Our Debts Must be Redeemed
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St Paul's from the south west in 1896. In mid-October 2011, a group of Occupy protesters in London set up tents and encamped outside of St. Paul
[See the full post at: Our Debts Must be Redeemed]What happens to people who bought McMansions, BMWs, the finest clothes, the latest techie gadgets, took exotic vacations, putting everything on credit cards and loans? If these people can’t afford the interest, how could they pay down the principal? In a debt jubilee, would these people get to keep all their stuff, or have to sell it, or in exchange for ‘no debt’, these people would become indentured servants to those financial institutions and/or the government?
David Graeber’s “Debt: The First 5,000 Years” is a big book, a long slog, but worth the effort of reading.
Historically, debtors have been protected and that is the religious history Ashvin relates.
In The Lord’s Prayer, “forgive us our debts, as we forgive our debtors” was therefore, probably actually about debt, not sin. Family debts were paid with human bodies, sons and daughters enslaved
Following is an excerpt from the introduction from the Kindle edition.
“… How many times have we been told that the advent of virtual money, the dematerialization of cash into plastic and dollars into blips of electronic information, has brought us to an unprecedented new financial world? The assumption that we were in such uncharted territory, of course, was one of the things that made it so easy for the likes of Goldman Sachs and AIG to convince people that no one could possibly understand their dazzling new financial instruments. The moment one casts matters on a broad historical scale, though, the first thing one learns is that there’s nothing new about virtual money. Actually, this was the original form of money. Credit system, tabs, even expense accounts, all existed long before cash. These things are as old as civilization itself. True, we also find that history tends to move back and forth between periods dominated by bullion—where it’s assumed that gold and silver are money—and periods where money is assumed to be an abstraction, a virtual unit of account. But historically, credit money comes first, and what we are witnessing today is a return of assumptions that would have been considered obvious common sense in, say, the Middle Ages—or even ancient Mesopotamia.
“… in the past, ages of virtual credit money almost invariably involve the creation of institutions designed to prevent everything going haywire—to stop the lenders from teaming up with bureaucrats and politicians to squeeze everybody dry, as they seem to be doing now. They are accompanied by the creation of institutions designed to protect debtors. The new age of credit money we are in seems to have started precisely backwards. It began with the creation of global institutions like IMF designed to protect not debtors, but creditors. At the same time, on the kind of historical scale we’re talking about here, a decade or two is nothing. We have very little idea what to expect.
“This book is a history of debt, then, but it also uses that history as a way to ask fundamental questions about what human beings and human society are or could be like—what we actually do owe each other, what it even means to ask that question. As a result, the book begins by attempting to puncture a series of myths—not only the Myth of Barter, which is taken up in the chapter, but also rival myths about primordial debts to the gods, or to the state—that in one way or another form the basis of our common-sense assumptions about the nature of economy and society. In that common-sense view, the State and the Market tower above all else as diametrically opposed principles. Historical reality reveals, however, that they were born together and have always been intertwined. The one thing that all these misconceptions have in common, we will find, is that they tend to reduce all human relations to exchange, as if our ties to society, even to the cosmos itself, can be imagined in the same terms as a business deal. This leads to another question: If not exchange, then what? … drawing on … anthropology to describe a view of the moral basis of economic life; then return to the question of the origins of money to demonstrate how the very principle of exchange emerged largely as an effect of violence—that the real origins of money are to be found in crime and recompense, war and slavery, honor, debt, and redemption. … actual history of the last five thousand years of debt and credit, with its great alternations between ages of virtual and physical money. Many of the discoveries here are profoundly unexpected: … ” Kindle Locations 390-417
I believe Graeber says that, historically, all forms of slavery (including debt slavery) are nullified during a Jubilee. So a modern-day Jubilee would entail the nullification of credit card debt, mortgages, loans etc., I believe. At least, those are the basic conditions that would make a modern day Jubilee a true Jubilee. There must be countless other kinds of debt that have accrued over the course of our Debt Era.
