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The Modern Debt Jubilee

Tyler Durden's picture





 

From Bill Buckler, author of The Privateer

The Modern Debt Jubilee

The modern “debt jubilee” is characterised as “quantitative easing for the public”. It has been boiled down to a procedure where the central bank does not create new money by buying the sovereign debt of the government. Instead, it takes an arbitrary number, writes a check for that number, and deposits it in the bank account of every individual in the nation. Debtors must use the newly-created money to pay down or pay off debt. Those who are not in debt can use it as a free windfall to spend or “invest” as they see fit. This, it is said, is the only way left to restart economic “growth” and finally get the spectre of unending financial crisis out of the headlines. It is the latest of a long string of “print to cover” remedies.

The major selling feature of this “method” is that it provides the only sure means out of what is called the global “deleveraging trap”. This is the trap which is said to have ensnared Japan more than two decades ago and which has now snapped shut on the whole world. And what is a “deleveraging trap”? It is simply the obligation assumed when one becomes a debtor. This is the necessity to repay the debt. There are only three ways in which a debt can be honestly repaid. It can be repaid with new wealth which the proceeds of the debt made it possible to create. It can be repaid by an excess of production over consumption on the part of the debtor. Or it can be repaid from already existing savings. If none of those methods are feasible, the debt cannot be repaid. It can be defaulted upon or the means of “payment” can be created out of thin air, but that does not “solve” the problem, it merely makes it worse.

The “deleveraging trap”, so called, is merely a rebellion against the fact that you can’t have your cake and eat it too. So is the genesis of the entire GFC. Debt can always be extinguished by means of an arbitrarily created means of payment. But calling that process QE or a Debt Jubilee doesn’t (or shouldn’t) mask its essence, which is simple and straightforward debt repudiation.

A “debt jubilee” is the latest attempt to make a silk purse out of a sow’s ear. It is the latest pretense that we CAN print our way to prosperity, but only if we do it in the “right” way.

 


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Sun, 08/19/2012 - 12:02 | Link to Comment Stackers
Stackers's picture

I wonder what the moral hazards are of writing every person in the country a check to pay off over indebtedness ......hmmmm

Sun, 08/19/2012 - 12:03 | Link to Comment bugs_
bugs_'s picture

they won't use it to pay down debt.

Sun, 08/19/2012 - 12:13 | Link to Comment JPM Hater001
JPM Hater001's picture

Remember the inflation Bush's checks caused?  $140 barrel oil will seem quaint...

Sun, 08/19/2012 - 12:19 | Link to Comment malikai
malikai's picture

That inflation was just the blow-off top of the commodities bubble combined with the crushing of the Bear. The checks' contribution was minimal at best. Of course, it was debt financed, not the 'tax rebate' they called it, so it was inflationary. But not meaningfully, IMO.

Sun, 08/19/2012 - 13:11 | Link to Comment Doña K
Doña K's picture

I saw a nice sailboat for sale. When do I get my check?

Sun, 08/19/2012 - 17:08 | Link to Comment AGuy
AGuy's picture

"I saw a nice sailboat for sale. When do I get my check?"

"As a sailboat sales man, I regret to inform you that because of the financial conditions we are forced to triple our prices immediately. Be sure to make a purchase soon because we can't gaurentee that our prices will remain at this discounted level (+300% of yesterday's price) beyond a few days."

"As a Visa\Mastercard servicer, we regretfully inform you that your your credit card interest rate has risen to 250%. We understand that this is a difficult issue, however, we are subject to market pricing and are forced to make adjustments."

"Dear Taxpayer, We have recently revised our mill rates to reflect recent economic changes. Your new effective tax payment will be increased by...."

You get the picture. Bottom line: No free Lunch Served!

 

 

Sun, 08/19/2012 - 21:06 | Link to Comment 3rdgrader
3rdgrader's picture

A minor increase of the M3, distributed equally (by amount) to all, without repayment required, would only slow the increasing rate of the transfer of wealth from the poor to the rich.

A major increase of the M3, if large enough, would actually only temporarily halt the transfer of wealth.

 I wouldn't hold my breath if I was you.

Sun, 08/19/2012 - 17:27 | Link to Comment GMadScientist
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When you get your Somali butt on-board and manage to sell it for salvage.

