4 ms·

So debt has nothing to do with it, it’s a one-time universal payout?

by aqme28 4y ago

recursivedoubts 4y ago
Yes. Everyone gets the payment. The catch is that debtors must use the payment to extinguish their debt. Non-debtors get the money free and clear. This is as fair a mechanic as I have ever heard for a debt jubilee. Steve Keen is a genius.
- CamelCaseName 4y ago
  This is simply a wealth transfer to institutions who lent money at low rates prior to the rate increases.
  - recursivedoubts 4y ago
    It is not simply that, although it does ensure that the money that those institutions lent is paid back, rather than defaulted on. But let's be honest: what's really going to happen in the case of defaults is that the banks will seize the real underlying assets and sell them at fire-sale prices to other rich people. The important part is that the borrower is now out from under exponential debt and can get on with their lives, and total debt in the economy is brought down to a sustainable level. Non-debtors get something too: free and clear cash. Is it perfect? No, of course not. Nothing this simple could be perfectly fair. But it is simple, hard to game, addresses the core problem (too much debt) and is probably as fair as it will get, practically. Certainly the elites would scream bloody murder if someone important legitimately proposed it. Keen has been ignored and mocked for years. That's evidence enough for me.
    - shjake 4y ago
      It also impossible to enforce. And is basically equivalent to “why don’t we just print more money and give it everyone?”. And anyway a terrible idea.. why do you want to penalize people who have low interest rate mortgages for instance? Anything they’d gain would be offset by inflation…
  - lief79 4y ago
    Good point ... paying down my mortgage faster is a fairly poor use of the funds. However, if it can be used for regular payments or prepayments over a period of time, it's not a bad deal. I'd hope they'd also make exceptions for any loans under the current rate of inflation, but good luck getting that passed. Having to immediately pay off a 0% loan (if anyone still offers those) clearly is far from the optimal use of the money.
    - recursivedoubts 4y ago
      People will be incentivized (and possibly required) to pay off high-interest debt first, which is the right thing. Beyond that, a modern debt jubilee isn't about you optimizing your individual financial situation. Rather, it is about: - keeping it as simple and hard to game as possible - reducing total debt in the economy to a sustainable level If you have to pay down or pay off your mortgage, sorry. On the other hand, you would own a house free and clear. So life wouldn't be all bad.
    - whateveracct 4y ago
      I'd imagine using it on your next monthly payment would be allowed. Agreed - not a bad deal.
- WJW 4y ago
  How is this a fair mechanic for a debt jubilee? People without debt get free extra money to invest. People deep in debt have to give the money they receive to the first group (ie the people they were indebted to), so those can then invest even more. The end result is that the people in debt are even further behind.
  - hellisothers 4y ago
    I think you’re letting good be the enemy of great here though. Even if the debtor has to use all of the cash to pay to the lenders (who also got money), it “removes the yoke” of compounding crushing debt they’re currently unable to get out from under.
    - WJW 4y ago
      That same compounding effect also works for the additional investments of the lenders. After all is said and done, the lending group will be able to use its newfound cash flow to purchase ever more investments at prices that the newly debt-free won't be able to match. Soon, the newly debt-free group will be "forced" back into debt because there is no other way to afford (say) a house. An exception would be if the interest on the debt is wildly higher than the interest gained by the investments, but even then the real problem is the high interest rates. There are better ways to regulate those than giving even more economic power to those already wealthy. You can't get away from wealth disparity by giving to everyone, eventually you have to take from some group to give to the other. The group being taken from will generally not like that.
- chollida1 4y ago
  I think I can follow that logic. But what do we do about the inflation that this brings? If all of a sudden there is a huge amount of extra cash in teh system, then prices go up alot. Lets say everything goes up 20%. Now the poor who had debt no longer have debt but the price of life has gone way up for them. The rich just pocket the money and the inflation doesn't affect their day to day life very much. Infact they are better off as assets have now inflated due to this new money. Thinking about this more, this like the poorer you are the worse off you'd now be in this situation. Unless the solution is to close your eyes and pretend like inflation would never happen, which the last year has shown us is not a reasonable belief to hold.
  - euroderf 4y ago
    I guess what is proposed is a one-off inflationary expansion... much like the Covid stimulus bills (it all created how many trillions of dollars?). But the net result was (AFAIK) a significant drop in indebtedness and poverty. But then again, the inflation was picked up by companies as an excuse to profiteer, and initiate a spiral, which is why we find the Fed today kicking the economy in the groin.
- shjake 4y ago
  > This is as fair a mechanic as I have ever heard for a debt jubilee. Also not practically possible at least in the real world. Which is possibly why it sounds so great…

So debt has nothing to do with it, it’s a one-time universal payout?

by aqme28 4y ago

So debt has nothing to do with it, it’s a one-time universal payout?

