Friday, January 15, 2010
Our whole economic system is endangered anyway
It is an enticing prospect: wiping the slate clean could liberate so many people from the constraints of those monthly instalments that it would trigger a momentous economic recovery. But while such a move has the virtue of simplicity, it is hardly practical. For one thing, ancient kingdoms tended to be creditors, and so could forgive as much debt as they fancied. Western governments today are largely debtors. Moreover, a wholesale debt jubilee would so scare investors that in the future they would demand excessively high interest rates in exchange for loans, causing a lack of credit which would endanger our whole economic system.