10 ms·

Why not forgive the loans? The negative affect of debt on people's capacity to contribute to the world economy is high, and I think it stands to reason that peo

by ihsw 11y ago

Why not forgive the loans? The negative affect of debt on people's capacity to contribute to the world economy is high, and I think it stands to reason that people would contribute more for the duration of paying off their loan if the loan wasn't hanging over their head. The banks would scream bloody murder, obviously, but their slack policies got us into this mess in the first place. The intention is to throw people a rope to save them from drowning, but the rope is ending up as a noose around their neck more than anything else. The government's may have had good intentions in their support for the proliferation of subprime lending, but I think it would've been more effective to just give people money without the expectation that they pay it back directly. It will find its way back into the economy as, so to speak, trickle up economics.

twoodfin 11y ago
Imagine you're a bank calculating the interest rate to offer on a loan. Do you think that rate will be lower or higher if you believe there are circumstances wherein the government would unilaterally allow your borrower to cease payment? Obviously, if the government could be metaphysically certain of the loans that would never return another penny and only cancel those, there's no net loss to the bank. But there's no net gain to the borrower other than a potential psychological effect. Risk of government-sanctioned default is the same as any other default risk, and will be priced into interest rates, hurting especially those with marginal credit whom the banks judge most likely to be the "beneficiaries" of some future forgiveness.
- sageikosa 11y ago
  Not to mention the precedent it sets with the corresponding expectations of future similar actions should they be needed, and the erosion of confidence in your money's ability to maintain inflationary value.
- amalag 11y ago
  This is why in days of yore there was something called collateral. Loan goes bad, you take the collateral, maybe take a loss and move on. Now banks think they can get rid of that concept too. They want loans to be insured by governments so there will never be defaults and they can simply mint money?
  - forgetsusername 11y ago
    >Loan goes bad, you take the collateral Yeah, and in the most recent cases that was somebody's home, for which nabbing that collateral was controversial. >Now banks think they can get rid of that concept too. Banks are pretty good at assessing loan risk. You don't think so? Go try to get a small business or unsecured loan.
  - ArkyBeagle 11y ago
    But in the US, having collateral was viewed as a sort of privilege mechanism. Mitt Romney's Dad George, in the very best of intentions, tried to make it to where "underserved" or "redlined" mortgage districts got more service in mortgages to counterbalance things. The end result of the monster that became blew up in 2008, after people took it far, far, far too far. The hard problems are hard, mainly because you can't see the effect of an action until it's far too late. Calomiris/Haber wrote a book explaining this. Recommended. We can resort to a sort of grumpy, Congregationalist/Calvinist mentality but then stuff goes undone and people are poorer. Value should come from value, not suffering.
- aback 11y ago
  Also: Imagine you're a bank calculating the interest rate to offer on a loan. Do you think that rate will be lower or higher if you believe there are circumstances wherein the government would unilaterally forgive your bad debts if your customer defaults?
- phkahler 11y ago
  >> Risk of government-sanctioned default is the same as any other default risk, and will be priced into interest rates, hurting especially those with marginal credit whom the banks judge most likely to be the "beneficiaries" of some future forgiveness. This seems to be the opposite with student loans. The government has backed those and will not allow them to be dismissed in bankruptcy and all that, yet those loans have some of the highest interest rates around. Is that just based on the lack of collateral? I mean a person could die and then it will never be repaid. Homes are required to carry insurance, so the risk of destruction is covered. Is that what it is, or are they just screwing people over? These are just questions, I have no skin in the game ATM and hope my kids can avoid it as well.
- sbierwagen 11y ago
  Imagine you're a bank calculating the interest rate to offer on a loan. Do you think that rate will be lower or higher if you believe there are circumstances wherein the government would unilaterally allow your borrower to cease payment? It is unquestionably true that a debt jubilee would result in higher interest rates. It is somewhat disingenuous to spin this as a negative for people with marginal credit: you only have bad credit if you are very young, or have outstanding debt-- annulling a thousand bucks of debt has dramatically greater marginal utility than the ability to get a loan of a thousand dollars at 15% APR instead of 25% APR. I also question how long the effect of a jubilee-premium would last. Five years? Ten? Brazil, Argentina and Mexico all defaulted on their sovereign debt in the 80s-- (https://en.wikipedia.org/wiki/Latin_American_debt_crisis https://en.wikipedia.org/wiki/Latin_American_debt_crisis ) and they certainly weren't locked out of the bond market forever-- Mexico's 30 year bonds are standing at about 6.8% right now. Gold was illegal to own in the United States from 1933 to 1975, (https://en.wikipedia.org/wiki/Gold_Reserve_Act https://en.wikipedia.org/wiki/Gold_Reserve_Act ) yet investors aren't acting like they're afraid of the government taking their gold again-- it's at $1,155 a troy ounce right now.