Sun, 08/19/2012 - 12:20 | Link to Comment vast-dom
vast-dom's picture

been saying for over year that QE for public was the final true real QE that would work, until we need QE(p)2, 3, 4....infinity....and the analogue to TWIST will be ObamaCare....we are so fucked!

Sun, 08/19/2012 - 13:46 | Link to Comment Poor Grogman
Poor Grogman's picture

Cash for clunkers...

Now cash for stackers....

Still its less subject to wind drift and cheaper than a heli drop I suppose

Sun, 08/19/2012 - 15:36 | Link to Comment Don Keot
Don Keot's picture

This is what I think I am going to do.  Buy a load of gold and silver on my credit card, so I will have debt, and then when I get my check, I can pay off my debt, as required, and thereby beat the PM todamoon rush. All I need to know is, what is the estimated size of the check.

Sun, 08/19/2012 - 19:47 | Link to Comment Papasmurf
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The Bush check was what, $500.  Don't stack too high.

Sun, 08/19/2012 - 12:22 | Link to Comment Stackers
Stackers's picture

Well technically as long as "most" of the money is used to pay off debt created through fractional reserve banking, then the new money will just disappear back into the vacuum it was created from in the first place, less the interest due of course, which means most of it will just end up balancing bank balance sheets and allowing them to pocket the interest they would not have collected if the debt was simply written off making them insolvent and bankrupt. It's not a bad plan and is very non-inflationary, but it is neck deep in moral hazard.

Sun, 08/19/2012 - 12:24 | Link to Comment vast-dom
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after QE(p) more debt will be incurred by public necessitating QE(p)2 and so on and so forth. No jobs. No structural reform. Ergo no solution. Just staggering out the CRASH which is desperately needed in order to reset this ponzi scam back to functioning FREE markets.

Sun, 08/19/2012 - 12:26 | Link to Comment Stackers
Stackers's picture

exactly, the moral hazard is that now everyone will be expecting it in the future and it will just accelerate piss poor financial planning we already have.

Sun, 08/19/2012 - 12:47 | Link to Comment vast-dom
vast-dom's picture

precisely. sit back dribbling sputum with your hand out waiting for QE(p). You can buy crack, beer, junk food, toxic soda, candy and you will OD on that and your next easy infusion. managed expectations for self-entitled entitlements. the zombies are being groomed. 

Sun, 08/19/2012 - 13:11 | Link to Comment laozi
laozi's picture

I prefer the new debt jubilee to bank bailouts. If the public is forced to pay down debt with their money, the banker will lose. In a perfect world, interest would be pushed up, to the level where people still in debt would suffer still, while the debt-free man consumes, and gives the finger to the debtor.

Instead of letting the banks reap the harvest of money creation (inflation), this will be given to the common man. Bankers lose.

Moral hazard, yeah, but at least it is fair to the non-debt slave (not so much to the saver).

Sun, 08/19/2012 - 13:51 | Link to Comment Things that go bump
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I don't think they can raise interest rates.  Government can't pay the interest on its borrowing if they go any higher.  

Sun, 08/19/2012 - 15:38 | Link to Comment Curt W
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If you must use it to pay debt, it is a bailout for the banks, they will get paid instead of people defaulting.

Mon, 08/20/2012 - 08:43 | Link to Comment laozi
laozi's picture

No, everyone will pay off debt. Not just debtors on the verge of default. It will shrink the size of banks, make them less powerful. Think about it, if all debt was repaid, the bank would be out of business.

Sun, 08/19/2012 - 12:48 | Link to Comment Mad Mad Woman
Mad Mad Woman's picture

Neck deep in moral hazard?  Let me get this straight, by bailing out the people there is moral hazard, but bailing out the banks is not then?  

At some point in time, preferably sooner than later, the people will need debt repudiation. If govt would've helped Main Street to begin with maybe we wouldn't have these problems now. Instead govt gave away tons of money to Wall Street and the banksters with no strings attached. That's good & bailing out Main Street isn't. Twisted logic by a lot of commenters here at ZH. 

Main Street & TRUE small business was left to twist in the wind with absolutely no help at all. WTF??

