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Government

is a 'Debt Jubilee' The Only Way to Avoid a Depression? (washingtonpost.com) 402

The Washington Post just ran an interesting op-ed from a research professor of economics at the University of Missouri: Massive social distancing, with its accompanying job losses, stock dives and huge bailouts to corporations, raises the threat of a depression. But it doesn't have to be this way. History offers us another alternative in such situations: a debt jubilee. This slate-cleaning, balance-restoring step recognizes the fundamental truth that when debts grow too large to be paid without reducing debtors to poverty, the way to hold society together and restore balance is simply to cancel the bad debts...

The U.S. economy has polarized sharply since the 2008 crash. For far too many, their debts leave little income available for consumer spending or spending in the national interest. In a crashing economy, any demand that newly massive debts be paid to a financial class that has already absorbed most of the wealth gained since 2008 will only split our society further.... The way to restore normalcy today is a debt write-down. The debts in deepest arrears and most likely to default are student debts, medical debts, general consumer debts and purely speculative debts. They block spending on goods and services, shrinking the "real" economy. A write-down would be pragmatic, not merely moral sympathy with the less affluent.

In fact, it could create what the Germans called an "Economic Miracle" -- their own modern debt jubilee in 1948, the currency reform administered by the Allied Powers. When the Deutsche Mark was introduced, replacing the Reichsmark, 90 percent of government and private debt was wiped out. Germany emerged as an almost debt-free country, with low costs of production that jump-started its modern economy...

In the past, the politically powerful financial sector has blocked a write-down. Until now, the basic ethic of most of us has been that debts must be repaid. But it is time to recognize that most debts now cannot be paid -- through no real fault of the debtors in the face of today's economic disaster.

"Critics warn of a creditor collapse and ruinous costs to government," the op-ed argues. "But if the U.S. government can finance $4.5 trillion in quantitative easing, it can absorb the cost of forgoing student and other debt."
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is a 'Debt Jubilee' The Only Way to Avoid a Depression?

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  • by astrofurter ( 5464356 ) on Monday March 23, 2020 @05:43AM (#59862058)

    A debt jubilee is a nice moderate, historically successful policy. Why stop there? We ought not let this panic go to waste! I say, let's go for a full palintokia.

    • Re:too moderate (Score:5, Informative)

      by sycodon ( 149926 ) on Monday March 23, 2020 @07:17AM (#59862330)

      The German state had essentially been wiped out. Many of the people holding the debt had been killed. Many of the people owing the debt had been killed. Don't even talk about the actual records, that were all on paper, being destroyed. If they had not wiped the slate clean you'd have people trying to collect debt on behalf of dead debt holders, from the dead, based on just their say so. (So, kind of like debt collectors today).

      I doubt they could have maintained the existing debt structures without chaos.

    • Re:too moderate (Score:5, Insightful)

      by Applehu Akbar ( 2968043 ) on Monday March 23, 2020 @07:35AM (#59862380)

      A debt jubilee is a nice moderate, historically successful policy. Why stop there? We ought not let this panic go to waste! I say, let's go for a full palintokia.

      For you young whippersnappers, debt is something you owe. But for retired people, debt is something they own. Bonds generate the income they live on.

      So have you decided to kill off all the old people by giving them corona, or will it be by making their bonds worthless?

      • Re: (Score:3, Insightful)

        by jellomizer ( 103300 )

        I though all the old people had bootstraps they can pull up?
        Or was much of the wealth for the boomers just happened not by working harder and smarter then the generations before and after them. But from a set of conditions that made it economically stable for their lives?
        WWII Putting most of the world in rubble, while the United States infrastructure was unharmed. And people with GI bill getting college degrees, and serving in the military had been trained for a degree of discipline. Allowing the boomer g

      • Re:too moderate (Score:5, Insightful)

        by ranton ( 36917 ) on Monday March 23, 2020 @09:14AM (#59862728)

        For you young whippersnappers, debt is something you owe. But for retired people, debt is something they own. Bonds generate the income they live on. So have you decided to kill off all the old people by giving them corona, or will it be by making their bonds worthless?