  - forgetsusername 11y ago
    >weren't locked out of the bond market forever-- Mexico's 30 year bonds are standing at about 6.8% right now 6.8% represents quite a bit of risk in this environment of historically low rates. How is Argentina doing? I mean, I agree that people will eventually "forget", but that's always with the assumption that the "last time" was some unique set of circumstances. It's amazing to me that people still believe that the best way to reap the benefits of capitalism is to seize or extort the capital from the capital owners. Of course, everyone thinks that those capital owners are some mysterious "other", and they'll be unscathed by the wealth grab. I wonder what people would think if they were told by the government that their savings and investments were being reset to zero so some students could get a free education? Probably wouldn't be so impressed...
jasode 11y ago
>Why not forgive the loans? The idea of a "debt jubilee" is definitely something that's been discussed before by economists and philosophers. One big issue is that there are other people on the other side of those debt cancellations that would get hurt. For example, it's terrible that young adults have massive college loans to pay back. Some are kicking around the idea to forgive those loans. But there are also creditors as well. Think of grandparents who have a 401k for retirement. Through the interconnectedness of the financial system, a component of their retirement income will depend on payback of those "bad" college loans. Will those senior citizens happily vote for a debt reset if they know their retirement savings get reduced? Seems doubtful. The way to sell the idea of debt forgiveness is to convince the creditors that it's impossible for the debtors to pay them back. Therefore, take a financial hit now instead of later so the economy can get moving.
- cryoshon 11y ago
  Cynically: the old are already impoverished, and we have more to gain by freeing the youth from future poverty than we do by salvaging twilight years. Realistically, you're right about debt having two sides... but one side is typically far more in the hole than the other.
- Frondo 11y ago
  This is a really good point. My gut tells me that if the old people were relying on the massive indebtedness of today's college attendees, then that has been a cruel error on their part, an injustice that should be righted. Also, the artificiality of the debt--and the idea that a jubilee won't really hurt the creditors--is put into striking relief by the Rolling Jubilee. Right now, people are already buying that bad debt for pennies on the dollar, just to wipe it out. I'd like to see if anyone's modeled what would happen if that behavior were just turned up to 11, who'd be harmed, etc.
  - jasode 11y ago
    >if the old people were relying on the massive indebtedness of today's college attendees, then that has been a cruel error on their part, Oh no no... I don't want people to picture an old hag sucking the blood of infants. To clarify, I was using "grandparents" as a single example to humanize what a "creditor" was. We have met the creditors and they are us.[0] When society complains about the unfairness of student loan debt, we tend to think of the creditors as something abstract and invisible. The total student debt is ~1.3 trillion[1]. If forced to picture who is owed that money, maybe college kids would think of some evil mustache twirling CEO of Goldman Sachs or Chase Bank. Sure, some fraction of a fraction of the interest payment does go to executives like them but the vast majority of the money goes to us. That 1.3 trillion is diffused throughout the economy. The pensions of police officers, firemen, and teachers. The car insurance premiums we pay is priced a certain way based on investments that point to those college loans. Etc etc. At the moment, the struggling college grads are "visible" and the creditors seem "invisible" but trust me, if a political movement gathers steam to ask Congress to forgive those loans, all those invisible creditors will come out of the woodwork at Congressional hearings and fight it. Trying to convince millions of us to zero out the balance sheets for those student loans will be a huge uphill battle. [0]riff on: https://en.wikipedia.org/wiki/Pogo_(comic_strip)#.22We_have_met_the_enemy_and_he_is_us..22 https://en.wikipedia.org/wiki/Pogo_(comic_strip)#.22We_have_... [1]http://www.marketwatch.com/story/every-second-americans-get-buried-under-another-3055-in-student-loan-debt-2015-06-10 http://www.marketwatch.com/story/every-second-americans-get-...
golergka 11y ago
What about the people who put their money in the bank, the money that was used to give those loans? People who are relying on their pension plans? Life savings? What you're saying is that we should _just take money from people_, without expectations to give them back anything directly.
- sbierwagen 11y ago
