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Maybe this is a naive question, but... why can't we temporarily just stop the whole chain of debt instead of forcing individuals and small businesses to bear th

Maybe this is a naive question, but... why can't we temporarily just stop the whole chain of debt instead of forcing individuals and small businesses to bear the brunt of losses? Right now the issue is that if we're not working, we're not making money, and we can't pay for rent and debts. But is the only solution to find a way for the government to give the people money and let the businesses collapse? Why can't we put the burden further up the chain? Doesn't it all end up at the banks? I pay my landlord rent, my landlord pays mortgage on the property to the bank. Can we pause rent and mortgages and debts for a few months? Sure, there would be big damage done to the economy still, but why do we have to let the damage happen at the individual level? I'm sure there's some simple explanation, but I don't understand why.

massysett 7y ago
The bank sells the mortgage to Fannie Mae. Fannie puts it into a mortgage-backed security. Your life insurance company or pension plan buys that mortgage-backed security. So it comes right back to you. There’s just no good way to compensate for weeks or months of economic activity that just doesn’t happen.
- viklove 7y ago
  Basically our whole economy is based off of BS IOU's and the moment there is any problem in the world the whole system comes crashing down around us. Decades of economists and investors building layers and layers of obfuscated financial abstractions so they can get rich finally has its consequences. I guess it's been a while since we've eaten the rich. It was a long time coming.
bigmanwalter 7y ago
You're exactly right. But our leaders are afraid of everyone realizing just how easy it would be to end our debt slavery. The United States is run by a landlord and all his power comes from workers servicing his debts.
brutal_boi 7y ago
Very naively here (and prob wrong in many aspects) but I expect those you are talking about to have leverage on these decisions unlike us (the lowly pleb); I don't expect a bank ceo choosing to take that giantic hit of a burden when it can just be pushed globally on the society. You could even argue that if a bank is able to do thay, they could do it anyday and not require a pandemic event. Still, a stronger argument is that a bank is a business overall. They live out of debt. That kind of hit could also kill the bank I believe.
specialist 7y ago
By default or by design, debt forgiveness will occur. David Graeber's book Debt: The First 5000 Years details the cyclic history of such things. Some of the more savvy Haves, like Mitt Romney, recognize the current threat to the status quo and have made their opening bids on negotiating an armistice with the Have-Nots. Others, on both sides, are less willing to haggle.
crispyambulance 7y ago
> Maybe this is a naive question, but... why can't we temporarily just stop the whole chain of debt instead of forcing individuals and small businesses to bear the brunt of losses? It's not a naive question. Unfortunately I don't think the answer is going to be palatable.
jb775 7y ago
Great point, but it would probably send us into the dark ages when people refuse to re-start the chain of debt. People are def afraid of this possibility, hence the gun shop lines wrapped around the block. Debt: The first 5000 years is a great book that explains details of what would likely happen.

massysett 7y ago

The bank sells the mortgage to Fannie Mae. Fannie puts it into a mortgage-backed security. Your life insurance company or pension plan buys that mortgage-backed security. So it comes right back to you. There’s just no good way to compensate for weeks or months of economic activity that just doesn’t happen.

viklove 7y ago
Basically our whole economy is based off of BS IOU's and the moment there is any problem in the world the whole system comes crashing down around us. Decades of economists and investors building layers and layers of obfuscated financial abstractions so they can get rich finally has its consequences. I guess it's been a while since we've eaten the rich. It was a long time coming.

bigmanwalter 7y ago

You're exactly right. But our leaders are afraid of everyone realizing just how easy it would be to end our debt slavery. The United States is run by a landlord and all his power comes from workers servicing his debts.

brutal_boi 7y ago

Very naively here (and prob wrong in many aspects) but I expect those you are talking about to have leverage on these decisions unlike us (the lowly pleb); I don't expect a bank ceo choosing to take that giantic hit of a burden when it can just be pushed globally on the society. You could even argue that if a bank is able to do thay, they could do it anyday and not require a pandemic event. Still, a stronger argument is that a bank is a business overall. They live out of debt. That kind of hit could also kill the bank I believe.

specialist 7y ago

By default or by design, debt forgiveness will occur. David Graeber's book Debt: The First 5000 Years details the cyclic history of such things. Some of the more savvy Haves, like Mitt Romney, recognize the current threat to the status quo and have made their opening bids on negotiating an armistice with the Have-Nots. Others, on both sides, are less willing to haggle.

crispyambulance 7y ago

> Maybe this is a naive question, but... why can't we temporarily just stop the whole chain of debt instead of forcing individuals and small businesses to bear the brunt of losses? It's not a naive question. Unfortunately I don't think the answer is going to be palatable.

jb775 7y ago

Great point, but it would probably send us into the dark ages when people refuse to re-start the chain of debt. People are def afraid of this possibility, hence the gun shop lines wrapped around the block. Debt: The first 5000 years is a great book that explains details of what would likely happen.