        You are correct that this excessive debt is not just bad for the ones who owe the debt, but also for those who own the debt itself. Those who are in debt have difficulty paying it, but those who own the debt will find they own an asset which isn't worth what they paid for. This is why the problem isn't just for those who have taken on debt they cannot pay.

        A solution which lessens the burden on borrowers and keeps the economy going so stocks and bonds continue providing returns ends up helping both parties. Lenders may not make as much money as they had hoped, but that would be doubly true in a protracted recession / depression.

    • by nospam007 ( 722110 ) * on Monday March 23, 2020 @07:46AM (#59862416)

      "A debt jubilee is a nice moderate, historically successful policy. "

      Yes, the Trump Hotels and Resorts first, then the billionaires, the millionaires, the well-off and hundred bucks for the rest of us.

    • At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord’s release.

      https://www.natlbankruptcy.com... [natlbankruptcy.com]

  • by Errol backfiring ( 1280012 ) on Monday March 23, 2020 @05:47AM (#59862070) Journal

    As long as money is loaned into existence with usury (please don't use the term "that which is in between" or inter-est), the debt is always greater than the money supply. In short, it is impossible to pay all the debts, because the money to pay it with does not exist.

    There are two ways of paying debts: pay with something else (plunder natural resources) or borrow again ("borrow from the future"). This borrowing from the future will come to a halt when all immediate future has already be loaned out and banks don't believe in payback anymore. At this point you have a crisis. We learned absolutely nothing from the last crises. We are doing it all over again.

  • by nagora ( 177841 )

    "But if the U.S. government can finance $4.5 trillion in quantitative easing"

    That particular fat lady has not taken the stage yet.

    • I don't know about the US, but the European Central Bank gives the money (via financial constructs) to financial institutions. This means that they only pump money into the virtual finance (don't call this economy, as nothing is made there). This leaves the real behind and actively forces large companies to no longer burn their fingers on real economy anymore. If, as a company, you have to choose between building an expensive factory or getting free money from the ECB, the choice is easy.
    • "But if the U.S. government can finance $4.5 trillion in quantitative easing"

      That's just another way of saying "if the government can inflate the money supply by $4.5"

      Which implies, based on the current money supply (around $15.5T) an increase across the board of prices for everything of about 30%. So, everyone in favour of prices increasing 30%, raise your hands....

      • by dwywit ( 1109409 )

        It's not inflation they're worried about at the moment.

        You've not really examined the end-point of debt-fuelled expansion.

        Sooner or later, there'll be a breakpoint - enough people will start to say "hey, that's a LOT of debt, maybe we should dial it back a bit", and then there'll be a run of folk desperately trying to convert their debt e.g. interest-only property investment loans* - to cash, AKA sell the properties to reap their value in cash.

        And the cash won't be there. It's not there now. It never was.

        • It's not inflation they're worried about at the moment.

          It's not inflation I'm worried about at the moment. Just want to remind everyone that the end result of pumping an extra $4.5T into the economy is going to be a 30% rise in prices for everything.

          And yes, I know the cash isn't there. We've been living an inflationary economy since the end of WW1 (or the start of the Great Depression, depending on just where you live). It can't last forever, though people have been trying to make it last forever for

  • People who have behaved in a financially irresponsible manner, and have racked up massive debts, should not be rewarded. That goes for both individuals and corporations. Rewarding irresponsible behaviour will only lead to more irresponsible behaviour. Once their debts are cleared, low class individuals will simply rack up more debts and expect them to be cleared in the future. Poorly run businesses will expect the government to bail them out every time they fail.

    Debts should absolutely never be cleared.

    • by PsychoSlashDot ( 207849 ) on Monday March 23, 2020 @06:23AM (#59862174)

      People who have behaved in a financially irresponsible manner, and have racked up massive debts, should not be rewarded. That goes for both individuals and corporations. Rewarding irresponsible behaviour will only lead to more irresponsible behaviour. Once their debts are cleared, low class individuals will simply rack up more debts and expect them to be cleared in the future. Poorly run businesses will expect the government to bail them out every time they fail.

