Economics Professor: "[We’ll Have] a Never-Ending Depression Unless We Repudiate the Debt, Which Never Should Have Been Extended In The First Place"

George Washington's picture

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tittiger's picture

Duh how obvious does it have to get? Any 5th grader should have been able to come up with this obvious answer. 

Well then again considering Amerikans are government school indoctrinated...

Raging Debate's picture

Well played Sean. As well meaning as Truth in Sunshine was, adding layers to a specific debate clouds the ability to propose solutions. Three proposed solutions for one problem is fine, the mind can handle that. Most minds cannot handle three solutions for a never ending cascading tree of moral equivalance/comparison problems. 

The debate is should the citizens be liable for sovereign debt created in their name? My opinion: If Central Banking was a democratic and transparent process then YES.

If the citizens can only vote for political puppets that sign whatever bankers tell them to  then NO.


AchtungAffen's picture

Why a Debt Jubilee for America? I say no. They never allowed that with all their debtors who had to forcefully default in the best case, or just be skimmed away to please some massa at Wall Street. I wish Americans had a taste of their own medicine, the same they forced South America to swallow. But now it'll be China forcing this shit down your throats. It's only fair.

Problem Is's picture

A +5 to you, sir for that analysis...

"be bound by debts created by a ... ruling elite who contracted these debts at our expense"


"keep the parasitic banking sector alive, the economy dies. We have to kill the parasites and give a chance to the real economy to thrive once more and stop the financial [crooks]..."



"The fraud and obfuscation now underway in Washington to protect the TBTF banks and GSEs totals into the trillions of dollars and rises to the level of treason.

But GW... shouldn't you be using Bruce Krasting Quotation Bright Red instead of that Subdued GW Blue for the font color???

Bob's picture

Great work, George!

cara leaf's picture

Curiosity kills the cat question:

Why won't anyone relate dearth of employment to the tax laws exempting U.S. Foreign Subsidiaries from U.S. corporate taxes overseas (okay, not if they repatriate...what sociopath's gonna do that?) Ice the cake with slave labor...voila!  Who's going to plow money into anything over here?   No one expects a mention of this from our sociopathic legislature, but what gives with the media?  How do they avoid a problem so obvious?  Are they sociopaths, too?

Another burning question:

Why no sunshine on banks turning themselves into holding companies?  How can they NOT make money?  Borrow at zero. Buy Treasuries. Coin money (okay, so it is paper.)

One more:

Haven't we already defaulted if we have to print fake money to pay our debt?  So no one's read Fiat Money Inflation in France except me?


Cognition's picture

Debt repudiation?  Never going to happen. Look at Japan.  History tells us the most likely outcome that will solve this global debt crisis is either World War or revolution. 

Buckaroo Banzai's picture

DUH. We ARE repudiating the debt. By inflating the currency.

Nothing To See Here's picture

Refusing to honor a promise and elevating such behavior as a moral duty amounts to destoying one of the most important pillars of freedom and civilization, which is the stability of contracts.

What needs to be acknowledged is the source of the debt, and the source is monetary policy (fiat currency and central banking). The guy above who said that this is not a monetary issue is part of Zombieland.

TruthInSunshine's picture

TBTF and even non-TBTF corporate/financial entities walked away and still do, all the time.

In fact, it's acceptable practice with no moral condemnation.


Walk Away - MisesWiki

Though the government has been urging individuals to act against their financial well being and continue to make their mortgage payments even if they are underwater, big banks and commercial property owners are actively engaging in strategic defaults. Morgan Stanley strategically defaulted on 5 office buildings it unwisely purchased for $2.43 billion at the height of the bubble. The Morgan Stanley spokeswoman said "This ins't a default or foreclosure situation, we are going to give them the properties to get out of the loan obligation."[9] Similarly, Taubman Centers, Inc., strategically defaulted on a $135 million mortgage after the securing properties value fell to $52 million.[10]



Tishman's 'Strategic Default' on Stuyvesant Town


Milestones's picture

It is interesting to see the level of debate has risen and the subject matter has become much more focused in the past month or so. It would point to the thing I never really expected; more and more different people are finally zooming in on the real issue of the 21st century-how do we begin to restore human values in a Dolca La Vita world.

A new paradigm is struggling to be born; we are in the birth pangs and there will be hell to pay in the near future.

Great article G.W. Ya outdid yourself.      Milestones 

Milestones's picture

Typo error it's title (The movie) was La Dolca Vita "The Good Life" in Italian filmed in the late 50's or early 60's with (I;m going to butcher the name) Mastronni and Anita Elkberg. The scene of them both wading in the fountain was sublime, and so prophetic of today.     Milestones

Nothing To See Here's picture

Refusing to honor a promise and elevating such behavior as a moral duty amounts to destoying one of the most important pillars of freedom and civilization, which is the stability of contracts.