  Savings accounts are FDIC insured up to $250,000. Many retirees hold government bonds, which aren't going to default. A consumer-debt jubilee mostly affects investors, and maybe pension funds.
  - forgetsusername 11y ago
    >Savings accounts are FDIC insured up to $250,000 So? Do you think that this sort of insurance is free, and can be called upon without economic consequence?
  - golergka 11y ago
    > Savings accounts are FDIC insured up to $250,000. Where do you think this insurance comes from?
cylinder 11y ago
Read here, http://blog.mpettis.com/2016/01/will-chinas-new-supply-side-reforms-help-china/ http://blog.mpettis.com/2016/01/will-chinas-new-supply-side-... tl;dr is China will need to eventually give in and do debt forgiveness. there's strong historical precedent for it.
- krapht 11y ago
  Is there a mirror? My corporate firewall is blocking your link.
  - awqrre 11y ago
    Does Google cache work in that case? http://webcache.googleusercontent.com/search?q=cache:ZFFaYjVOc5QJ:blog.mpettis.com/2016/01/will-chinas-new-supply-side-reforms-help-china/ http://webcache.googleusercontent.com/search?q=cache:ZFFaYjV...
    - krapht 11y ago
      Afraid not. Symantec has the website flagged for some sort of "mass-injection" attack, whatever that may be.
wernercd 11y ago
> The banks would scream bloody murder, obviously, but their slack policies got us into this mess in the first place. So, your solution to "the banks" slack policies - which were actually caused by government meddling: Affordable Housing Act, guaranteed student loans, etc... Your solution is more government meddling? Forcing the banks that didn't want to give out loans... to lose money on those loans? How about stay-out-of-the-way economics? Socialism - take from the "rich" and give to the "poor" - disincentivizes people from working and being productive. Why work hard, when the trash down the street lives better by being worthless? I mean... it just blows my mind that people see these issues... issues caused largely by interference... and so many think that the answer is more interference.
- anigbrowl 11y ago
  Nobody forced the banks to participate in those markets. The government interference has been limited to demanding that banks treat the public equally instead of reinforcing structural discrimination.
  - saint_fiasco 11y ago
    If they have to treat people equally then they are forced to either participate in "those markets" or not participate in any market.
    - anigbrowl 11y ago
      /world's_smallest_violin You don't get to take advantage of structural discrimination and then whine about how hard it is to have to treat people fairly. If that's a problem for a bank then they should find another asset class to invest in.
- roymurdock 11y ago
  The government plays a regulatory, distributive role in society, allowing profits to accrue to capitalists but setting taxes and running social programs at the proper level to ensure that society as a whole functions smoothly, and that there are opportunities for everyone to improve their situation. Most of the economic world is in agreement that financial deregulation was a huge contributing factor in the crash of 2007-08. The repeal of Glass-Steagall allowed banks to take on too much risk with too little supervision. This would have been fine if the banks had been the only ones punished when their bets went bad - but they had also been allowed to accrue so much power (through consolidation/M&A) that it was impossible to let them face the consequences of their own bad decisions and fail. So they had to be underwriten with public money in the form of QE. A functional society requires healthy levels of both capitalism and socialism to survive. But the most important thing in my opinion, is that those who intentionally commit fraud or do not act in the fiduciary interest of their stakeholders are adequately punished. This last part is of course the rub - how can you tell if the leaders of business and finance were intentionally setting up their dependents for a crash? What is the adequate punishment?
ArkyBeagle 11y ago
Because people are bloody minded animals. This is a survey: http://mappingignorance.org/2013/03/20/experiments-in-fairness/ http://mappingignorance.org/2013/03/20/experiments-in-fairne... The seminal experiment is Kahneman around 1986. I fail at finding a good treatise on it. But here's this: https://en.wikipedia.org/wiki/Prospect_theory https://en.wikipedia.org/wiki/Prospect_theory And as applied directly to econ: http://www.econ.uzh.ch/dam/jcr:ffffffff-9758-127f-0000-00005e2c9579/DoesFairnessPreventMarketClearing.pdf http://www.econ.uzh.ch/dam/jcr:ffffffff-9758-127f-0000-00005... The banks are simply our agents in this. Roughly, other "innovations" have made debt more dangerous over time. My paltry understanding is that one of the uses of inflation is to erode the value of debt. We don't have meaningful inflation any more. And yes, I relaize how bizarre that sounds. But: http://www.interfluidity.com/v2/3212.html http://www.interfluidity.com/v2/3212.html Something terrible has happened to the tradeoff between the balance sheet and cash flow. A really crummy analogy is position v. velocity on quantum realms; as competitiveness has escalated, we get to where the trade between them is more severe. Also IMO, much as wages have stagnated, the value of capital goods has also.
CyberDildonics 11y ago
If you have a job and the company has agreed to pay you, why don't you work for free?