      Debts should absolutely never be cleared. Doing so is a road to economic ruin. People and businesses must take responsibility for their own actions. No exceptions!

      That's one way to look at it.

      What about the young couple who both had stable, decent-paying jobs who took out a mortgage on a house to live in, and now don't have jobs? The obvious answer is to just take the house back... kick them out and they get whatever equity they've accrued. Only the housing market will have tanked, so they'll be upside-down. Only they will have bought furnishings which need somewhere to go and storage costs money. Only they need somewhere to go and their close family may be in similar circumstances or don't have room to take them in. Only they may have moved away from family, meaning a costly relocation.

      I'm not saying the fundamental idea is - or isn't - a good one. I'm just saying that there's a very real human cost here and to insinuate that people who are getting screwed by this circumstance are irresponsible is being selfish, callous, and ignoring the spectrum of fiscal reality between chronically helpless and Jeff Bezos.

      TLDR:Some people were living within their means but those means have now vanished.

      • by DarkOx ( 621550 ) on Monday March 23, 2020 @07:12AM (#59862300) Journal

        This is EXACTLY what personal bankruptcy is for! I would agree that couple did not behave irresponsibly but fate deblt them a bad hand. They should declare bankruptcy. Which would all them to most likely to keep a lot of their other personal assets and savings, surrender the house and discharge the remaining debt. They go solve their problem - movie in with mom and dad, sell one of the cars and rent an apartment for 6 months while they find a job - sell some other retained personal property, whatever they need to do.

        The banks gets an asset back, one that happens to now be worth far less than the money they had lent the couple to buy it but guess what they were being paid to take that risk, that is what the interest on the debt was all about! You win some you lose some. If the bank loses to many it means they were either being irresponsible or again maybe fate just dealt them a bad hands. In that case their investors lose but again they were getting dividends or unrealized capital appreciation to take that risk, you win some your lose some. Maybe they were irresponsible and did not do their due diligence before investing or maybe there was a global pandemic. Either way while they are probably pouting saying how unfair it all is the reality is its perfectly fair. What REALLY isnt fair is to dump their burden on people who perhaps very deliberately chose lower risk lower return investments like Treasury bonds. Its not fair to them for this to be monetized away and to see their money devalued.

        The whole OMG families and consumers blah blah is a lie. What this is really about is retires and state pension funds! The politicians won't admit it but the simple fact is the state pension funds are all insolvent now unless the market rebounds aggressively (at least on paper). Many of them shifted into fairly agressive growth strategies after the last crisis to try and catch up. Now they are really FOOBAR. SS has less market exposure but demographic problems the government already has to basically fake the data so cost of living adjustments don't make the problem worse. SS payments wont support retirees that still have mortgage debt, and want to eat as well as prices rise. It certainly wont support consumer spending. So that leaves that 401k money. Guess what if all these workers don't see real big returns there after this once we have third coincidental retirement crisis to with our SS and state pension fund crises. These were the real reasons for the TBTF bailouts and they will be the reasons for this round. Jubilee would not even fix the problem! Half of the assets retirees hold are debts; those assets go to zero when the debts are forgiven. Guess what if you have no income, you still starve even if you have no debts, unless you have assets to generate income with either thru sales of them or dividends and interest.

        • by Nidi62 ( 1525137 ) on Monday March 23, 2020 @07:17AM (#59862326)

          This is EXACTLY what personal bankruptcy is for! I would agree that couple did not behave irresponsibly but fate deblt them a bad hand. They should declare bankruptcy. Which would all them to most likely to keep a lot of their other personal assets and savings, surrender the house and discharge the remaining debt. They go solve their problem - movie in with mom and dad, sell one of the cars and rent an apartment for 6 months while they find a job - sell some other retained personal property, whatever they need to do.