One can hardly imagine how liberating it will be to be relieved from crushing debt. The social pathology of the constant pursuit of profit that our society languishes from will most likely recede. But, this kind of Jubilee will not be granted from above, it must be demanded for from below. Reading Chomsky and other anarchist literature has taught me that this is how social transformations take place. Let’s hope the credit ‘catastrophe’ in Europe spreads as quickly as possible so as to relieve the desperate poor that must choose between rent/debt payments or groceries.
bluebird,
I would think any modern plans to repudiate or redeem debts should be targeted at those debtors who have been hit the hardest, i.e. cannot come close to satisfying their debts with their earned incomes or the sale of secured assets. Perhaps the redemptive plan could grow to accommodate more and more debtors over time, but initially I think the only universal aspect should be that compounding interest is terminated and timelines for repayment are extended. By no means should anyone be forced into any sort of servitude in exchange for debt cancellation, simply swapping one form of slavery for another.
The mindset involved here has to be one of charity and forgiveness, rather than making sure everything works out “fairly” in every case. Charity for struggling individuals and small businesses, not large banks or corporations. The latter must be held accountable for any illegal actions they have undertaken and must be allowed to suffer the monetary losses they have incurred. Shareholders get wiped out, creditors take massive haircuts and only depositors are protected to the best extent possible.
The New Economic Collapse Video: It makes uncomfortable but urgent viewing.
with transcript
When Casey Research Chief Technology Investment Analyst Alex Daley met former Reagan Budget Director David Stockman to talk about the economy and where he sees it leading taxpayers investors and savers in the near future, he got some very intriguing insights from a man who served right at the heart of the US federal government.
True, some if it makes for uncomfortable watching, but the message is critical if you want to keep your assets safe in what David calls calls “the great unwind.”
Hi Folks,
plus ça change, plus c’est la même chose…
https://www.environmentalgraffiti.com/news-rare-photographs-peasants-russia-19th-century?image=17Quote:
“The Emancipation Reform of 1861 resulted in a huge peasantry which, though no longer under the yoke of serfdom, still was not totally free – with heavy taxes a particular burden. According to Spartacus.com: “The arable land which the freed peasantry had to rent or buy was valued at about double its real value (342 million roubles instead of 180 million); yesterday’s serfs discovered that, in becoming free, they were now hopelessly in debt.””L,
Sid.There is always a concern about the big debtors making out while those with no debts get nothing.
This would not be a problem if everyone was given the same amount of money. Debtors would be required to pay their debts in full with the receipt of funds. Others have fun in the new inflated economy.Details needed but . . . I hope you get the drift.
acomfortI have finally concluded that some sort of debt jubilee is ultimately inevitable: debts that can’t be repaid, won’t be repaid. I also conclude such a jubilee won’t arrive until after a devastating dose of deflation, however. But when the jubilee (in some form) finally arrives (because it has to) it won’t be fair–since when has anything yet been “fair”!
It’s natural to bristle at the notion that excessively indebted spendthrifts, who partied like it’s 1999 all the way until 2016, should somehow be absolved of these burdens putting them in the same beneficial position as the modest saver with no debts. But the sorry truth is that the number of debt-free savers is so minuscule, in comparison to the heavily indebted spenders, that it’s very hard to imagine the relatively few savers getting much consideration after the whole debacle.
The indebted (a massive majority) will not vote for the minority of savers’ interests. The indebted will vote and lobby for their OWN interests, which will be in stark contrast to the minority of savers. And so it’s very possible, if not likely, that those with the biggest debts can seemingly benefit from a one-sided write-off. However, most of these big debtors won’t enjoy the intervening deflation in much comfort at all! Many could even die without proper nutrition or medical attention. So, being freed of your huge debt after a decade of deflationary “starvation” won’t be worth the big windfall at the end of this long road, in my opinion. I’d still rather stay out of debt and have some cash for the months and months of rainy days ahead.
Now, for those unable to get debt-free (most of us), a strategic default will probably become a necessity where any cash that COULD be used to pay off debt is hidden from the system’s detection, so you can at least pay for groceries until your un-repayable loans are wiped off the books–a day that will not come very soon nor easily. I recognize the huge risks in taking such a path–all I’m saying is I expect many will have no other choice.