Yes. Everyone gets the payment. The catch is that debtors must use the payment to extinguish their debt. Non-debtors get the money free and clear. This is as fair a mechanic as I have ever heard for a debt jubilee. Steve Keen is a genius.

CamelCaseName 4y ago
This is simply a wealth transfer to institutions who lent money at low rates prior to the rate increases.
- recursivedoubts 4y ago
  It is not simply that, although it does ensure that the money that those institutions lent is paid back, rather than defaulted on. But let's be honest: what's really going to happen in the case of defaults is that the banks will seize the real underlying assets and sell them at fire-sale prices to other rich people. The important part is that the borrower is now out from under exponential debt and can get on with their lives, and total debt in the economy is brought down to a sustainable level. Non-debtors get something too: free and clear cash. Is it perfect? No, of course not. Nothing this simple could be perfectly fair. But it is simple, hard to game, addresses the core problem (too much debt) and is probably as fair as it will get, practically. Certainly the elites would scream bloody murder if someone important legitimately proposed it. Keen has been ignored and mocked for years. That's evidence enough for me.
  - shjake 4y ago
    It also impossible to enforce. And is basically equivalent to “why don’t we just print more money and give it everyone?”. And anyway a terrible idea.. why do you want to penalize people who have low interest rate mortgages for instance? Anything they’d gain would be offset by inflation…
- lief79 4y ago
  Good point ... paying down my mortgage faster is a fairly poor use of the funds. However, if it can be used for regular payments or prepayments over a period of time, it's not a bad deal. I'd hope they'd also make exceptions for any loans under the current rate of inflation, but good luck getting that passed. Having to immediately pay off a 0% loan (if anyone still offers those) clearly is far from the optimal use of the money.
  - recursivedoubts 4y ago
    People will be incentivized (and possibly required) to pay off high-interest debt first, which is the right thing. Beyond that, a modern debt jubilee isn't about you optimizing your individual financial situation. Rather, it is about: - keeping it as simple and hard to game as possible - reducing total debt in the economy to a sustainable level If you have to pay down or pay off your mortgage, sorry. On the other hand, you would own a house free and clear. So life wouldn't be all bad.
  - whateveracct 4y ago
    I'd imagine using it on your next monthly payment would be allowed. Agreed - not a bad deal.
WJW 4y ago
How is this a fair mechanic for a debt jubilee? People without debt get free extra money to invest. People deep in debt have to give the money they receive to the first group (ie the people they were indebted to), so those can then invest even more. The end result is that the people in debt are even further behind.
- hellisothers 4y ago
  I think you’re letting good be the enemy of great here though. Even if the debtor has to use all of the cash to pay to the lenders (who also got money), it “removes the yoke” of compounding crushing debt they’re currently unable to get out from under.
  - WJW 4y ago
    That same compounding effect also works for the additional investments of the lenders. After all is said and done, the lending group will be able to use its newfound cash flow to purchase ever more investments at prices that the newly debt-free won't be able to match. Soon, the newly debt-free group will be "forced" back into debt because there is no other way to afford (say) a house. An exception would be if the interest on the debt is wildly higher than the interest gained by the investments, but even then the real problem is the high interest rates. There are better ways to regulate those than giving even more economic power to those already wealthy. You can't get away from wealth disparity by giving to everyone, eventually you have to take from some group to give to the other. The group being taken from will generally not like that.
chollida1 4y ago
I think I can follow that logic. But what do we do about the inflation that this brings? If all of a sudden there is a huge amount of extra cash in teh system, then prices go up alot. Lets say everything goes up 20%. Now the poor who had debt no longer have debt but the price of life has gone way up for them. The rich just pocket the money and the inflation doesn't affect their day to day life very much. Infact they are better off as assets have now inflated due to this new money. Thinking about this more, this like the poorer you are the worse off you'd now be in this situation. Unless the solution is to close your eyes and pretend like inflation would never happen, which the last year has shown us is not a reasonable belief to hold.
- euroderf 4y ago
  I guess what is proposed is a one-off inflationary expansion... much like the Covid stimulus bills (it all created how many trillions of dollars?). But the net result was (AFAIK) a significant drop in indebtedness and poverty. But then again, the inflation was picked up by companies as an excuse to profiteer, and initiate a spiral, which is why we find the Fed today kicking the economy in the groin.
shjake 4y ago
> This is as fair a mechanic as I have ever heard for a debt jubilee. Also not practically possible at least in the real world. Which is possibly why it sounds so great…