          Giving the housing market right now (affordable houses are practically non-existent, and all new construction is mcmansions, townhomes for the price of an expensive single-family home, or 55+ communities), you think a couple without jobs and with a recent bankruptcy would actually find an apartment that would rent to them?

          • by DarkOx ( 621550 ) on Monday March 23, 2020 @07:23AM (#59862352) Journal

            Not in the same market perhaps but somewhere yes. People HAVE to be willing to pack up the car and move with the things they can carry. That has been true of other generations and its true of this one if they expect to survive and have a decent life at some point.

            I also think when foreclosure crisis two hits, the value of those properties will come down, and rents will come down to match. The banks can't just sit and maintain those assets for ever and the buys can't just generate zero-revenue because they insist on rents nobody can pay. It will hurt but the market will fix this.

            • That's a really weird idea... you can't just move out west and be the town blacksmith anymore, plenty of fields require living near a population mass. Perhaps a very talented programmer can work wherever he can find an internet connection, but e.g. for biotech you need to be where there is a confluence of research orgs and universities.
              • by DarkOx ( 621550 )

                Its not really that weird. Life in NYC costs a hell of a lot more than life in say Richmond VA.. Guess what if you move to Richmond ahead of the rest of the flight from NYC you get to enjoy the capital appreciate on any real-estate you manage to acquire.

                Its also true that while you can't just go be a blacksmith there are a lot of jobs that we have lots of regulatory rules on that used to be work anyone could get. We could dump those rules. We have been living above our means. Sometime safety like how much

                • by Nidi62 ( 1525137 )

                  Its not really that weird. Life in NYC costs a hell of a lot more than life in say Richmond VA..

                  Median house price in Richmond, VA is still 265k, with median rents at 1350. Pretty steep for a couple with no job prospects lined up and no safety net to move there from NYC on a whim. Given prices in NYC, your middle income couple probably didn't make enough to have enough savings to afford a speculative move like that. Although on the bright side, the unemployment rate in Richmond was only 2.9% as of 2019.

                  • by guruevi ( 827432 )

                    Or you could live out of Richmond VA where the average house costs $100k. Sure the commute sucks, but I've done worse.

                    You don't HAVE to live where it is most expensive. I actually moved away from the city center in recent years. Sure the commute went up but so did my quality of life. And now with this it's really great not to live in a packed city.

            • by Nidi62 ( 1525137 )

              I also think when foreclosure crisis two hits, the value of those properties will come down, and rents will come down to match.

              Prices may come down, but if foreclosure crisis 2 hits the economy will tank as well and (effectively)no one will still be able to afford those houses.

              The banks can't just sit and maintain those assets for ever and the buys can't just generate zero-revenue because they insist on rents nobody can pay. It will hurt but the market will fix this.

              Sure they can, because they will get a bailout. They'll sit on those properties, get the bailout, and ride it out until the recovery. Or, if the banks don't get those properties, the few people with deep pockets will (at bargain prices) and rent them out. And post-recovery the stock market will hit record highs again, housing prices will skyrocket again, b

          • by kenh ( 9056 ) on Monday March 23, 2020 @08:52AM (#59862638) Homepage Journal

            you think a couple without jobs and with a recent bankruptcy would actually find an apartment that would rent to them?

            The bankruptcy is a non-issue, the lack of jobs is an issue - how are they going to come up with monthly rent without jobs? Why *should* any landlord rent a home to people without income?

          • Re: (Score:3, Insightful)

            by Train0987 ( 1059246 )

            A debt jubilee would dramatically inflate the housing bubble even more. If you think house prices are high now then forgive every mortgages and watch those prices double/triple overnight.

        • Personal bankruptcy doesn't clear student loan debt.

          Fix that and you'll have a point.

          • by kenh ( 9056 ) on Monday March 23, 2020 @09:08AM (#59862692) Homepage Journal

            No, please don't.

            The current student loan program is structured the way it is because people used to simply declare bankruptcy after college, sticking the US taxpayer with their college debt, in exchange twenty-somethings couldn't buy a house for 7 years, but they had a free college education.

