Is The Solution To The Credit Bubble In The Jubilee?

[VeryMeanReversion]

If debts are all forgiven, then everyone with savings would presumably also lose that. For every debit there is a credit.

Good point. My savings represent somebody having to do some work in future to repay it.

When they dont have to do any repayment, my savings have gone.

VMR.

[bearbullfence]

This was a one-off event to bring the books under control and therefater to implement stroict rules regarding debt and abuse of the fractional reserve banking system?

Bottom line: How much worse would such a dramatic remedy be than the inevitable result of the current madness of Brown? I.e. more debt, more slavery, more instability, more social misery...........................

So lets get this straight... all debt is wiped out.

The current situation is caused because no-one knows the value of loans on banks' books. You wipe out the debt and those loans are then valued at zero. The banks capital will be blown away, and instead of having to insure against the possibility of loans going bad the govenment will have to instantly find hard cash to pump into banks to recapitalise them.

Government will have to sell treasury bonds or print money to find the cash to give to the banks. UK Government bonds will be downgraded to junk because we've proved we can't pay our loans back and existing foreign investors will be terrified that money owed to them will be wiped out and loans will be recalled at such a rate that will make the situation in Zimbabwe look like a stroll in the park.

All in all, regarless of politcal and economic persuasion it is an insane idea. You can't beat the market.

[VeryMeanReversion]

A debt jubilee is the last step to be taken before Max warms up his V8 and attaches the nitrous. Although unlikely, it is a nonzero probability.

I used to play SimCity years ago. Sometime, you get to a point when people start moving out and your yearly income goes severely negative where you just know you are going to have to press the reset button. The debt jubilee is that reset button.

All politicians should be forced to play that game to see how the policies play out. Most will overbuild, incur massive maintenance expenses and be reaching for the debt-jubilee button before they get out of the 1900's.

VMR.

[Guest vicmac64]

First, please try to keep this thread OT and not turn it into some religious fundie rant one way or the other. Keep to the econmics!

My intent is to raise the possibility that an ancient remedy to deal with acculumated debt and the repercussions thereof may have a viable remedy. It is too easy to write off ancient teachings as being, well, ancient and of no relevance today. But there are sound arguments to support the contention that there really is nothing new under the sun and that Hegel got it right about human history being a series of repeated mistakes.

http://en.wikipedia.org/wiki/Jubilee_(Christian)

"In the Biblical book of Leviticus, a Jubilee year is mentioned to occur every fifty years, in which slaves and prisoners would be freed, debts would be forgiven..."

What if..........

Instead of Gordon borrowing billions to pay off debt--all debt was cancelled?

To avoid exploitation of the spirit of the rule--only debt accumulated for houses purchased befroe a certain date would be debt free?

This was a one-off event to bring the books under control and therefater to implement stroict rules regarding debt and abuse of the fractional reserve banking system?

Bottom line: How much worse would such a dramatic remedy be than the inevitable result of the current madness of Brown? I.e. more debt, more slavery, more instability, more social misery...........................

No - it would only encourage more reckless borrowing and lending in the future. We need to be as a nation caring for those that have been deceived by the financial system (I'm thinking of first time buyers etc) and as such they must be treated leniently. However those that have deliberately speculated have already taken a risk and as such their debt should remain as should business loans.

Failed businesses should be allowed to fail and as quickly as possible. We need to bring back protectionism, pull out of Europe, Tax Imports (except raw materials heavily) and GET OUR PEOPLE BACK TO MEANINGFUL EMPLOYMENT.

Anything else will lead to further decline of our nation.

DEBT is DEBT, that is why the prudent shoudl be rewarded not the debtors.

[swissy_fit]

First, please try to keep this thread OT and not turn it into some religious fundie rant one way or the other. Keep to the econmics!

My intent is to raise the possibility that an ancient remedy to deal with acculumated debt and the repercussions thereof may have a viable remedy. It is too easy to write off ancient teachings as being, well, ancient and of no relevance today. But there are sound arguments to support the contention that there really is nothing new under the sun and that Hegel got it right about human history being a series of repeated mistakes.

http://en.wikipedia.org/wiki/Jubilee_(Christian)

"In the Biblical book of Leviticus, a Jubilee year is mentioned to occur every fifty years, in which slaves and prisoners would be freed, debts would be forgiven..."