Some of you say it's too bad for the people, they racked up record debt so it's time to pay the piper. Isn't that also what the banksters & Wall Street did too? And Wall Street & banksters have more debt now than they ever did (all the derivitives & associated horse trading tricks). Trillions in debt. It's time to let those banksters fail. They'll probably take us all down with them but, that's the way it goes. The people are tired of bailing out the banksters & Wall Street. Time to let them fail.

Sun, 08/19/2012 - 12:54 | Link to Comment vast-dom
vast-dom's picture

nanotechnology will turn lead into gold and build bridges instantly from nothing but their very own particles. so no one will need to work. in fact the word work will dissapear from the lexicon. people will live wherever they want and have unlimited monies. mansions for all in tiny high-tech coffin-sized spaces where you can be anyone do anything.

 

QE x QE(p) to the Nth.

Sun, 08/19/2012 - 13:34 | Link to Comment francis_sawyer
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You'll shoot your eye out kid!

Sun, 08/19/2012 - 14:51 | Link to Comment Freewheelin Franklin
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POST-SCARCITY OR BUST!!!

I got a slightly used 3-D printer you can have.

Sun, 08/19/2012 - 16:30 | Link to Comment Anusocracy
Anusocracy's picture

One era's technology is another era's magic.

The future is so bright I gotta get a bigger brain.

Sun, 08/19/2012 - 13:27 | Link to Comment Acet
Acet's picture

Actually, on the subject of Moral Hazard, this is not so much a problem as long as everybody gets the same amount and those who have debts are forced to use the money first to pay those debts and then (only of there is any money left from paying the debts) they can spend it.

This is because those with more debt won't have much or any money left over after paying up their debts while those with little or no debts will have a bonanza that they can enjoy to the fullest if they so wish.

Sun, 08/19/2012 - 13:38 | Link to Comment nmewn
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That amount of money, in real circulation (instead of stacked on digitized pallets...bank ledgers) I think, would be immediately hyper-inflationary. The ten thousand dollar boat just went to twenty thousand.

Its got to be debt wipe out, not printing to pay off debt...IMHO.

Sun, 08/19/2012 - 14:17 | Link to Comment michael_engineer
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Not much chance of the various international flavors of debt holders and stuckees agreeing on any jubilee and reallocation of resources and liabilities and honoring agreements in place that were expecting the status quo instead of caveat emptor.

Sun, 08/19/2012 - 15:24 | Link to Comment nmewn
nmewn's picture

I'm quite sure they will be very disappointed one way or the other, eventually.

I guess its all in how one looks at it. Perspectives.

Our government could say to the Euro-zone (for example) look, we spent over a half century on your soil after you destroyed the place during two world wars, thus allowing you the luxury to "experiment" in all sorts of grand society schemes without having the burden of taxing your populace for a military per se.

This is the price, its non-negotiable and we're sorry past leaders on both sides didn't see far enough into the future to account for it. If its good enough for our GM bond holders its good enough for you. Surely you can see the fairness of law means it must be applied equally.

And by the way we're closing our bases as a cost saving measure...have a nice day and give von Rumpoy our regards ;-)

Sun, 08/19/2012 - 16:28 | Link to Comment Ghordius
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LOL - you do have a quite interesting opinion on why the US is the senior partner of NATO

Sun, 08/19/2012 - 17:35 | Link to Comment zhandax
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What is proposed here is not a genuine debt jubilee.  This is a keynesian perversion of a debt jubilee.  In the real thing, the creditors write off all the debt and the system is cleansed.  In the perversion proposed here, the fed simply swaps one pile of debt for another, accomplishing nothing.  Oh, and just in case anyone forgot fiat econ 101, if a genuine debt jubilee did occur, there wouldn't be any dollars when it was completed.  All our FRNs are debt.

Sun, 08/19/2012 - 17:54 | Link to Comment nmewn
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Well, we've all got our opinions Ghordius...ranging from the conspiratorial to the practical to the absurd.

As a practical matter NATO, was the counter weight to the Warsaw Pact and the Soviet Union, which is no more. I think you guys are big enough to handle the big bad bear now and all your internecine across the border backyard squabbles. And the Italian, British and French navy should be more than enough to protect your trade routes.

Good luck ;-)

Mon, 08/20/2012 - 05:35 | Link to Comment Disenchanted
Disenchanted's picture

 

 

Why does NATO still exist?