            Student loan debt is unsecured debt that runs in the tens of thousands of dollars per student - if a high school graduate is unable to predict the cost of repaying 4 years of $30K/yr student loans over a ten year period when they go to college, why should the taxpayer forgive the debt?

            • by ranton ( 36917 )

              Fixing the issues with bankruptcy and student loan doesn't mean just making it easy to declare bankruptcy as soon as you graduate. It isn't an either or situation. Judges and lawyers on both sides are involved to make the results as equitable as possible for both sides. It would be almost trivially easy to draft laws which would not allow the abuses you mention in your post. As if a judge wouldn't notice a student hasn't even tried to pay down debt after graduating is insulting to our judicial system.

      • You give them a hiatus or refinance their debt with a loan that allows them to postpone payments at low or zero percent interest for the length of the crisis. It's called "lender of last resort", not "Santa Clause of last resort".
    • by Cederic ( 9623 ) on Monday March 23, 2020 @06:23AM (#59862176) Journal

      Yeah, Government policies invariably penalise financially prudent people.

      Own your own home? No help with the rent.
      Cleared the mortgage? No relief for you.
      Have savings? You don't need state assistance if you're out of work.
      Have property assets? Sell those before you can get social care.

      Have unsustainable levels of loans and credit card debt? Of course we'll help.

      Cunts.

      • Re: (Score:2, Insightful)

        by narcc ( 412956 )

        So your complaint is that we don't help people who don't need help and, instead, help people who need help instead?

        • by Cederic ( 9623 ) on Monday March 23, 2020 @06:49AM (#59862222) Journal

          No. I find it frustrating that people who are sensible end up funding the irresponsible lifestyles of others.

          It incentivises profligacy. Why save for your old age when you can spend the money now and still get the same standard of living when you retire anyway?

        • So your complaint is that we don't help people who don't need help and, instead, help people who need help instead?

          No, it’s that if politicians can find a majority population of grasshoppers to vote themselves free money at the expense of the ants, they will indulge the irresponsible - who will go right on being irresponsible. That’s how we turn into Zimbabwe.

      • Comment removed (Score:5, Insightful)

        by account_deleted ( 4530225 ) on Monday March 23, 2020 @08:00AM (#59862440)
        Comment removed based on user account deletion
        • by Cederic ( 9623 )

          I entirely disagree. My parents were poor, I grew up in second hand clothing, half my extended family die young from cancer because of their working class lifestyle.

          Yet my parents had no debt until they bought a house, which they bought using savings and the assured income from a pension.

          I have no debt because I don't take on debt I can't afford to repay. I could easily have bought a house three times the size, at three times the price, and chose not to because it would've left me financially exposed. I've

        • Re: (Score:3, Insightful)

          by Solandri ( 704621 )

          The mistake you're making here is assuming that there is a strong correlation between being "financially prudent" and not having debt.

          That's not what "financially prudent" means. It means you only take on debt you have a reasonably good chance of paying off.

          People get student loans because otherwise it's impossible for a lower-class income to go to college.

          A lower income friend of mine paid for college in a really clever way that I wish I had thought of. She attended a cheap community college for severa

    • by pjt33 ( 739471 )

      On the flip side, you could see this as punishing irresponsible lenders, who might then be less inclined to lend to irresponsible borrowers in the future.

      • by clive27 ( 889511 )
        Lenders used to be responsible, but then one party cried poor people can't afford house, cars, colleges and started pressuring lenders to relax their standards. Easy loans then started and everything became very expensive for everyone.
        • by Nidi62 ( 1525137 ) on Monday March 23, 2020 @06:56AM (#59862234)

          Lenders used to be responsible, but then one party cried poor people can't afford house, cars, colleges and started pressuring lenders to relax their standards. Easy loans then started and everything became very expensive for everyone.

          Yeah, I'm sure the lenders absolutely hated getting payments for years and then, when those poor people inevitably defaulted on the loans, getting assets they could turn around and sell. And they certainly didn't adjust up rates or prices for everyone to ensure they would keep making profits.

