn't affect their day to day life very much. Infact they are better off as assets have now inflated due to this new money.

Thinking about this more, this like the poorer you are the worse off you'd now be in this situation.

Unless the solution is to close your eyes and pretend like inflation would never happen, which the last year has shown us is not a reasonable belief to hold.

But the net result was (AFAIK) a significant drop in indebtedness and poverty.

But then again, the inflation was picked up by companies as an excuse to profiteer, and initiate a spiral, which is why we find the Fed today kicking the economy in the groin.

Also not practically possible at least in the real world. Which is possibly why it sounds so great…

Even if debtors pay off a chunk of their debt, companies will be lining up to offer them new debt, especially as the chance of default goes down with the new precedent.

The way a real debt jubilee has to work is that debt is repudiated, with the creditor left holding the bag - not made good on.

Still, it's not that hopeless. I've seen a lot of people get out of debt. You don't have to go into debt for things and you sure don't have to remain in debt.

People aren't as helpless as you think.

On the other hand, I recognize that the majority of people, and, importantly, young people have either been lured or forced into crushing debt for things like education, housing, medical care, trinkets and so forth. It is at the point now that, regardless of how you feel about the individual morality of a given debtor, it is threatening the whole economy.

We need to reduce total debt in the economy. A modern debt jubilee is the fairest way to do it.

Instead, we'll raise rates, crush the middle and working classes, and bail out the rich.

I'm sure there are more than enough people that carelessly got themselves into debt... They bought into the consumerist world we live in. It's hard to resist. But there are also many that are stuck in generational economic turmoil, that don't have the tools to dig themselves out.

If it's just that you currently don't have debt because you've paid off your student loans and your mortgage, then congrats I guess?

We are living in a silly debt fueled age where many people can't even afford to go into debt for a house these days. But banks are happy to give them credit for consumer shit like phones.

It wouldn't hurt you, it just wouldn't help. You wouldn't be hurting. I think that is a distinction. You don't get the help, because you don't need it. They do say "Fair isn't everyone gets the same thing, fair is where everyone gets what they need."

Thank you for adding this link.

Not really. It helps savers and punishes those who took undue amounts of risk.

Wouldn't this be very inflationary? It's approximately equivalent to "give everyone $X". I don't see any discussion at the link about how people would react to the dollar (and any dollar-denominated savings, wages, etc) suddenly being worth far less?

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.

With rates approaching zero it was rational to load up on second mortgages, driving up the totality of the debt. If you managed to lock in a sub-3% loan few years back, it's irrational to accelerate repayment.

I'm generally supportive of these types of measures especially in a financial crisis, but keep in mind that economically, this isn't too different from a bank bailout. The primary net effect of giving people money to pay off their loans is making lenders whole.

Well no, that's the net effect if you give insolvent people money to pay their loans; but if you erase the debt of people who would keep on paying that money for decades, then this has the immediate impact of freeing up a big part of their next paycheck - which otherwise would go to that loan payment - to be spent or invested elsewhere, and this doesn't happen if you just make a bank bailout.

The rest of what you're talking about is fairly standard economic stimulus and it's not that controversial or unprecedented and has little to do with debt jubilee.

I'm not necessarily against any of this - the point is more that the mechanism proposed (giving money to everyone with the intent of helping people pay off their loans) does not match the rhetoric (GP decrying too much debt and socialism for the rich).

First of all, this isn't what your article says. It says that savers must buy newly issued corporate shares and the funds raised by these new shares must be used to pay corporate debt.

Second of all, this basically requires the government to perfectly micromanage billions of transactions, which is impossible. What's to prevent a debtor from immediately opening a new line of credit?

What is debt anyway? Let say I hold 100k in leveraged derivatives which are the equivalent of someone holding 400k worth of the underlying asset (they put down 100k and borrowed 300k).

What happens under this scheme if everyone gets 100k? I buy another 100k of derivatives and the other guy has to spend it paying down debt…

This is just a massive miss-allocated stimulus program (financed through.. you guessed it.. more debt) if that’s what Keen is suggesting maybe it’s one of the main reasons nobody takes him seriously?