 

For Americans, how much of our FICA taxes have been spent on things like NATO?

 

“Everyone needs to understand who NATO is: NATO’s military is funded — at least 25 percent — by the United States, and so when you look at the Obama administration saying it’s passing it off to NATO, it’s still going to be run out of Washington, it’ll still be U.S. tax dollars that are helping to run the operation. ~ Congressman Dennis Kucinich

Mon, 08/20/2012 - 08:32 | Link to Comment nmewn
nmewn's picture

Thats what I'm telling Ghordius below...but my reasons may be different from yours ;-)

Still, its pull the plug time.

Mon, 08/20/2012 - 06:02 | Link to Comment Ghordius
Ghordius's picture

how about this little fact: France and Britain would have been perfectly happy to continue to "take care" of their imperial interests, and were happily landing in a joint operation (with their ally Israel) on the shores of Egypt, 1956, until Uncle Sam called them back. It's called the Suez Crisis.

Another fact: Germany was utterly disarmed after WWI. How long took them to rearm? Do you think the european industry (BMW and Mercedes Benz come to mind) could not be able to mass produce drones and the future generations of robotic light tanks? Particularly if the Russians have a stake in the rearming process, like they did with Germany in the 30's?

NATO still is the armed branch of the current commercial empire, led by the US. Don't underestimate the current equilibrium.

Mon, 08/20/2012 - 08:27 | Link to Comment nmewn
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"France and Britain would have been perfectly happy to continue to "take care" of their imperial interests..."

Which is a by product of what I'm advocating...among other things.

"Another fact: Germany...Russia..." etc.

Not our problem.

"NATO still is the armed branch of the current commercial empire, led by the US. Don't underestimate the current equilibrium."

Well aware of it...I thought I was clear about America ending its involvement with NATO.

You see, its like this. America can (militarily) project itself across the world. If Europeans wants to or needs to do the same...they will need to pay for it themselves...all of it. 

As I said, its my opnion that Europe has gotten a free ride to conduct their little social experiments in a vacuum without having the real expense of providing national security for its individual citizens. That is a real cost that is borne by my taxation and lately Bernanke's printing press.

Its very easy to sit smuggly by (not you Ghordius but Euro-socialist trash in general) sipping coffee and commenting on Anerican affairs, how fucking stupid we Americans are, how fat we are, how Europe has it all figured out with their "health care"...vacations...blah blah blue blooded, hoity toity, pinky finger extended nonsense...while I pick up the tab for their national security.

The European lifestyle would be very different without our presence. Its my desire for it to change. The shops, restaurants, bars etc. in the towns around the bases as well would be different without the "stupid Americans" there. The left there will say good riddance and I will say good luck.

We will always have our fraternal-cousin bonds...but its time to pull the plug on this special arrangement.

Mon, 08/20/2012 - 08:38 | Link to Comment Disenchanted
Disenchanted's picture

 

 

"while I pick up the tab for their national security."

 

Speaking of "special arrangements..."

 

I'm tired of picking up the tab for Israel's security as well. You?

Mon, 08/20/2012 - 09:11 | Link to Comment nmewn
nmewn's picture

And Egypts 2.2 billion as well I trust?

Mon, 08/20/2012 - 14:23 | Link to Comment Disenchanted
Disenchanted's picture

 

 

and Saudis and Pakistan and on and on...

 

We are borrowing to give away goodies globally('aid' 'loans' etc., etc).

 

I am in the camp that thinks if the goodies are going to be passed out, it should first happen here at home.* Isn't that why this govt. was formed, to look after the real interests of it's citizens primarily?

 

Don't answer that, because something tells me that's another one of those things I'm finding out was a lie all along.

 

* I know I know...we can't afford that either. Because we are fucking broke and have been for quite some time. Some say our 'brokeness' as a nation goes back to 1933.

Mon, 08/20/2012 - 16:55 | Link to Comment nmewn
nmewn's picture

Well, tis is oin to be interestin and somewat embarrassin, I ave two keys side by side tat aren't workin...no, I'm not kiddin...lol...comes out lookin like a bad lisp.

I'll just use underscore_.