    • Irresponsible lending should not be rewarded either. It's a two-way street.

      No bank is forced to lend money to anyone. When they do, the must accept the risk of default.

    • by Nidi62 ( 1525137 ) on Monday March 23, 2020 @06:33AM (#59862192)

      People who have behaved in a financially irresponsible manner, and have racked up massive debts, should not be rewarded. That goes for both individuals and corporations. Rewarding irresponsible behaviour will only lead to more irresponsible behaviour.

      Damn yeah! Screw all those irresponsible, lazy, good for nothing free loaders like doctors or small business owners! If you can't afford it up front you shouldn't do it at all! And college? If you can't afford it, you don't need it!

      Or, you know, there are a lot of things that are beneficial to society and the economy that have substantial up front costs and debt is the only way to get them started. Doctors can come out of med school with hundreds of thousands of dollars of debt. Small businesses, restaurants, etc often require debt not only to start up but also to run for the first couple years before they can really get profitable. Graduating college debt free is technically possible but getting more and more difficult, is pretty limiting, and not possible for everyone. Debt is not inherently a bad thing. But debt such as owning a 500k house and a 90k car on a 50k a year salary and carrying 20k debt on 3 credit cards is bad and irresponsible. It shouldn't be conflated with all debt though.

      • by khchung ( 462899 )

        Or, you know, there are a lot of things that are beneficial to society and the economy that have substantial up front costs and debt is the only way to get them started.

        WRONG. You could have the government pay for college for all qualified students so they won't have to graduate with crippling debt to begin with. Works quite well in many places in the world.

    • More generally, government measures should affect all people equally. I wouldn't mind some kind of helicopter money or basic income that is distributed equally to everyone.

    • Exactly correct. Irresponsible lenders should never be bailed out.

      They have perfected their modus operandi. Lend indiscriminately and demand government bail out.

      In all other countries it is the responsibility of the lender to make sure the borrower has the capacity to pay back. Only in the USA lenders give money to all and sundry with minimal verification. It is possible to provide minimal information, like, name address, ssn and borrow money. SSN is identification, not authentication. But somehow the b

    • Re: (Score:3, Insightful)

      by asylumx ( 881307 )
      20 year old me might not agree with parent, but 38 year old me who has spent the last 20 years racking up and then paying off "bad debt" does. I got my shit together and paid off my student loans, credit cards, etc. If you now forgive all that for others who still haven't gotten their shit together, you're effectively punishing me for doing the right thing and encouraging me to exploit the system going forward instead. IMO we punish people enough for doing the right thing in America already. Obviously I
    • You are going on the assumption that success or failure are 100% up to bad decisions.
      Bankruptcy protection laws, LLC, and Corporations are all about debt forgiveness. There is a degree of risk for any company or even any financial transactions.

      Do I buy an Electric Car now, where I can have 10-20 years with a car that I don't need fuel (cheaper per mile electric) and less maintenance. However If I lose my job, then I will not be able to pay off the loan.
      Do I keep my ICE/Hybrid Car, and risk oil prices goi

  • by Alwin Henseler ( 640539 ) on Monday March 23, 2020 @05:57AM (#59862098)

    To introduce a universal basic income.

    Various good reasons to do that anyway. Even better reasons to do it in face of the current crisis. Full-blown or not. Just an amount that allows everyone to buy food no matter what. Or a bit more like include housing or basic healthcare costs. Temporary or not.

    But in the heartland of capitalism? From the probably-not-gonna-happen dept...

  • Maybe not (Score:3, Insightful)

    by AmiMoJo ( 196126 ) on Monday March 23, 2020 @05:57AM (#59862100) Homepage Journal

    Problem is that this favours people who built up massive debts. Maybe they have a huge debt on real estate and cars, well now they got all that stuff for free. And if the idea gets floated people will be buying the most expensive stuff they can find on credit in the hope that the debt gets wiped out. And if you are one of the creditors, say a business offering finance because margins are so thin in your industry, it could be pretty bad for you.

