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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsMichael Hudson: A debt jubilee is the only way to avoid a depression
By Michael Hudson
Michael Hudson, author of and forgive them their debts and Killing the Host, is president of the Institute for the Study of Long-Term Economic Trends and is distinguished research professor of economics at the University of Missouri at Kansas City.
March 21, 2020 at 5:18 p.m. EDT
Even before the novel coronavirus appeared, many American families were falling behind on student loans, auto loans, credit cards and other payments. Americas debt overhead was pricing its labor and industry out of world markets. A debt crisis was inevitable eventually, but covid-19 has made it immediate.
Massive social distancing, with its accompanying job losses, stock dives and huge bailouts to corporations, raises the threat of a depression. But it doesnt have to be this way. History offers us another alternative in such situations: a debt jubilee. This slate-cleaning, balance-restoring step recognizes the fundamental truth that when debts grow too large to be paid without reducing debtors to poverty, the way to hold society together and restore balance is simply to cancel the bad debts.
The word Jubilee comes from the Hebrew word for trumpet yobel. In Mosaic Law, it was blown every 50 years to signal the Year of the Lord, in which personal debts were to be canceled. The alternative, the prophet Isaiah warned, was for smallholders to forfeit their lands to creditors: Woe to you who add house to house and join field to field till no space is left and you live alone in the land. When Jesus delivered his first sermon, the Gospel of Luke describes him as unrolling the scroll of Isaiah and announcing that he had come to proclaim the Year of the Lord, the Jubilee Year.
Until recently, historians doubted that a debt jubilee would have been possible in practice, or that such proclamations could have been enforced. But Assyriologists have found that from the beginning of recorded history in the Near East, it was normal for new rulers to proclaim a debt amnesty upon taking the throne. Instead of blowing a trumpet, the ruler raised the sacred torch to signal the amnesty.
It is now understood that these rulers were not being utopian or idealistic in forgiving debts. The alternative would have been for debtors to fall into bondage. Kingdoms would have lost their labor force, since so many would be working off debts to their creditors. Many debtors would have run away (much as Greeks emigrated en masse after their recent debt crisis), and communities would have been prone to attack from without.
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Excellent article.
Sherman A1
(38,958 posts)I hope that this is the case, but I have serious doubts it will occur.
Igel
(35,300 posts)Everybody seems to be saying, "I've wanted this down for years, because there's no other way and we're doomed unless you do what I say. Now that we have this plague, there's no other way and we're doomed unless you do what I say."
Wasn't true before, probably not true now, but people are more panicked and there's more uncertainty.
Most decisions made under stress and in panic are wrong. It's like thinking, "What can I do? I know, I'll be 24 72-megaroll-packs of toilet paper!"
denem
(11,045 posts)The Fed adds some zeros to banks and creditors balances to compensate them for the cancelled debt. Black helicopter money.
Sherman A1
(38,958 posts)I will believe it when I see it.
denem
(11,045 posts)its on.
PJMcK
(22,036 posts)Look at their history! They create dangerous bubbles of debt and when the bubble bursts, they cry poverty and demand the government bail them out. Taxpayers and debtors get screwed twice and the bankers end up whole.
Some system we've had.
denem
(11,045 posts)A one off - never, 'never ever' to be repeated.
safeinOhio
(32,676 posts)My guess is that there are no Christian banks.
Laelth
(32,017 posts)-Laelth