What if..........

Instead of Gordon borrowing billions to pay off debt--all debt was cancelled?

To avoid exploitation of the spirit of the rule--only debt accumulated for houses purchased befroe a certain date would be debt free?

This was a one-off event to bring the books under control and therefater to implement stroict rules regarding debt and abuse of the fractional reserve banking system?

Bottom line: How much worse would such a dramatic remedy be than the inevitable result of the current madness of Brown? I.e. more debt, more slavery, more instability, more social misery...........................

If you want normally peaceful people like myself who've worked and saved for years to open the guns cabinet, great idea.

QE is bad enough and will rob me and mine blind I fear.

Forgiving debts would be all very well if it had been planned and everyone had known in advance, but why should people who saw the debt trap be punished?

[Stars]

Although i'm not a biblical expert (by any stretch), i understand the original concept of jubilee was the regular redivision of land (land reform)

[porca misèria]

If they were stupid enough to wipe out debts in a 'jubilee' I would stop paying my rent and rack up as much debt as I could before refusing to pay. I have absolutely no debt - not "not much debt", not "no debt except my small overdraft", not "no debt except the credit card". Zero debt. If people get their debts wiped then watch me go on the biggest debt binge the world has ever seen before leaving this country for good. I doubt I'd be the only one.

I would also explain to all my friends and colleagues what I am about to do and try and get them to join me. In short, this country would go up in flames.

If you wipe out debt, you wipe out money. It's that simple.

Take a look at a banknote. "I promise to pay the bearer on demand the sum of ...". That's right, it's an IOU from the Bank of England. Debt.

[interestrateripoff]

Isn't that default in all but name? The problem being the debts are assets to banks.

F

"While economic textbooks claim that people and corporations are competing for markets and resources, I claim that in reality they are competing for money - using markets and resources to do so. Greed and fear of scarcity are being continuously created and amplified as a direct result of the kind of money we are using. For example, we can produce more than enough food to feed everybody, and there is definitely not enough work for everybody in the world, but there is clearly not enough money to pay for it all. In fact, the job of central banks is to create and maintain that currency scarcity. Money is created when banks lend it into existence When a bank provides you with a $100,000 mortgage, it creates only the principal, which you spend and which then circulates in the economy. The bank expects you to pay back $200,000 over the next 20 years, but it doesn't create the second $100,000 - the interest. Instead, the bank sends you out into the tough world to battle against everybody else to bring back the second $100,000."- Bernard Lietaer, Former Central Banker

If this view is correct then no it's not.

[mightytharg]

When this started in 2007 I said give everyone £10,000. Every man, woman and child in the country.

This is exactly the opposite of what they should do since it would devalue sterling reward the debtors (who caused the problem) and punish the savers.

Instead they should take £10,000 from everyone. We should demand this. Who is with me?

[Bloo Loo]

If you wipe out debt, you wipe out money. It's that simple.

Take a look at a banknote. "I promise to pay the bearer on demand the sum of ...". That's right, it's an IOU from the Bank of England. Debt.

course, debt is the ASSET of the banking system.

And they moan now when only SOME of their assets have dropped.

Writing them all off would need a mother of all bailouts, a bailout of mass destruction.

[HovelinHove]

Leviticus also recommends stoning anyone who takes the Lord's name in vein, or who sleeps with his wife while she's on the blob, among other draconian and completely vial rules.

The only way Jubilee would work was if they readjusted all property 'ownership' and wherever you are you get to keep without debt, whether you are renting from a landlord or the bank (think this may have been mentioned above). You would also need to reset all currencies etc.

[interestrateripoff]

If you wipe out debt, you wipe out money. It's that simple.

Take a look at a banknote. "I promise to pay the bearer on demand the sum of ...". That's right, it's an IOU from the Bank of England. Debt.