    It only worked in Germany because the country was in ruins and dependent on aid anyway.

    • Would the owners of US debt [investopedia.com] (China, Japan, UK namely) be fine with giving back what amounts to trillions of Dollars? I doubt they would. I also highly doubt that baby boomers would voluntarily give up their access to Medicare and Social Security programs. This is all a huge call for panic and is unnecessary. With a loss of revenue from "social isolation" (whatever tf that means) also comes the loss of expenses. If handled correctly, resources could be stockpiled in this kind of situation. Stockpiles are val
      • by AmiMoJo ( 196126 )

        Take car sales for example. They are falling fast, and so are used prices. People suddenly only get half what they were expecting for their old car (no exaggeration) so now they can't afford a new one. The car manufacturers and dealers make a lot of money from finance deals so when this happens they usually offer better finance terms to encourage sales. But if they have a load of cars on finance and the debt is forgiven they basically sold a car for a fraction of what it cost to build and the owner gets to

        • by narcc ( 412956 )

          The obvious solution is to only eliminate debts made before some date. If we were to do something like this today, you might pick a date as old as 4 or 5 years. If things get worse, you could move that date forward, but it should be clear from the start that new debts won't be eligible for forgiveness.

          • Re:Maybe not (Score:5, Interesting)

            by AmiMoJo ( 196126 ) on Monday March 23, 2020 @07:01AM (#59862254) Homepage Journal

            I'd say just eliminate certain types of debt, like student loans and medical bills.

            Ultimately though trying to use capitalism to fix this won't work. People are going to need socialism. In the UK the government is paying 80% of people's wages if companies don't fire them, for example. It's not enough but it's a start. UBI would be even better.

            Mortgages are on hold and they need to do something about rents too. Things like car finance too.

            • by Nidi62 ( 1525137 )

              I'd say just eliminate certain types of debt, like student loans and medical bills.

              Ultimately though trying to use capitalism to fix this won't work. People are going to need socialism. In the UK the government is paying 80% of people's wages if companies don't fire them, for example. It's not enough but it's a start. UBI would be even better.

              For right now something like student loan forgiveness (or at the very least, instead of suspending interest they should have suspended payments) and guaranteed income for employees kept on payroll would take care of a good part of the "stimulus", as people would both have more disposable income and wouldn't have to worry about not having a paycheck next week so they can keep spending. Basically you would create a trickle-up stimulus. People will still buy/order food, still need to buy gas, still order thi

      • We're talking about private debt not T-bonds, you dumb-dumb.
    • by rho ( 6063 )

      Problem is that this favours people who built up massive debts

      You mean like our national debt and yearly deficits?

      Or how the banks leveraged the shit out of sketchy financial instruments and got bailed out so they wouldn't go tits up?

      A debt jubilee may not be a good idea, but if you're going to make individuals wear the hairshirt, let's talk about the real abusers of debt first.

  • by Iamthecheese ( 1264298 ) on Monday March 23, 2020 @05:59AM (#59862104)
    Any economic policy must recognize that our current standards of living are based on our current productivity and our current laws. The books say whether I have financial tokens to trade for goods and services. They do not and cannot say how many goods and services are available, except for the nearly useless metric of how many tokens there are overall for each unit of productivity. An honest look at the fundamentals of our society would show that the super rich have a lot of land and luxurious lifestyles, but most of their tokens cannot be spent on goods and services, and as such are moot. One or a few of them can spend their tokens, but that restricts all the rest due to the real-world level of energy and man hours available.

    So comparing the number of tokens available to the common man vs the very wealthy is not a useful metric. We should look at the minimum standard of living (the lifestyle of people who have no tokens) the median standard of living, and the highest standard of living. Those standards of living are what need to rise. Whether our policy changes debt, the overall number of tokens, and who we give and take tokens from the concern must be for those standards of living. Everything else is a red herring.
    • You fucker. You posted the first truly insightful comment of the decade on slashdonk when I unusually have no mod points. Not that my +1 would really make any difference.