by ihsw 11y ago

twoodfin 11y ago

Imagine you're a bank calculating the interest rate to offer on a loan. Do you think that rate will be lower or higher if you believe there are circumstances wherein the government would unilaterally allow your borrower to cease payment? Obviously, if the government could be metaphysically certain of the loans that would never return another penny and only cancel those, there's no net loss to the bank. But there's no net gain to the borrower other than a potential psychological effect. Risk of government-sanctioned default is the same as any other default risk, and will be priced into interest rates, hurting especially those with marginal credit whom the banks judge most likely to be the "beneficiaries" of some future forgiveness.

sageikosa 11y ago
Not to mention the precedent it sets with the corresponding expectations of future similar actions should they be needed, and the erosion of confidence in your money's ability to maintain inflationary value.
amalag 11y ago
This is why in days of yore there was something called collateral. Loan goes bad, you take the collateral, maybe take a loss and move on. Now banks think they can get rid of that concept too. They want loans to be insured by governments so there will never be defaults and they can simply mint money?
- forgetsusername 11y ago
  >Loan goes bad, you take the collateral Yeah, and in the most recent cases that was somebody's home, for which nabbing that collateral was controversial. >Now banks think they can get rid of that concept too. Banks are pretty good at assessing loan risk. You don't think so? Go try to get a small business or unsecured loan.
- ArkyBeagle 11y ago
  But in the US, having collateral was viewed as a sort of privilege mechanism. Mitt Romney's Dad George, in the very best of intentions, tried to make it to where "underserved" or "redlined" mortgage districts got more service in mortgages to counterbalance things. The end result of the monster that became blew up in 2008, after people took it far, far, far too far. The hard problems are hard, mainly because you can't see the effect of an action until it's far too late. Calomiris/Haber wrote a book explaining this. Recommended. We can resort to a sort of grumpy, Congregationalist/Calvinist mentality but then stuff goes undone and people are poorer. Value should come from value, not suffering.
aback 11y ago
Also: Imagine you're a bank calculating the interest rate to offer on a loan. Do you think that rate will be lower or higher if you believe there are circumstances wherein the government would unilaterally forgive your bad debts if your customer defaults?
phkahler 11y ago
>> Risk of government-sanctioned default is the same as any other default risk, and will be priced into interest rates, hurting especially those with marginal credit whom the banks judge most likely to be the "beneficiaries" of some future forgiveness. This seems to be the opposite with student loans. The government has backed those and will not allow them to be dismissed in bankruptcy and all that, yet those loans have some of the highest interest rates around. Is that just based on the lack of collateral? I mean a person could die and then it will never be repaid. Homes are required to carry insurance, so the risk of destruction is covered. Is that what it is, or are they just screwing people over? These are just questions, I have no skin in the game ATM and hope my kids can avoid it as well.
sbierwagen 11y ago
Imagine you're a bank calculating the interest rate to offer on a loan. Do you think that rate will be lower or higher if you believe there are circumstances wherein the government would unilaterally allow your borrower to cease payment? It is unquestionably true that a debt jubilee would result in higher interest rates. It is somewhat disingenuous to spin this as a negative for people with marginal credit: you only have bad credit if you are very young, or have outstanding debt-- annulling a thousand bucks of debt has dramatically greater marginal utility than the ability to get a loan of a thousand dollars at 15% APR instead of 25% APR. I also question how long the effect of a jubilee-premium would last. Five years? Ten? Brazil, Argentina and Mexico all defaulted on their sovereign debt in the 80s-- (https://en.wikipedia.org/wiki/Latin_American_debt_crisis https://en.wikipedia.org/wiki/Latin_American_debt_crisis ) and they certainly weren't locked out of the bond market forever-- Mexico's 30 year bonds are standing at about 6.8% right now. Gold was illegal to own in the United States from 1933 to 1975, (https://en.wikipedia.org/wiki/Gold_Reserve_Act https://en.wikipedia.org/wiki/Gold_Reserve_Act ) yet investors aren't acting like they're afraid of the government taking their gold again-- it's at $1,155 a troy ounce right now.
- forgetsusername 11y ago
  >weren't locked out of the bond market forever-- Mexico's 30 year bonds are standing at about 6.8% right now 6.8% represents quite a bit of risk in this environment of historically low rates. How is Argentina doing? I mean, I agree that people will eventually "forget", but that's always with the assumption that the "last time" was some unique set of circumstances. It's amazing to me that people still believe that the best way to reap the benefits of capitalism is to seize or extort the capital from the capital owners. Of course, everyone thinks that those capital owners are some mysterious "other", and they'll be unscathed by the wealth grab. I wonder what people would think if they were told by the government that their savings and investments were being reset to zero so some students could get a free education? Probably wouldn't be so impressed...