What needs to be acknowledged is the source of the debt, and the source is monetary policy (fiat currency and central banking). The guy above who said that this is not a monetary issue is part of Zombieland.

Nothing To See Here's picture

Refusing to honor a promise and elevating such behavior as a moral duty amounts to destoying one of the most important pillars of freedom and civilization, which is the stability of contracts.

What needs to be acknowledged is the source of the debt, and the source is monetary policy (fiat currency and central banking). The guy above who said that this is not a monetary issue is part of Zombieland.

Sean7k's picture

The stability of contracts assumes TWO parties that are in agreement to what the contract requires from both parties. I don't remember signing off on the debt, the Constitution or anything else. In fact, less than one hundred people signed off on the Constitution. 

The assumption by government, that they have legally binding power of attorney over the wealth of the people that inhabit America is the biggest con ever perpetrated.

Nothing To See Here's picture

On that I agree. But that's what makes removing the government's ability to borrow and to print the most pressing issue, rather than just saying that a contract can be repudiated.

Besides, the Constitution says that the currency should be in gold and silver, not fiat paper. It the Constitution was only followed, it still would be a huge improvement.

Blithering ORSA's picture

So GW is the guy back in college who never payed his dorm hall fees and still expected to eat 4 slices of pizza at every hall meeting.  Expecting him to pony up his dues was immoral. 


I feel the same way about my mortgage and car note.  The dude hiring the repo-man would not-so-respectfully disagree.

dolly madison's picture

The people did not want to bail out the banks, but the bought politicians did it anyway.  I agree with the article.  We will not get out of a recession until the we can start over after default.



We all know that you are a paid shill attempting to spread your pestilence here on ZeroHedge. Do yourself a favor and click on your own screenname, then click on the "track" option. See any common denominators do we?

P.S. Fuck you

LFMayor's picture

Holy shit!  Is this "Bubba" your ex wife's login or some shit, George?  What the hell did you do, pick on this guy in high school?

PulauHantu29's picture

Interesting article. I am seeing more people "just walk away" from their houses.....they decided not to live "rent free" but instead moved far away to other states and left the house empty and just stopped paying the mortgage. Most of these folks even had placed a 20% down payment .....interesting times....mmmm.

One problem

hidingfromhelis's picture

Powerful stuff from start to finish, GW. Thought this section was especially relevant:
"Odious debt is an established legal principle. Legally, debt is to be considered odious if the government used the money for personal purposes or to oppress the people. Moreover, in cases where borrowed money was used in ways contrary to the people’s interest, with the knowledge of the creditors, the creditors may be said to have committed a hostile act against the people. Creditors cannot legitimately expect repayment of such debts."

Having the ability to create "money" through debt, then seize tangible assets that were pledged as collateral is key for TPTB. Seems the pace of looting is accelerating, and I suspect that the oligarchs know the party is coming to an end for them. Now they're brazenly looting whatever they can get their hands on before it's down to trying to get blood from a turnip.

On a related note, I'd like to belly up to the discount window for a virtually interest-free loan; I pledge as collateral some land in Paraguay as well as houses in Chicago and Texas. Does that work for you?

MethodMan's picture

Something tells me the real George Washington would raise the militia and forcibly evict the "repudiators."

CompassionateFascist's picture

The militia will rise...after Ponzi collapse, and when the ZOG attempts to save itself via Martial Law, gun- and PM-grab.

bubba1231's picture



You are a slimy coward who thinks that if they put enough words on a page they are true.  Yet literally 99% of what youprint is BS.  You are a disgrace.

pussfeller's picture

++ just for quoting Matthew 6:12! Even the Law had provisions for TOTAL debt forgiveness every 7 years.

traderjoe's picture

Count me among those that believe the entire banking system is a scam - create money for free, loan it out at interest taking collateral in the process. Eventually the banks will own the real assets from money created from thin air.

And why does a sovereign country borrow its own money - at interest - from private corporations?

geno-econ's picture

You would also be repudiating global trade .The largest consumer nation wants it for nothing---who would sell them with little prospect to get paid and if they can no longer borrow money. Not a bad idea in order to bring us to our senses. Other possibility is for China to partially forgive some of the US debt it holds. Latter is more likely as China would only forgive enough to keep us consuming and beholding---much as banks have learned to do with US consumer. US did the same in Latin America and Africa for many years when we were a trade surplus nation. Now the shoe is  on the other foot and we are fast becoming a third world nation.  Best to repudiate everything now and start all over again on the road to real recovery and wealth creation.

bubba1231's picture


How is it that this 9/11 denying coward is still alllowed to post here?  GW is literally a worthless liar - who listens to anything he has to say?  GW have you apoogized for $hitting all over the families of 9/11 yet?