  • by OpenSourced ( 323149 ) on Monday March 23, 2020 @06:44AM (#59862214) Journal

    Let's suppose, just one example, that the US government defaults on its debt. Default is the right word, debt-jubilee is some kind of happy spin.

    One third of the debt is held by the same government or the Federal reserve. Talk about bootstrapping. No problems there, I'd guess.

    Another third is held by foreign countries and investors. Well, nothing lost there, I suppose, except the fact that the US will keep running a deficit, and the foreign investors may think now twice about buying debt. But perhaps the nullification of interest payments would help enough with the deficit.

    And the other third is held by basically individual investors, via their funds, retirement schemes and banks. So your retirement may be halved, not funny. What happened with retirements in Germany after the war? Well, who knows, but the social security net was still to be invented, so there is that.

    That is just one debtor. But hey, it worked for Germany. I suppose the individual opinions about this jolly idea will depend on which side of the debt equation you find yourself.

  • I calculated some large number, but I may have hit too many 0's or not enough.

    4.5 trillion has a whole lot of 0's.

    As to the companies who are struggling, and previously accepted a bailout and used the money to buy back stock?

    Fool me once, shame on you. Fool me twice and declare chapter 7 or 11 as appropriate.

    Pay some token amount per full time employee at the companies with issues. Not including their management.

    Since part time employees, contractors and H1-B's don't (generally) have any benefits, neither

  • Or how about we stop paying these fat cat colleges hundreds of thousands of dollars.
    • by Nidi62 ( 1525137 )

      Or how about we stop paying these fat cat colleges hundreds of thousands of dollars.

      Some of us sacrificed to keep college costs down. My school only had 2 pools!

  • If corporations can be 'persons' and by law take all the advantages thereof (and none of the consequences), then the same should hold true for actual real people. Corporations and businesses walk away from bad debt ALL THE FUCKING TIME. You can't have it both ways. You want to make citizens responsible for their bad debt? Then do the same for corporations and businesses and make them responsible for their bad debt too. Or remove their bogus 'personhood'. Otherwise, fuck it, I am acting as a corporation of o
  • That worked because no one in Germany owned anything but their share of the pile of rubble Germany was bombed into. (at least the general population. Please allow that oversimplification here)

    And it wasn't simply a debt cut. All your assets were reduced, too! (Most of them by the war and not by the reform itself)

  • I would prefer that you capped debt at 10% of a person's income and allow a person's wages to be garnished.
    This would make it so that debt could never be debilitating. Depending on the type of debt, I would also be willing
    to consider loan forgiveness after a certain length of time. 30 years for mortages, 10 years for student debt.
    You could probably not make these retroactive without huge consequences for retirees who own a lot of this debt
    but going forward if companies knew that there was a max amount of debt a person could have and they had
    to pay it back in 10 years then they would calculate risk accordingly.

     

  • by stabiesoft ( 733417 ) on Monday March 23, 2020 @09:37AM (#59862808) Homepage
    A friend (I completely do not understand) were talking the other day and he was saying he wanted a new sports car, but could not afford it. But if he won the lottery the first thing he would do is go buy the car he lusted for. I replied with, "you would not pay off your mortgage first?". His response was a definite no. I don't get it, but he seems to have to have payments that total his income. As soon as one payment is done, he buys something else to replace the payment. Crazy. So in a jubilee, he would just start over again.

    No, I think a just as impractical idea would be a 2 or 3 month rent/mortgage holiday/car payment holiday. Just don't allow them to be collected. The apartment owners with mortgages would get a free mortgage, so they should be able to sustain no rent. Think of it as all major expenses are put on hold for a couple of months while this thing plays out.
  • by LynnwoodRooster ( 966895 ) on Monday March 23, 2020 @10:48AM (#59863074) Journal
    All debts are paid. Either by the debtor or the lender. All we're talking about is making all the lenders pay the debt - not the borrowers.

The trouble with being punctual is that nobody's there to appreciate it. -- Franklin P. Jones

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