It was formed to make everyone equal under t_e rule of law. 2/3 rule aside and citizens only. T_ey started (very early) to circumvent t_e law and it continues to t_is day. It was done for t_e very best intentions but it was wron_.

Its not t_at conservatives & libertarians are _eartless, we are not. We just look on a lon_er timeline at t_e dama_e t_at can be done wit_ flawed policies.

An article on wat I'm tryin to say...(I've really ot to blow out my keyboard)...lol.

http://www.lewrockwell.com/orig4/ellis1.html

Pay careful attention to te last few sentences from link...

Tue, 08/21/2012 - 05:41 | Link to Comment Disenchanted
Disenchanted's picture

 

 

Well this tradition has certainly expanded(from your link):

 

Money with them is nothing but trash when it is to come out of the people. But it is the one great thing for which most of them are striving, and many of them sacrifice honor, integrity, and justice to obtain it."

 

Nowadays instead of "most of them" it could read all of them, and not be far from the truth.

Tue, 08/21/2012 - 06:42 | Link to Comment nmewn
nmewn's picture

Very few t_in_s public s_ould be compelled to fund precisely because of t_at...its very easy to _ive away candy w_en its someone elses candy.

My keyboard is fried...we'll talk at len_t_ some ot_er time.

Seeya ;-)

Mon, 08/20/2012 - 09:20 | Link to Comment Ghordius
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Yes. But a quite common non-US view is that all the goods sent to the US in exchange for "the full faith of the US Treasury" are only a modern form of tribute... And that Europe has subsidized the US lifestyle for over twenty years, and then China is doing it since ten years.
China owns two trillion USD from this.

Mon, 08/20/2012 - 09:43 | Link to Comment nmewn
nmewn's picture

I'm all for cutting off the "tribute".

And communist China can take a ride on a dragon for all I care.

If I were so inclined, which I'm not usually...but as an exercise (let me try on my "central planning hat")...they will have to deal with their own under utilized labor force. We have able bodied unemployed and welfare recipients here too. If they want a check from the state we have unused factories that can be converted to making i-shit right here.

Boy, this central planning stuff is easy...lol.

It ain't getting paid back, the government is broke Ghordius.

Mon, 08/20/2012 - 11:24 | Link to Comment Ghordius
Ghordius's picture

+1 "central planning is easy" !!! LOL don't make a habit out of wearing that hat, otherwise you'll start wondering what jobs you would have to find for the returning legions!

nevertheless, one little thing: the US government is broke - in gold terms - since it defaulted in 1971. So as you can see, some things can run on faith for a while...

Mon, 08/20/2012 - 17:01 | Link to Comment nmewn
nmewn's picture

Yes, but woo come bejind will not be impressed by wat we ave done.

Lookin for keyboard cleaner now...see above for explaination ;-)

Sun, 08/19/2012 - 17:49 | Link to Comment Stoploss
Stoploss's picture

Bingo.

Technically there is no word in existence to properly describe the type of inflation that will occur as a result of debt jubilee.

I submit:  Warp drive inflation. (Hyper inflation assumes you will stay in your own galaxy), we're way past that now.

Sun, 08/19/2012 - 15:14 | Link to Comment Anusocracy
Anusocracy's picture

Debt jubilee is a completely asinine idea.

You are rewarding the useless idiots that voted for the alpha-male useless idiots that caused all this.

 

Sun, 08/19/2012 - 15:27 | Link to Comment TIMBEEER
TIMBEEER's picture

Idiocracy. There is a whole movie dedicated to it. We're on a good way there, just keep on the good work with the food stamps and helicopter money.

Sun, 08/19/2012 - 16:22 | Link to Comment Anusocracy
Anusocracy's picture

Government: anti-civilization, anti-evolution.

All that a moron could desire.

Mon, 08/20/2012 - 05:28 | Link to Comment Disenchanted
Disenchanted's picture

 

 

 

"repudiation"

 

Lets make this word much more popular. I'll guarantee banksters hate it...

 

Repudiate all odius (public) debt!

 

 

The Concept of Odious Debt

 

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.