Gawd only knows how the system moves forward after such a jubilee. I think we’ll just have to cross that inevitable bridge when we get to it.
Since we’re quoting from David Graeber, I like his quip that just because he paid off his student loan, didn’t mean that everyone should have to – just because he got mugged, doesn’t mean that everyone should be.
I got to hear him speak last November in SF. He’s a charming bright guy.
Ashvin – so the debts are wiped out in your scenario. People get to keep their degrees, their houses? That would certainly free up a lot of money, with inflation right around the corner.
Would the price of houses come down, or would they go up? Would people be able to turn around and sell their houses? If they did, what would stop them from levering up and buying several more?
If house debt is gone, how about current market prices? I imagine they would have to come down to zero. What are the chances this would happen?
Charles Hugh Smith has talked frequently about “vested interests”. The problem is that everyone has a “vested interest” in wanting something for nothing.
When the vast majority of people want something for nothing, is it any wonder you get the government you do? You get a government with a licence to steal.
The followers dictate who the leader is, not the other way around.
How is this any different than the jackasses who are raping the planet, those who say, “Oh well, it’s there for the taking, so let’s take it. I want it, so it’s mine. Let’s just go in and ROB another country, plunder the hell out of it, kill any who oppose us because, damn, WE really need those resources and we don’t feel like paying for them.”
Henry Blodget wrote an article entitled, “There’s an Easy, Fair Solution to the Global Debt Crisis – Too Bad No One Ever Talks About It”.
“It’s called ‘bankruptcy.’
The borrower says, “I can’t pay you back” and then the borrower surrenders his or her claim on any assets that he or she still possesses.
The lender, meanwhile, sifts through those assets and recoups what he or she can.
And in this normal, natural state of affairs, both parties get hurt by the experience, and they go home to nurse their wounds, having learned a harsh lesson that hopefully will help them avoid making similar mistakes in the future.
And that’s as it should be.
Because they’re both responsible for the mistake.
The borrower borrowed too much. And the lender loaned too much.
And they both paid the price for their optimism and/or greed.”
https://www.businessinsider.com/how-to-fix-debt-problem-2011-11
“Slightly more than two-thirds (65%) of U.S. households “own” a home. (The quotes denote the paucity of actual ownership if the mortgage exceeds the value of the home. In that case, it’s more like a lease with a balloon payment.) This super-majority is keenly interested in maintaining housing subsidies and any policies aimed at re-inflating the housing bubble: zero-rate interest policy (ZIRP), government-guaranteed mortgages to marginally qualified buyers, and so on.
The fact that this “changes the rules” so failure (the accepting of losses, bankruptcy, etc.) is voided or transferred to the public ledger is perfectly acceptable to the majority of homeowners pining for a return to bubblicious prices.
Their self-interest is misplaced, of course, because when you change the rules to protect yourself from losses, the market can never clear itself of rot and deadwood, and so the system becomes a zombie market dependent on a steady transfer of losses to the taxpaying public. This transfer of risk to the system eventually leads to systemic collapse.”
https://www.oftwominds.com/blogjune12/capitalism-democracy6-12.html
Hi Ash,
Excellent piece. People have to remember – money *is* debt – the consequence of everyone paying their debts IS NO MONEY to run society!
Well, except for coinage which is debt free.
Hyperinflation is only possible in a different system than we have today – they have to disassociate debt from money to hyperinflate.
A banker widget is debt. Debt is their product.
The corporate mandate, to maximize profits, is also correctly stated as “maximize banker widgets (debt) external to the company” – which is the exact same as “maximizing profits.”
The take away is that we all get up and go to our job with thing in mind – saturate the world with debt as quickly as possible.