George Washington's picture

Hi Bubba!  Nice use of numbers 2, 4, 5, 6 and 7!

(In fact, family members of people who died on 9/11 want a new investigation.)


Sean7k's picture

Surprised you're still willing to show your traitorous avatar in these parts. 9/11 was a US government false flag murder of almost 3000 US citizens. Thank you GW's for all your work.

oldmanagain's picture

It does seem to be us versus the banks at the animal spirits level.

You notice I did not use an anal reference as is the Zerohedge custom.

RockyRacoon's picture

Looks like a slow-mo Jubilee is starting at the bottom and working its way up -- whether TPTB like it or not.   Stop that mo-fos!  

Arch Duke Ferdinand's picture

Senate Majority Whip Dick Durbin (D-Ill.) said a presentation of the Gang of Six's plan to cut the deficit by $3.7 trillion Tuesday morning left many senators with a positive feeling.

Read between the lines...

OT: Hilarious 2 Min Vid...

TruthInSunshine's picture

It's not so simple.

All debt isn't created equal, nor does all debt carry the same moral fiber.

Here's a simple question to juice the debate:


If I lived responsibly and well underneath my means, even paying cash and rebuffing credit to purchase my home and cars, while my neighbor purchased a Donzi, Aston Martin Vantage, G5 and a $5,000,000 home, all on credit, and based on embellishment of actual income, should my neighbor be relieved of his debt, and if you say yes, is this fair to me?


Now, if we are talking about sovereign debt, racked up by a nepotistic network of Central Bankers and Legislators, essentially dishing out free money to friends of theirs, using the taxpayer as collateral, the dynamics of said morality change dramatically.

Sean7k's picture

You're attempting to change the terms of the debate. The question concerns sovereign debt only. Your example is misdirection.

TruthInSunshine's picture

I thought my comments were pretty forthright and acknowledged the difference in dynamics and moral issues as between private and sovereign debt.

Sean7k's picture

Your example concerns private debt, by a single citizen through contracts with single entities- that has nothing to do with debt repudiation of sovereign debt or odious debt. Your attempt to introduce a completely different set of parameters for the sake of creating moral hazard and implying the same moral hazard is attached to debt repudiation is disingenious.


boiltherich's picture

Sovereign debt repudiation carries within it the implication of personal and private debt repudiation as well since the sovereign is the issuer of legal tender, when the sovereign repudiates it's debts the ripple effect will also take out private debt.  Since most of the money ever invented by the sovereign is in fact ledger entries on books that are seen as debts owed by the taxpaying citizens, with very little of that ever being legal tender specie at any given time, wiping it out would in fact make the repayment of private debts not only intolerable but impossible. 

Also we live in a double entry bookkeeping world where all debts of the sovereign are assets on someone else's books.  Wipe out those debts and you also wipe out those assets. 

It would be fine by me since nearly all that debt is held by the investor class who by right should have paid into the tax base in the form of revenues to the government rather than lending to the government at interest thus making the poorer and middle classes responsible now not only for legitimate ongoing government outlays but for the payment of unsustainable interest flows to the rich. 

Maybe what we should have had all along was to call all income taxes not a tax but a loan which the government would supply you and your offspring with an endless flow of welfare...I mean interest payments.  Why should only the rich get to avoid paying "taxes" while substituting loans that will give them unearned income forever?  All those years I paid income taxes and I should have been allowed to skip those taxes if I would instead pledge to lend that money to the government instead, where is my check assholes? 

TruthInSunshine's picture

I'm really not intending to be disingenuous,  but maybe I'm not parsing the admittedly core detail enough.

But, just as a reference, this is but one of a few items in this article that could conceivably lead a prudent reader to potentially assume the debt being discussed isn't as limited as you claim:


Ambrose Evans-Pritchard wrote in 2009:


In the end, the only way out of all this global debt may prove to be a Biblical debt Jubilee.

So, maybe that selection really is just limiting the debate purely to sovereign debt, and that's what was meant by "global."

OTOH, there are technical issues that interweave household debt and sovereign debt now that central banks have identified and intervened in the affairs of what are now 'Too Big To Fail' banks (that are also lenders and creditors to individuals).

Sean7k's picture

Glad to hear it and I apologize if you're sincere, still, to read personal debt obligations from the article is a stretch beyond the dreams of Gumby or Stretch Armstrong...

TruthInSunshine's picture

My apologies are always genuine.

Although, I think that you and I (and most sane people) are on the same page in terms of sovereign debt, in actuality.

chunga's picture

QUICK! Borrow some money from TBTF and don't pay it back!

TruthInSunshine's picture

They refuse to let me belly up to the discount window.

I was going to borrow a few billion @ .000000001% interest and invest it in  appreciationtainium.