4 ms·

I heard about Keen's proposal of a debt jubilee (reducing private debt by random payments into bank accounts) and would be interested to hear criticism of it:

I heard about Keen's proposal of a debt jubilee (reducing private debt by random payments into bank accounts) and would be interested to hear criticism of it: http://moneyweek.com/steve-keen-interview-debt-jubilee/ http://moneyweek.com/steve-keen-interview-debt-jubilee/

dllthomas 9y ago
Naively, it would benefit those able to carry debt and maintain many bank accounts moving into the jubilee period.
- redcalx 9y ago
  Hmm, it definitely wouldn't be a deposit per bank account, that would be deeply unfair and biased to the extent it would be politically infeasible. The intention, realistic or otherwise, is for the cash sum to be awarded per citizen. Yes that may be via bank accounts for those that have them, but I imagine there would need to be other mechanisms in place for those that don't have an account. Also the payments are fixed amount, not erasing of whatever debt you may have. A key aspect is that for those with debt the bank must use the cash towards paying off the debt first, whereas those with no debt will just get cash appear in their current account (or a cheque in the post, or whatever). Not saying it's practical, easy, or without ways of gaming the system, but those are the baseline intentions.
  - dllthomas 9y ago
    Ah, my reading of your summary doesn't seem to match the actual proposal much at all. I read "random payments into bank accounts" as "payments into random bank accounts", which I think is one reasonable interpretation but clearly not the only one. I also took "reducing private debt by..." as being a requirement on the individual payments rather than simply a goal of the program. With neither of those attributes, my analysis doesn't apply.
- jacquesm 9y ago
  And it would penalize those without debt!
  - redcalx 9y ago
    That's not correct. The proposal is a fixed amount per citizen, with the caveat that for those with debts the money must go towards paying off debts with priority.
- lr4444lr 9y ago
  That's not quite how he proposes it though: in order to avoid unfairly disadvantaging creditors, he'd have them given a cash payment of their share of the net difference of their total debt from the per-capita infusion. E.g., if the person has $2000 in bonds to be called, $1000 in credit card debt, and the total jubilee per capita is $4500, they'd receive $5500 ($4500 - $1000 + $2000). (If I understand his position correctly.)
  - dllthomas 9y ago
    Yeah, the summary mislead me.
redcalx 9y ago
The main problem appears to be how it would be implemented in practice. We already did the money 'printing' part, but QE as a means of getting that money into the economy has been pretty awful (IMO and by an number of accounts), but it was relatively straightforward and cheap to do because all of the necessary mechanisms where already in place. To allocate a fixed amount of cash to every citizen, and require that debt is paid off with priority, well that's not simple at all, it requires a central database of who owns what and that doesn't exist.

dllthomas 9y ago

Naively, it would benefit those able to carry debt and maintain many bank accounts moving into the jubilee period.

redcalx 9y ago
Hmm, it definitely wouldn't be a deposit per bank account, that would be deeply unfair and biased to the extent it would be politically infeasible. The intention, realistic or otherwise, is for the cash sum to be awarded per citizen. Yes that may be via bank accounts for those that have them, but I imagine there would need to be other mechanisms in place for those that don't have an account. Also the payments are fixed amount, not erasing of whatever debt you may have. A key aspect is that for those with debt the bank must use the cash towards paying off the debt first, whereas those with no debt will just get cash appear in their current account (or a cheque in the post, or whatever). Not saying it's practical, easy, or without ways of gaming the system, but those are the baseline intentions.
- dllthomas 9y ago
  Ah, my reading of your summary doesn't seem to match the actual proposal much at all. I read "random payments into bank accounts" as "payments into random bank accounts", which I think is one reasonable interpretation but clearly not the only one. I also took "reducing private debt by..." as being a requirement on the individual payments rather than simply a goal of the program. With neither of those attributes, my analysis doesn't apply.
jacquesm 9y ago
And it would penalize those without debt!
- redcalx 9y ago
  That's not correct. The proposal is a fixed amount per citizen, with the caveat that for those with debts the money must go towards paying off debts with priority.
lr4444lr 9y ago
That's not quite how he proposes it though: in order to avoid unfairly disadvantaging creditors, he'd have them given a cash payment of their share of the net difference of their total debt from the per-capita infusion. E.g., if the person has $2000 in bonds to be called, $1000 in credit card debt, and the total jubilee per capita is $4500, they'd receive $5500 ($4500 - $1000 + $2000). (If I understand his position correctly.)
- dllthomas 9y ago
  Yeah, the summary mislead me.

redcalx 9y ago

The main problem appears to be how it would be implemented in practice. We already did the money 'printing' part, but QE as a means of getting that money into the economy has been pretty awful (IMO and by an number of accounts), but it was relatively straightforward and cheap to do because all of the necessary mechanisms where already in place. To allocate a fixed amount of cash to every citizen, and require that debt is paid off with priority, well that's not simple at all, it requires a central database of who owns what and that doesn't exist.