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In most societies there have been some form of "release valve" to keep everyone from ending up in permanent debt. Without such release valves everyone would end

In most societies there have been some form of "release valve" to keep everyone from ending up in permanent debt. Without such release valves everyone would end up as slaves to one person (or a very small group of people). When this happens you get a very unstable social order and it usually results in some form of a revolution. In many societies this release valve has taken the form of a jubilee or large scale debt forgiveness at set intervals of time. This did two things: First it released people from debt bondage. Second, it forced lenders to lend responsibly. If they could not realistically foresee the debt being repaid before the next Jubilee they wouldn't make the loan. We've seen modern day Jubilees when it comes to 3rd world debt. We've also seen national Jubilees in Iceland and Saudi Arabia recently within the last year. In our society bankruptcy is supposed to serve this function. Unfortunately congress rewrote the bankruptcy laws in 2005 at the behest of the credit card companies (it was a lobbyist for Visa who actually wrote the law!) and the big banks. Under the new law it's much more difficult to get one's debts discharged and almost impossible to get student loans discharged. This legislation was literally bad for 99.9% of all Americans. The fact that it got passed is one more bit of evidence that the 99% don't really have representation in our current government. I think a Jubilee of some form would be an excellent development.

smsm42 14y ago
> In most societies there have been some form of "release valve" to keep everyone from ending up in permanent debt. This is called "bankruptcy". AFAIK US has bankruptcy - both business and personal. > Under the new law it's much more difficult to get one's debts discharged and almost impossible to get student loans discharged. Getting loans discharged is supposed to be difficult. If it were easy, nobody would pay them and there would be no credit market. As for student loans, what did you expect when you demanded unlimited lending at fixed interest? That banks would lend out all that money, take all that risk - and then allow people to just tell "oh, nevermind, I'm not really gonna pay this"? How that business is supposed to work then? The non-dischargeable debt is a direct consequence of the fixed rate (meaning, no ability to risk-adjust) and broad availability (meaning, no ability to reduce risk). It's either that or complete nationalization (read, global bailout) of all that debt. Arithmetics is a dismal science, you can't have 2+2 equal more than 4, however you try. If somebody took the money, the money have to come from somewhere. If you allow people to take money and not repay it, this money have to come from somewhere. > I think a Jubilee of some form would be an excellent development. I agree. I can't wait for such law - imagine, I wouldn't have to pay my mortgage and those pesky credit card bills - I'd just have to throw all mails from the banks and credit cards companies to the garbage and wait for the Jubilee. And then go buy another house and more stuff on my freshly renewed credit. In fact, I don't see why I would need to work at all - I'd just come into the store, flash my credit card (no need to even run it through the terminal - nobody would pay it anyway, so why bother?), take whatever I want and walk away. The Jubilee would take care of the rest. I think it's a great idea, indeed.
- maxerickson 14y ago
  If you schedule the first jubilee 50 years in the future, you neatly sidestep most of the sarcastic rejoinders. And then people with money to loan out can factor the coming jubilee into their credit decisions.
  - smsm42 14y ago
    Right, because everybody knows 50 years will never come, so nobody would think to take advantage of it on 48-th and 49-th year. Or do you mean it will always be 50 years in the future - like communism in the Soviet Union? Then it makes total sense. > And then people with money to loan out can factor the coming jubilee into their credit decisions. Can you venture a guess what that decision would be? If you have money and you know you debtor will be able to refuse to return your money in, say, 2 years - how willing you would be to lend it out? Now also consider that collection can take multiple years - and consider when credit markets would completely shut down? 5 years before the Jubilee? 10 years? Will the banks also be allowed to refuse to pay interest on deposits in Jubilee - or if they are not, where the money to pay interest will come from if everybody would be defaulting on their loans at once? In fact, will the banks be allowed to just refuse to pay out the deposits at all - since term deposit is nothing more than a loan you give to the bank? And if not, where those deposits are coming from since these money are already given out as loans and forgiven on Jubilee?
    - maxerickson 14y ago
      I never said I thought it was a great idea. I imagine it was far more sensible in the days when individuals that controlled land were making loans to their tenants.
    - ThomasGokey 14y ago
      In the 48th and 49th year lenders would make loans that would be much smaller and more realistically paid off in the short term. There is no way that debtors can force lenders to lend if they don't think it's a good deal. As you get closer and closer to a Jubilee year it would get harder to get a big loan. People would put of large projects until the first years of a new cycle.

smsm42 14y ago

> In most societies there have been some form of "release valve" to keep everyone from ending up in permanent debt. This is called "bankruptcy". AFAIK US has bankruptcy - both business and personal. > Under the new law it's much more difficult to get one's debts discharged and almost impossible to get student loans discharged. Getting loans discharged is supposed to be difficult. If it were easy, nobody would pay them and there would be no credit market. As for student loans, what did you expect when you demanded unlimited lending at fixed interest? That banks would lend out all that money, take all that risk - and then allow people to just tell "oh, nevermind, I'm not really gonna pay this"? How that business is supposed to work then? The non-dischargeable debt is a direct consequence of the fixed rate (meaning, no ability to risk-adjust) and broad availability (meaning, no ability to reduce risk). It's either that or complete nationalization (read, global bailout) of all that debt. Arithmetics is a dismal science, you can't have 2+2 equal more than 4, however you try. If somebody took the money, the money have to come from somewhere. If you allow people to take money and not repay it, this money have to come from somewhere. > I think a Jubilee of some form would be an excellent development. I agree. I can't wait for such law - imagine, I wouldn't have to pay my mortgage and those pesky credit card bills - I'd just have to throw all mails from the banks and credit cards companies to the garbage and wait for the Jubilee. And then go buy another house and more stuff on my freshly renewed credit. In fact, I don't see why I would need to work at all - I'd just come into the store, flash my credit card (no need to even run it through the terminal - nobody would pay it anyway, so why bother?), take whatever I want and walk away. The Jubilee would take care of the rest. I think it's a great idea, indeed.

maxerickson 14y ago
If you schedule the first jubilee 50 years in the future, you neatly sidestep most of the sarcastic rejoinders. And then people with money to loan out can factor the coming jubilee into their credit decisions.
- smsm42 14y ago
  Right, because everybody knows 50 years will never come, so nobody would think to take advantage of it on 48-th and 49-th year. Or do you mean it will always be 50 years in the future - like communism in the Soviet Union? Then it makes total sense. > And then people with money to loan out can factor the coming jubilee into their credit decisions. Can you venture a guess what that decision would be? If you have money and you know you debtor will be able to refuse to return your money in, say, 2 years - how willing you would be to lend it out? Now also consider that collection can take multiple years - and consider when credit markets would completely shut down? 5 years before the Jubilee? 10 years? Will the banks also be allowed to refuse to pay interest on deposits in Jubilee - or if they are not, where the money to pay interest will come from if everybody would be defaulting on their loans at once? In fact, will the banks be allowed to just refuse to pay out the deposits at all - since term deposit is nothing more than a loan you give to the bank? And if not, where those deposits are coming from since these money are already given out as loans and forgiven on Jubilee?
  - maxerickson 14y ago
    I never said I thought it was a great idea. I imagine it was far more sensible in the days when individuals that controlled land were making loans to their tenants.
  - ThomasGokey 14y ago
    In the 48th and 49th year lenders would make loans that would be much smaller and more realistically paid off in the short term. There is no way that debtors can force lenders to lend if they don't think it's a good deal. As you get closer and closer to a Jubilee year it would get harder to get a big loan. People would put of large projects until the first years of a new cycle.