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I agree about the problem but disagree about the solution. Forgiving debt would not only have a hyperinflationary effect on the currency since everyone will su

I agree about the problem but disagree about the solution. Forgiving debt would not only have a hyperinflationary effect on the currency since everyone will suddenly have massive surplus income but it's down right unethical. What about people who did not take on any debt? Will the government give them free money? How can we make it fair to people don't have any debt. Also, not everyone who has debt has the same amount of debt... Forgiving debts is akin to the banks giving free money only to people who have debts. It's ridiculous, why not give every person in the US 1 million dollars each? This should allow the vast majority of people to pay off their debts. That is still unfair though because massive hyperinflation won't give people the time to even spend their money so they would still be severely disadvantaged relative to debt holders who own assets. But anyway, debt forgiveness would completely destroy the fiat monetary system. Nobody will accept Dollars or Euros or any currency backed by a reserve bank which forgives debt because the amount of currency that would flood the system is unfathomable. The price of cryptocurrencies would double every hour, that kind of crazy.

capncleaver 6y ago
Leaving aside whether debt is 'fair' (is it fair that productive assets like land are in the hands of a hereditary plutocracy?), there is some evidence that debt forgiveness can work -- indeed, it might have been a critical release valve in the development of early civilization. I can highly recommend David Graeber's book 'Debt: the first five thousand years' on this topic. He proposes modern 'Debt Jubilees' similar to these: https://en.wikipedia.org/wiki/Jubilee_(biblical) https://en.wikipedia.org/wiki/Jubilee_(biblical) There's nothing to say that such a jubilee couldn't have means-testing or other 'fair' aspects incorporated into the design, it doesn't have to be blanket forgiveness. In Graeber's examples of ancient jubilees 'business' debts were, iirc, usually extempt. I agree it would be very disruptive to the existing order.
- petermcneeley 6y ago
  I wonder what will happen soon as an alternative society exists such that one with personal total debt can leave and start clean with 0 wealth ? Will they build a wall to keep those people in?
- nradov 6y ago
  If we were to institute periodic debt forgiveness then the obvious result is that lenders would simply cease lending as the jubilee approaches. This would strangle some sectors of the economy.
- cryptica 6y ago
  What about people who didn't inherit anything and don't own any assets and don't have any debt? What do I get? Does this mean I should go to the bank right now and take out 1 million in loans to buy crypto then wait for my debt to disappear? Why would the bank approve such loan? Some people couldn't even afford to get a loan. Forgiving debts will make house prices even more out of reach. These people would be absolutely evicerated since everyone else will basically get free money. These honest, cautious people will be the new lower class of society. It's criminal. Think of all the lawsuits... The court system won't even be able to handle it. There will be complete break down of all laws. I doubt private property laws will survive. You can be sure mafias of disgruntled individuals will form and take all your assets anyway. Maybe if the debt jubilee comes with complete forfeiture of all assets, then it makes a little bit more sense. But this will still be terrible for inequality at the very top. If we want to change the rules, the fairest thing that can be done is seize everyone's assets which are above a certain threshold net worth and redistribute them evenly to all citizens. Then we can talk about cancelling the debt. Otherwise I think we should just let things run their course. If you don't like your situation, why don't you pay a visit to the billionaires and politicians who put you in that position? Sort it out with them. Don't try to steal from decent people via monetary manipulation who are also victims.
  - candiodari 6y ago
    > Does this mean I should go to the bank right now and take out 1 million in loans to buy crypto then wait for my debt to disappear? Why would the bank approve such loan? If you have a business idea that requires money, then you certainly should do so. The bank would approve such a loan because it might work. Of course, you'll have to convince them. In practice, they'll take proxies for conviction: you'll have to prove you believe (and that you will follow through) by putting up your own money next to theirs. > Some people couldn't even afford to get a loan. Well the deeper reason is that "the rich" are the ones responsible for most of those assets being worth something in the first place. So they get something back from the people they provide it for. They don't immediately need something, so they're ok to take the promise of something back in the future. Add some basic economics and you have debt. So I wouldn't worry about assets being worth much or not: they won't be, as organizations making these assets will voluntarily stop, and the value of those assets will drop like a stone. In crude terms: why would Apple maintain an app store for society if there's a debt jubilee ? They won't. Because they won't get paid for it, and motivation will have to come from elsewhere. And a gun, the historical answer, only goes so far. The big problem is that we are getting more and more into is the situation that a significant portion of society is worthless to society. Solve that, and debt problem will go away. Don't solve it and no economic system, no matter how simple or complex, is going to save you (assuming it keeps growing it has to break). Debt is fundamentally a way to make private enterprise pay for nonproductive people in a growing economy. Great. Take that away, and someone else will have to work (not pay, obviously) for them. Current tax rates implies that we're close to the situation that everyone with a job will have to provide for between 3 and 4 others (US closer to 3, EU closer to 4, Asia, surprisingly, even higher), without receiving anything in return. That's what debt, indirectly, does. Fancy switching back to the direct approach?