 

The United States set the first precedent of odious debt when it seized control of Cuba from Spain. Spain insisted that Cuba repay the loans made to them by Spain. The U.S. repudiated (refused to pay) that debt, arguing that the debt was imposed on Cuba by force of arms and served Spain’s interest rather than Cuba’s, and that the debt therefore ought not be repaid. This precedent was upheld by international law in Great Britain v. Costa Rica (1923) when money was put to use for illegitimate purposes with full knowledge of the lending institution; the resulting debt was annulled.

 

"Odious debt" is a narrow legal term that refers only to a very specific category of debt. However, some debt that is not odious may nevertheless be illegitimate.


 

I'd prefer repudiation over jubilee. To me accepting the form of jubilee in this article implies that the (public)debt was legitimate.

Private debt is another story...

Mon, 08/20/2012 - 13:34 | Link to Comment KnowIDontKnow
KnowIDontKnow's picture

+1

The only way out of this crisis is for the total debt/income level (including private debt) to return to something closer to 100% from its current 250%.  It will happen, that much is certain.  The question is whether it will occur through a chaotic collapse or some sort of orchestrated process.  A debt jubilee where everyone gets the same benefit is way more fair than a collapse in which insiders get the information first and trade on it.

Sun, 08/19/2012 - 13:46 | Link to Comment Things that go bump
Things that go bump's picture

I don't see how this fixes the problem of a massive, intrusive, federal government that has become dangerous and can no longer be funded.  This will permit it to continue its trend of growing even larger and more intrusive.   

Sun, 08/19/2012 - 14:47 | Link to Comment Anusocracy
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Gold Medal Winner

Sun, 08/19/2012 - 17:55 | Link to Comment MillionDollarBoner_
MillionDollarBoner_'s picture

"moral hazard"...wots that, then?

I thought that was a quaint and "barbaric" concept...

Sun, 08/19/2012 - 14:29 | Link to Comment Silver Bug
Silver Bug's picture

Debt jubilee's used to be standard practice. This is of course until the banksters took over.

 

http://ericsprott.blogspot.ca/

Sun, 08/19/2012 - 17:00 | Link to Comment midtowng
midtowng's picture

I wonder how they would force people to repay debts? I assume it is possible, I just don't know how.

Debts that can't be repaid won't be repaid. It's either this or massive defaults strung out over a very long period of time.

Sun, 08/19/2012 - 17:29 | Link to Comment GMadScientist
GMadScientist's picture

Liens. Stupid debtors won't ever actually see a dime.

Sun, 08/19/2012 - 12:52 | Link to Comment analyzer_66
analyzer_66's picture

it will never ever happen, Obongo does not understand anything related to economics and the monied interests would sooner take option B where we are all shooting each other in the streets over the last loaf of bread, gallon of milk or gas etc.  Besides this, Obongo is already taking care of all his bruthas with the EBT cards, so what if a brutha has 6 false identities so he can collect 6 times his share of welfare bennies in 6 different cities AND collect 6 income tax refunds..

once a violent civil uprising starts on US soil, the DHS has all the ammo they need to quell it

 

Sun, 08/19/2012 - 15:15 | Link to Comment anonnn
anonnn's picture

I deliberately interrupt to caution:

The Tyler-sponsor  and the author of this post seems to badly misunderstand the concept of "Debt Jubilee". It is an ancient term for a wise practice that enforces fairness on both the debtor and lender.

Please seek and learn the history/definition of Debt Jubilee.

Mon, 08/20/2012 - 00:09 | Link to Comment Clinteastwood
Clinteastwood's picture

Yes, you have it right.  The borrower is the servant to the lender until the debt jubilee. What happens after that is........usually..........the borrowerer again becomes servant to the lender for seven more years.    Rinse, repeat.

Sun, 08/19/2012 - 18:43 | Link to Comment Peter Pan
Peter Pan's picture

The debt jubilee should not be through writing every person a check but by confiscating the close to 20 trillion dollars stacked away in secret bank accounts and havens across the planet.

Sun, 08/19/2012 - 12:15 | Link to Comment malikai
malikai's picture

Bill, you should have also explained the other side of the Debt Jubilee. The side of the creditor.

Sun, 08/19/2012 - 12:38 | Link to Comment mikla
mikla's picture

Agree, and +1 to you.

However, there *are* *no* creditors.  All creditors everywhere are insolvent, and will remain so after this "debt-jubiliee".