jasode 11y ago

>Why not forgive the loans? The idea of a "debt jubilee" is definitely something that's been discussed before by economists and philosophers. One big issue is that there are other people on the other side of those debt cancellations that would get hurt. For example, it's terrible that young adults have massive college loans to pay back. Some are kicking around the idea to forgive those loans. But there are also creditors as well. Think of grandparents who have a 401k for retirement. Through the interconnectedness of the financial system, a component of their retirement income will depend on payback of those "bad" college loans. Will those senior citizens happily vote for a debt reset if they know their retirement savings get reduced? Seems doubtful. The way to sell the idea of debt forgiveness is to convince the creditors that it's impossible for the debtors to pay them back. Therefore, take a financial hit now instead of later so the economy can get moving.

cryoshon 11y ago
Cynically: the old are already impoverished, and we have more to gain by freeing the youth from future poverty than we do by salvaging twilight years. Realistically, you're right about debt having two sides... but one side is typically far more in the hole than the other.
Frondo 11y ago
This is a really good point. My gut tells me that if the old people were relying on the massive indebtedness of today's college attendees, then that has been a cruel error on their part, an injustice that should be righted. Also, the artificiality of the debt--and the idea that a jubilee won't really hurt the creditors--is put into striking relief by the Rolling Jubilee. Right now, people are already buying that bad debt for pennies on the dollar, just to wipe it out. I'd like to see if anyone's modeled what would happen if that behavior were just turned up to 11, who'd be harmed, etc.
- jasode 11y ago
  >if the old people were relying on the massive indebtedness of today's college attendees, then that has been a cruel error on their part, Oh no no... I don't want people to picture an old hag sucking the blood of infants. To clarify, I was using "grandparents" as a single example to humanize what a "creditor" was. We have met the creditors and they are us.[0] When society complains about the unfairness of student loan debt, we tend to think of the creditors as something abstract and invisible. The total student debt is ~1.3 trillion[1]. If forced to picture who is owed that money, maybe college kids would think of some evil mustache twirling CEO of Goldman Sachs or Chase Bank. Sure, some fraction of a fraction of the interest payment does go to executives like them but the vast majority of the money goes to us. That 1.3 trillion is diffused throughout the economy. The pensions of police officers, firemen, and teachers. The car insurance premiums we pay is priced a certain way based on investments that point to those college loans. Etc etc. At the moment, the struggling college grads are "visible" and the creditors seem "invisible" but trust me, if a political movement gathers steam to ask Congress to forgive those loans, all those invisible creditors will come out of the woodwork at Congressional hearings and fight it. Trying to convince millions of us to zero out the balance sheets for those student loans will be a huge uphill battle. [0]riff on: https://en.wikipedia.org/wiki/Pogo_(comic_strip)#.22We_have_met_the_enemy_and_he_is_us..22 https://en.wikipedia.org/wiki/Pogo_(comic_strip)#.22We_have_... [1]http://www.marketwatch.com/story/every-second-americans-get-buried-under-another-3055-in-student-loan-debt-2015-06-10 http://www.marketwatch.com/story/every-second-americans-get-...

golergka 11y ago

What about the people who put their money in the bank, the money that was used to give those loans? People who are relying on their pension plans? Life savings? What you're saying is that we should _just take money from people_, without expectations to give them back anything directly.

sbierwagen 11y ago
Savings accounts are FDIC insured up to $250,000. Many retirees hold government bonds, which aren't going to default. A consumer-debt jubilee mostly affects investors, and maybe pension funds.
- forgetsusername 11y ago
  >Savings accounts are FDIC insured up to $250,000 So? Do you think that this sort of insurance is free, and can be called upon without economic consequence?
- golergka 11y ago
  > Savings accounts are FDIC insured up to $250,000. Where do you think this insurance comes from?