capncleaver 6y ago

Leaving aside whether debt is 'fair' (is it fair that productive assets like land are in the hands of a hereditary plutocracy?), there is some evidence that debt forgiveness can work -- indeed, it might have been a critical release valve in the development of early civilization. I can highly recommend David Graeber's book 'Debt: the first five thousand years' on this topic. He proposes modern 'Debt Jubilees' similar to these: https://en.wikipedia.org/wiki/Jubilee_(biblical) https://en.wikipedia.org/wiki/Jubilee_(biblical) There's nothing to say that such a jubilee couldn't have means-testing or other 'fair' aspects incorporated into the design, it doesn't have to be blanket forgiveness. In Graeber's examples of ancient jubilees 'business' debts were, iirc, usually extempt. I agree it would be very disruptive to the existing order.

petermcneeley 6y ago
I wonder what will happen soon as an alternative society exists such that one with personal total debt can leave and start clean with 0 wealth ? Will they build a wall to keep those people in?
nradov 6y ago
If we were to institute periodic debt forgiveness then the obvious result is that lenders would simply cease lending as the jubilee approaches. This would strangle some sectors of the economy.
cryptica 6y ago
What about people who didn't inherit anything and don't own any assets and don't have any debt? What do I get? Does this mean I should go to the bank right now and take out 1 million in loans to buy crypto then wait for my debt to disappear? Why would the bank approve such loan? Some people couldn't even afford to get a loan. Forgiving debts will make house prices even more out of reach. These people would be absolutely evicerated since everyone else will basically get free money. These honest, cautious people will be the new lower class of society. It's criminal. Think of all the lawsuits... The court system won't even be able to handle it. There will be complete break down of all laws. I doubt private property laws will survive. You can be sure mafias of disgruntled individuals will form and take all your assets anyway. Maybe if the debt jubilee comes with complete forfeiture of all assets, then it makes a little bit more sense. But this will still be terrible for inequality at the very top. If we want to change the rules, the fairest thing that can be done is seize everyone's assets which are above a certain threshold net worth and redistribute them evenly to all citizens. Then we can talk about cancelling the debt. Otherwise I think we should just let things run their course. If you don't like your situation, why don't you pay a visit to the billionaires and politicians who put you in that position? Sort it out with them. Don't try to steal from decent people via monetary manipulation who are also victims.
- candiodari 6y ago
  > Does this mean I should go to the bank right now and take out 1 million in loans to buy crypto then wait for my debt to disappear? Why would the bank approve such loan? If you have a business idea that requires money, then you certainly should do so. The bank would approve such a loan because it might work. Of course, you'll have to convince them. In practice, they'll take proxies for conviction: you'll have to prove you believe (and that you will follow through) by putting up your own money next to theirs. > Some people couldn't even afford to get a loan. Well the deeper reason is that "the rich" are the ones responsible for most of those assets being worth something in the first place. So they get something back from the people they provide it for. They don't immediately need something, so they're ok to take the promise of something back in the future. Add some basic economics and you have debt. So I wouldn't worry about assets being worth much or not: they won't be, as organizations making these assets will voluntarily stop, and the value of those assets will drop like a stone. In crude terms: why would Apple maintain an app store for society if there's a debt jubilee ? They won't. Because they won't get paid for it, and motivation will have to come from elsewhere. And a gun, the historical answer, only goes so far. The big problem is that we are getting more and more into is the situation that a significant portion of society is worthless to society. Solve that, and debt problem will go away. Don't solve it and no economic system, no matter how simple or complex, is going to save you (assuming it keeps growing it has to break). Debt is fundamentally a way to make private enterprise pay for nonproductive people in a growing economy. Great. Take that away, and someone else will have to work (not pay, obviously) for them. Current tax rates implies that we're close to the situation that everyone with a job will have to provide for between 3 and 4 others (US closer to 3, EU closer to 4, Asia, surprisingly, even higher), without receiving anything in return. That's what debt, indirectly, does. Fancy switching back to the direct approach?