We all work to maximize Bankster widgets… and my friends tell me these people are stupid. -lol-
Doing so is mathematically unsustainable, though, and so this approach will end. The only item to be determined is who will eat the losses… the people who control the levers of power who own most of the debt and control most of the cash through front corporations… you know, the ones doling out .6% 30 year loans who finance the campaigns of both party candidates and promote them through their media… or the little guy who has already had their face financially ripped off?
Yeah. That’s an easy one. That’s not to exclude another round of Treasury looting and societal debt saturation… they might do it.
But they won’t do it when it hurts them. That’s the decision point and the change of policy that Stoneleigh discusses so eloquently.
On a related note, Damon Vrabel had an excellent piece worthy of consideration…
The Coming Crash: Usury and the Irrelevant Church
https://www.canadafreepress.com/index.php/article/23067
Standing up for what is right isn’t easy… and, as a society, we like easy. As one British podcast interviewee put it, “Americans fear one thing and one thing only… inconvenience.”
Just a few notes:
The problem with finance isn’t interest per se as it can be borrowed along with the principal (and always is). Where the problems lie:
– Loans are extended in one form while repayment is demanded in another form.
Loan are extended as ‘fiat loans’: spreadsheet- or ledger entries @ no cost to the lender. Repayment is demanded in circulating money which cannot be had under certain circumstances. All loans are bets as to whether circulating money can be obtained for the lender by the clever/hard working borrower as the loan matures. This is our crisis to some degree: the large amounts of no-cost claims against decreasing amounts of circulating money which is hoarded as fast as it is created.
– Ledger entry lending is a fraud: fiat claims with no possible fiat repayment only fiat re-financing at increased cost to the borrower.
– The purpose of poor people is to validate money: unlike the wealthy, the poor will die willingly to gain money or certainly die without it: this gives money a character ordinary goods do not possess.
– Industrialization is credit dependent: repudiation of debts = de-industrialization. Debt = wealth, removing one removes the other. There are reasons why both debtors and creditors do not wish to see the debts vanish. The wealthy man borrows his wealth and puts the burden of repayment upon his customers. If they cannot pay then he himself must return his fortune to the lender or see it vanish into general ruin.
– At the same time, the wealthy man must turn his fiat fortune into circulating money, if his fortune (surplus) is large enough to be one it is too large (too costly) to convert without unraveling the market for circulating money — Steve’s First Law of Economics.
Thank you for bringing to light the Geneva Study Bible interpretation of the parable of the talents. The literal translation always seemed hypocritical.
backwardsevolution post=4530 wrote: Ashvin – so the debts are wiped out in your scenario. People get to keep their degrees, their houses? That would certainly free up a lot of money, with inflation right around the corner.
I don’t think people who can reasonably pay off substantial amounts of debt, without suffering a huge drop in their standard of living, should be allowed to completely walk away from those debts. In my mind, the Jubilee is about giving debtors every possible chance we can give them to redeem those debts (without the debts growing larger), and, if they are simply incapable of doing so, then having others step up to redeem those debts for them. Most of the external money will have to come from somewhere, i.e. government, taxpayers, large banks/corporations who eat the losses.
Would the price of houses come down, or would they go up? Would people be able to turn around and sell their houses? If they did, what would stop them from levering up and buying several more?
If house debt is gone, how about current market prices? I imagine they would have to come down to zero. What are the chances this would happen?
I’m not sure… but given the fact that major banks would be eating a lot of the losses and forced into bankruptcy, it wouldn’t be very easy for people to get credit for large purchases. In addition, I think any debt jubilee policy should be accompanied with major structural reforms.
Henry Blodget wrote an article entitled, “There’s an Easy, Fair Solution to the Global Debt Crisis – Too Bad No One Ever Talks About It”.
“It’s called ‘bankruptcy.’
The borrower says, “I can’t pay you back” and then the borrower surrenders his or her claim on any assets that he or she still possesses.
The lender, meanwhile, sifts through those assets and recoups what he or she can.