cylinder 11y ago

Read here, http://blog.mpettis.com/2016/01/will-chinas-new-supply-side-reforms-help-china/ http://blog.mpettis.com/2016/01/will-chinas-new-supply-side-... tl;dr is China will need to eventually give in and do debt forgiveness. there's strong historical precedent for it.

krapht 11y ago
Is there a mirror? My corporate firewall is blocking your link.
- awqrre 11y ago
  Does Google cache work in that case? http://webcache.googleusercontent.com/search?q=cache:ZFFaYjVOc5QJ:blog.mpettis.com/2016/01/will-chinas-new-supply-side-reforms-help-china/ http://webcache.googleusercontent.com/search?q=cache:ZFFaYjV...
  - krapht 11y ago
    Afraid not. Symantec has the website flagged for some sort of "mass-injection" attack, whatever that may be.

wernercd 11y ago

> The banks would scream bloody murder, obviously, but their slack policies got us into this mess in the first place. So, your solution to "the banks" slack policies - which were actually caused by government meddling: Affordable Housing Act, guaranteed student loans, etc... Your solution is more government meddling? Forcing the banks that didn't want to give out loans... to lose money on those loans? How about stay-out-of-the-way economics? Socialism - take from the "rich" and give to the "poor" - disincentivizes people from working and being productive. Why work hard, when the trash down the street lives better by being worthless? I mean... it just blows my mind that people see these issues... issues caused largely by interference... and so many think that the answer is more interference.

anigbrowl 11y ago
Nobody forced the banks to participate in those markets. The government interference has been limited to demanding that banks treat the public equally instead of reinforcing structural discrimination.
- saint_fiasco 11y ago
  If they have to treat people equally then they are forced to either participate in "those markets" or not participate in any market.
  - anigbrowl 11y ago
    /world's_smallest_violin You don't get to take advantage of structural discrimination and then whine about how hard it is to have to treat people fairly. If that's a problem for a bank then they should find another asset class to invest in.
roymurdock 11y ago
The government plays a regulatory, distributive role in society, allowing profits to accrue to capitalists but setting taxes and running social programs at the proper level to ensure that society as a whole functions smoothly, and that there are opportunities for everyone to improve their situation. Most of the economic world is in agreement that financial deregulation was a huge contributing factor in the crash of 2007-08. The repeal of Glass-Steagall allowed banks to take on too much risk with too little supervision. This would have been fine if the banks had been the only ones punished when their bets went bad - but they had also been allowed to accrue so much power (through consolidation/M&A) that it was impossible to let them face the consequences of their own bad decisions and fail. So they had to be underwriten with public money in the form of QE. A functional society requires healthy levels of both capitalism and socialism to survive. But the most important thing in my opinion, is that those who intentionally commit fraud or do not act in the fiduciary interest of their stakeholders are adequately punished. This last part is of course the rub - how can you tell if the leaders of business and finance were intentionally setting up their dependents for a crash? What is the adequate punishment?

ArkyBeagle 11y ago

Because people are bloody minded animals. This is a survey: http://mappingignorance.org/2013/03/20/experiments-in-fairness/ http://mappingignorance.org/2013/03/20/experiments-in-fairne... The seminal experiment is Kahneman around 1986. I fail at finding a good treatise on it. But here's this: https://en.wikipedia.org/wiki/Prospect_theory https://en.wikipedia.org/wiki/Prospect_theory And as applied directly to econ: http://www.econ.uzh.ch/dam/jcr:ffffffff-9758-127f-0000-00005e2c9579/DoesFairnessPreventMarketClearing.pdf http://www.econ.uzh.ch/dam/jcr:ffffffff-9758-127f-0000-00005... The banks are simply our agents in this. Roughly, other "innovations" have made debt more dangerous over time. My paltry understanding is that one of the uses of inflation is to erode the value of debt. We don't have meaningful inflation any more. And yes, I relaize how bizarre that sounds. But: http://www.interfluidity.com/v2/3212.html http://www.interfluidity.com/v2/3212.html Something terrible has happened to the tradeoff between the balance sheet and cash flow. A really crummy analogy is position v. velocity on quantum realms; as competitiveness has escalated, we get to where the trade between them is more severe. Also IMO, much as wages have stagnated, the value of capital goods has also.

CyberDildonics 11y ago

If you have a job and the company has agreed to pay you, why don't you work for free?