Pensions, Munis, banks, central banks, governments -- they are all insolvent.  Half of the S&P500 will still go-to-zero.

This will be the mechansim by which the "little-guy" exits the system -- although he'll exit anyway (through default, or after the "debt-jubilee", through future non-participation because all faith in the system is lost).

The issue is collateralization and leverage -- there is no scenario by which even this "jubilee" will de-lever the banks (it's a math problem).

Fundamentally, the banks are not accounting for loans-in-default.  They are still "booked" as "money-good", including the future revenue streams.  Even if the loan-today is paid-in-full, the problem is that the account is "settled" and that leveraged-future-revenue-stream does not happen, but the bank cannot pretend it will happen (because the account was settled).  The result:  Massive de-leveraging, as the banks must NOW acknowledge the future-debt-service-revenue will not happen.  (It won't happen anyway because the account is in default; but, the banks are not being forced to account for that default.)

So, the *worst* thing for the banks is for consumers to pay-off-their-loans, because it would trigger massive bank de-leveraging (they would have to perform mark-to-market now), as opposed to the current issue that all banks are leveraged-beyond-no-return, and lying about it.

Summary:  Loan paybacks means MASSIVE deleveraging.  The nominal amount "paid-back" is insignificant, because the current-accounting assumes future exponential debt servicing.

Humans have a hard time understanding exponential equations.

Sun, 08/19/2012 - 12:59 | Link to Comment Mad Mad Woman
Mad Mad Woman's picture

FUCK THE BANKS!!

If they would've done proper accounting in the first place they wouldn't have to worry so much about de-leveraging. That's the banksters problems, not Main Street's problems. It's high time that Wall Street and the banksters pay for their mistakes. The chickens are coming home to roost bitchez!!

FUCK THE BANKS!!

Sun, 08/19/2012 - 13:10 | Link to Comment mikla
mikla's picture

Agree on your first and last statements.

However, that's going to happen either way, and that's A Good Thing(TM).

The only issue is the mechanism by which Main Street "disconnects" from the banking system, which is something that will occur either-way.

Sun, 08/19/2012 - 13:14 | Link to Comment centerline
centerline's picture

Likewise, the era of having your cake and eating too is going to end.  The real questions revolve around how it all goes down and what the best position will be to take (depending on circumstances).

Sun, 08/19/2012 - 12:31 | Link to Comment financial apoca...
financial apocalyptic contagion's picture

yea wtf

half-baked article left out the fact that most big players are debtors and creditors 10 times over

Sun, 08/19/2012 - 13:20 | Link to Comment laozi
laozi's picture

Sorry, but I do not understand how that matters. Every person gets $10,000. If you have debt, you have to pay it off. If you are also a creditor you will receive money from a lot of people (paying off their debt). So?

Sun, 08/19/2012 - 15:19 | Link to Comment Pool Shark
Pool Shark's picture

 

 

Sounds brilliant; only one little problem:

money!=wealth

Printing and handing out $10,000 to every person does not create a single extra barrel of oil, ounce of gold, bushel of wheat, yard of concrete or spark plug.

Wealth is finite. All the infinite printing of "money" won't affect that. All it will do is dilute the value of "money" already in circulation and ultimately punish the responsible savers who didn't binge on credit. 

 

Sun, 08/19/2012 - 17:35 | Link to Comment GMadScientist
GMadScientist's picture

But it would extinguish the main reason that people are not out in the streets buying gold, wheat, oil, and spark plugs.

Debt is anti-wealth and needs to be handled one way or another. You can choose the "fair" way and accept the tears and bloodshed, or you can accept this way and continue to make nominal gains off selling to debtors.

The smart savers will choose a real store of value, some will choose the allure of the Ess and Pee, and others will spend it on increasinly expensive crap.

Sun, 08/19/2012 - 15:30 | Link to Comment mikla
mikla's picture

His point is the leverage:  Creditors will receive $10K, but still owe $100M.  So, what they receive is insignificant.

Further, this "settling-of-accounts" will force creditors to "mark-to-market" their accounts-as-they-are-settled, and that will force their insolvancy, because their "$10K/$100M" will be forcibly reported.  (They only exist today because they do not perform this accounting.) <for more info, see comment above>

Sun, 08/19/2012 - 12:36 | Link to Comment bank guy in Brussels
bank guy in Brussels's picture

And then there is God's side of the debt jubilee:

« And the Lord spake unto Moses in mount Sinai, saying ...

