Friday, January 15, 2010

Our whole economic system is endangered anyway

Why a debt jubilee is not the answer to Britain's prayers

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.

Posted by devo @ 06:45 AM (1271 views)
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3 thoughts on “Our whole economic system is endangered anyway

  • Yawn. A discussion of an ancient financial system without a mention of Capitalism’s creative destruction. Before changing the rules, perhaps we could look at enforcing our own laws properly instead of dumping debt on taxpayers?

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  • The only people really trying to take this idea seriously were the commentators and journalists quietly acknowledging that without capital appreciation, they are now very close to debtors prison. Freedom from debt while keeping the asset is a dreamy prospect for them. I think if it were implemented in practice you’d very quickly see a breakdown in social cohesion – after all taking possession of something without paying for it is tantamount to theft.

    Incidentally, a debt jubilee was never mooted when house prices were going up.

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  • I am increasingly finding the comments under such articles as far more interesting than the articles themselves. It would seem that people aren’t being fooled any more.

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