Not quite if you take the note into the BoE what do you get in return?

If I take in a £10 note the bearer on demand will give me back a £10 note which will also say "I promise to pay the bearer on demand the sum of ..."

This is circular it's not an IOU.

[Stars]

Leviticus also recommends stoning anyone who takes the Lord's name in vein, or who sleeps with his wife while she's on the blob, among other draconian and completely vial rules.

The only way Jubilee would work was if they readjusted all property 'ownership' and wherever you are you get to keep without debt, whether you are renting from a landlord or the bank (think this may have been mentioned above). You would also need to reset all currencies etc.

It was probably designed to stop a fee simple land-ownership scheme descending into a monopolistic, economically inefficient debt nightmare in which those who work for a living end up in debt to those who don't, but own the land on which they work.

[awf]

Leviticus also recommends stoning anyone who takes the Lord's name in vein, or who sleeps with his wife while she's on the blob, among other draconian and completely vial rules.

The only way Jubilee would work was if they readjusted all property 'ownership' and wherever you are you get to keep without debt, whether you are renting from a landlord or the bank (think this may have been mentioned above). You would also need to reset all currencies etc.

(Just a correction, not a topic-derailer.)

Not quite - no stoning required. It does name certain things like this as 'sin' but then the original meaning for 'sin' would be not perfect or unclean.

Remember these rules were given in days when medicine was a rudimentary practice, without anesthetic, without knowledge of bacteria or hospitals. The only way to prevent diseases was separation, avoidence and banning of certain foods and practices. There was no stoning punishment for these, but for a lot of things, there was an animal sacrifice (eg. dove, calf etc) which was intended to call to the mind of the 'sinner' the penalty for 'sin' is death. (eg. touch a dead thing = sin, dead thing passes on disease to you = you die).

Edited January 23, 2009 by delurker

[PopGun]

I'm sure all the STR's would love that!

Tough tittie.

I've been advocating debt write off for months, now it seems to be getting mainstream attention.

Remember: Gordon Brown will do ANYTHING to keep this game of musical chairs going. With these goons in power, you can't rule anything out.

[whoami]

1. There's no evidence a Jubilee ever happened.

2. There's no likelihood it ever will.

3. Nobody here seems to have even a faint grip the 'Jubilee' concept...

In debt terms, the point of a Jubilee was to prevent a dangerous or unfair build-up of excessive levels of debt (in modern terms, a 'debt bubble').

It works like this: a society agrees to establish a Jubliee year at an agreed number of years in the future, at which point any remaining debt may be defaulted on. If you hold a Jubilee every twenty-five years (say), lenders will then only lend up to twenty-four year terms in the first year, twenty-three-year terms in the second year, and so on. The idea was that once every 25 years, nobody would have any debt left and there would therefore be no debt to default on. In the twenty-sixth year the process would start all over again. The aim was to put a natural limit on the amount of debt that a society could accumulate and to prevent the kind of ridiculous situation we have today. It was not a get-out-of-jail-free card, quite the opposite.

What you lot are talking about is nothing to do with a Jubilee (which requires society to work towards it, a set number of years in advance). You're talking about a straight forward debt-forgiveness/credit-theft/bankruptcy default/emergency reset - call it what you like but it ain't a Jubilee. :angry:

Edited January 23, 2009 by whoami

[0q0]

Can you imagine - if the public thought debt forgiveness was coming they'd go out on a massive spend up, no wonder retail sales were actually up over Xmas!

Me, I'll go buy 2 mansions and a Baby Bentley, and even a box of lemons.

[stormymonday_2011]

The current situation is caused because no-one knows the value of loans on banks' books. You wipe out the debt and those loans are then valued at zero. The banks capital will be blown away, and instead of having to insure against the possibility of loans going bad the govenment will have to instantly find hard cash to pump into banks to recapitalise them.

Government will have to sell treasury bonds or print money to find the cash to give to the banks. UK Government bonds will be downgraded to junk because we've proved we can't pay our loans back and existing foreign investors will be terrified that money owed to them will be wiped out and loans will be recalled at such a rate that will make the situation in Zimbabwe look like a stroll in the park.