Yes, I’ve written before that bankruptcy is the closest we will probably ever get to “jubilee” in the developed world, and especially in America. I also wrote, though, that it’s a fundamentally rigged and broken process, and does very little to relieve debt burdens anymore. At the very large corporation level or the sovereign nation level, it doesn’t even exist. So if we are going to rely on a judicial bankruptcy process, that entire framework has to be radically changed, made cheaper and made much more effective at extinguishing debts… then we would basically be turning it into a form of Jubilee.
And in this normal, natural state of affairs, both parties get hurt by the experience, and they go home to nurse their wounds, having learned a harsh lesson that hopefully will help them avoid making similar mistakes in the future.
We do need to accompany debt forgiveness policies with structural reforms that are aimed at preventing speculative debt bubbles in the future. There are a lot of ideas floating around out there for how this could be done. First and foremost, we need to hold the financial elites accountable for their reckless and fraudulent actions, making it very clear that such actions will not be tolerated. Second, we need to dismantle the Federal Reserve System, which helps concentrate the process of money-debt creation into a few large private corporations. Third, we need to implement regulations that disincentivize debtors from levering up and speculating on asset prices – Dr. Keen has a few good ideas on this, such as putting a time limit on the value of corporate shares once they enter the secondary market.
The way I see it, if we ever get to the point where people are considering something as “radical” as a Debt Jubilee, it wont’ be very difficult to push these other “radical” changes through as well. BUT, I think we all know that it is VERY unlikely that we ever get to that point. Honestly, I don’t even spend much time thinking about the details, because first I want to hear that somebody, somewhere, in a very influential position within government, is talking about getting this process started. At the very least, we need a group of influential academics, media people, business leaders and spiritual leaders making it their mission to get something like this underway. Unfortunately, we don’t see that happening, and we most likely won’t before the debts are redeemed in a much more chaotic and unsympathetic manner for the masses.
I started to see the debt light about 5 years ago. Once assets around the world are connecting to debt and there are no assets not connected to debt you run into a repayment problem. It becomes physically impossible to repay the interest on the debt without the use of fraud. We have surpassed the worlds assets in debt and now live in a Ponzi scheme to pay it back. We have no choice but to obtain new debt, lie about making returns, and use the new debt to pay out returns to old debtors.
The truth is that capitalism has run its course and is unrepairable and needs to not be returned to. When there is ultimately a severe shortage of resources society needs better planning. Unfortunately this will hamper our freedoms but not choosing will set into play martial law and dictatorship.
william post=4537 wrote: I started to see the debt light about 5 years ago. Once assets around the world are connecting to debt and there are no assets not connected to debt you run into a repayment problem. It becomes physically impossible to repay the interest on the debt without the use of fraud. We have surpassed the worlds assets in debt and now live in a Ponzi scheme to pay it back. We have no choice but to obtain new debt, lie about making returns, and use the new debt to pay out returns to old debtors.
The truth is that capitalism has run its course and is unrepairable and needs to not be returned to. When there is ultimately a severe shortage of resources society needs better planning. Unfortunately this will hamper our freedoms but not choosing will set into play martial law and dictatorship.
This is what gold is all about. It is honest debt free money. Until we go back to it and tell the banksters we are done with their corrupt dishonest fiat we will suffer the consequences.
Golden Oxen post=4564 wrote: This is what gold is all about. It is honest debt free money. Until we go back to it and tell the banksters we are done with their corrupt dishonest fiat we will suffer the consequences.
I’m all for telling the banksters we are done with their corruption, but the religious devotion to gold could be very risky. You continue to ignore all the warning signs that we’re in a deflation and that gold might not be exempt.
Here’s a great article posted today that talks about the undeniability of deflation and the definite lack of “hyper-inflation”. Gold is knocked on its arse too.
https://www.ponziworld.blogspot.co.nz/2012/07/relentless-deflation-mind-output-gap.html
@Skipbreakfast – Is PonziWorld your blog? There are a lot of interesting postings, I will need to take a look at them.
I wish I could say that PonziWorld is my blog! It’s quite brilliant. As you’ve noticed, there are a lot of essays on his site worth reading. I don’t know the guy either–though from his super-short bio I read that he’s a fellow Canadian (now based in the U.S.). 🙂
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