All in all, regarless of politcal and economic persuasion it is an insane idea. You can't beat the market.

Disagree.

The current cash exposure of the banks loans etc is known all too well. What is not clear is whether there are assets of sufficient value held by the borrowers as collateral to cover these amounts in the event of a default.

The stark reality is that many of these debts are simply unrecoverable (that is they are already valued at zero) so will have to be written off regardless of whether or not there is any kind of formal debt relief program. In fact the collapse in bank share prices shows that the 'market' understands this reality all too well. The refusal of the financial institutions and governments to except this harsh truth is what is turning this crisis into a calamity.

Try reading the attached

http://www.denninger.net/letters/genesis.pdf

At least this plan at least offers an alternative to the endless bailouts and the panglossian hopes that something will turn up

Edited January 23, 2009 by up2nogood

[nixy]

This writing off of debt. Is it a one off, or on going?

Is it for big numbers or all numbers?

Say £100k savings or £100 savings?

Write them off today.......and again next month??

What??

[awf]

1. There's no evidence a Jubilee ever happened.

2. There's no likelihood it ever will.

3. Nobody here seems to have even a faint grip the 'Jubilee' concept...

In debt terms, the point of a Jubilee was to prevent a dangerous or unfair build-up of excessive levels of debt (in modern terms, a 'debt bubble').

It works like this: a society agrees to establish a Jubliee year at an agreed number of years in the future, at which point any remaining debt may be defaulted on. If you hold a Jubilee every twenty-five years (say), lenders will then only lend up to twenty-four year terms in the first year, twenty-three-year terms in the second year, and so on. The idea was that once every 25 years, nobody would have any debt left and there would therefore be no debt to default on. In the twenty-sixth year the process would start all over again. The aim was to put a natural limit on the amount of debt that a society could accumulate and to prevent the kind of ridiculous situation we have today. It was not a get-out-of-jail-free card, quite the opposite.

What you lot are talking about is nothing to do with a Jubilee (which requires society to work towards it, a set number of years in advance). You're talking about a straight forward debt-forgiveness/credit-theft/bankruptcy default/emergency reset - call it what you like but it ain't a Jubilee. :angry:

+1, but without the angry.

If a jubilee was to be initiated in the UK, it would require calculating the longest running mortgages 30-50 years? then reducing the loan term each year until jubilee. This would have the opposite effect of bringing down house prices gradually every jubilee cycle since you would be limited to the amount you could borrow the closer you were to jubilee year. Am I right?

[huw]

If debts are all forgiven, then everyone with savings would presumably also lose that. For every debit there is a credit.

And your salary is a debt (owed by your employer at the end of the month).

Your employer's invoices represent debts (owed by its customers).

Those who consume the end-products of the supply chain do so with debt (on their credit cards).

Topple the final domino at your extreme peril.

[huw]

Bankruptcy = targeted jubilee.

We already have incorporated the mechanism into our system, in a more flexible way that allows contracts* that can't be fulfilled to be liquidated, while allowing other contracts to stand.

The problem is that the level of bankruptcy needed is deemed unacceptable.

* Cancelling debt = unmaking private contracts.

[See]

Instead of Gordon borrowing billions to pay off debt--all debt was cancelled?

If I am right believing that the problems we are seeing are due to people losing confidence in the paper/fiat/computer debt based money system as a long term store of time and effort.

Making people less confident in it by writing it off will not help.

I believe we could be seeing the end of the fiat system. It is not going to be pretty.

[porca misèria]

Not quite if you take the note into the BoE what do you get in return?

If I take in a £10 note the bearer on demand will give me back a £10 note which will also say "I promise to pay the bearer on demand the sum of ..."

This is circular it's not an IOU.

Yes it's circular. But it's still an IOU.

It's just an IOU the bank will never honour. A con trick!

[Nelly]

Brainstorming the consequences:

All banks would be instantly bankrupt with huge liabilities (deposits liable to be repayed) and no assets.

They are allready though arnt they