 And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof: it shall be a jubilee unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family. ...

And if thy brother be waxen poor, and fallen in decay with thee; then thou shalt relieve him: yea, though he be a stranger, or a sojourner; that he may live with thee.

Take thou no usury of him, or increase: but fear thy God; that thy brother may live with thee. »

- The Bible, on the jubilee every 50th year, with forgiveness of all debts, and liberation of all slaves, Leviticus 25

Sun, 08/19/2012 - 12:53 | Link to Comment boogerbently
boogerbently's picture

IF giving out TRILLIONS of dollars, to inject into the system is the cure, then I am MORE in favor of sending checks to taxpayers, than to the bankers that caused the problem in the first place, and HAVEN'T "shared the wealth" with the LAST 2 "easings".

Sun, 08/19/2012 - 13:03 | Link to Comment FreedomGuy
FreedomGuy's picture

I agree. Actually, nothing should be done in an ideal system, but all the world is government run and centrally planned now. This is what you get with academics who suppose themselves gods. This will never end until people believe in themselves again.

Given that we are in a never ending break-misdiagnose-fix-repeat system I'd rather have the direct injections than Goldman Sachs and JPM. However, those two like to get their hands on the fake money first. The reason is, whoever gets the fake money first spends it the closest to the real money value. It's like being in a game of Monopoly and stealing $5k from the bank when no one is looking. The money makes its way into the game and property prices go up but whoever got it first buys at the original prices. In essence, you steal a march on your economic competitors.

So, if we are going to be economically stupid, then send it to the average citizen...I suggest actual taxpayers, only.

Sun, 08/19/2012 - 13:16 | Link to Comment Debeachesand Je...
Debeachesand Jerseyshores's picture

I agree,instead of giving Trillions of Taxpayers money to the corrupt Banksters etc to cover up their Gross Insolvency and Criminal activity.

 

The TARP should have went to the Taxpayers who filed 2007 Tax Returns and that would have injected money directly into the system and not pay for Bonus to the corrupt Banksters.

Taxes would have been directly withheld from those checks to pay Federal,State and local taxes,plus FICA and Medicare.That would have helped various State and local governments to fund necessary critical services and avoid short term expensive financing for these governments.

It would have lessen some of the damage cause by the housing bubble and overall help many small businesses to keep the lights on and help alleviate high unemployment.

 

 

Sun, 08/19/2012 - 12:56 | Link to Comment boiltherich
boiltherich's picture

Too bad that tomb is a work of superstitious fiction and there is no war-god in the sky to back up the promises made in it.  Only children, the mentally ill, the grossly stupid, or the emotionally crippled would live according to the psychotic ramblings of some Jewish tribal leader dead more than 2,500 years.  On second thought, maybe it is a good thing there is no serial killer psycho with all powerful abilities to do the promised killing and vengence and shit because in 54 years I have yet to meet a person that actually lived up to the expectations stated in that indecent collection of bullshit (especially those that claim to live by it).

Mon, 08/20/2012 - 06:43 | Link to Comment Disenchanted
Disenchanted's picture

 

 

 

Can I get an amen up in here!? (@ what boiltherich said)

 

bank guy said "Moses...jubilee...the land...etc."

 

That jubilee and not using usury against a "brother" only applied to a certain land and a certain group of people. Israelites of the Old Testament, worshippers of YHWH.

They could/can usura the hell out of anyone else that wasn't/isn't the 'chosen' of YHWH. "They" in the present tense refers to the group that misappropriated the title of YHWH's 'chosen' because their ancestors converted to the cult of YHWH back around the time of 700 - 800 AD...and specifically the even smaller group of 'they' that hide behind the trappings of that cult.

Those whose name cannot be spoken...

 

"To learn who rules over you, simply learn who you are not allowed to criticise." — (attributed to)Voltaire

Sun, 08/19/2012 - 13:00 | Link to Comment boogerbently
boogerbently's picture

Mark 3

24 If a kingdom is divided against itself, that kingdom cannot stand. 25 If a house is divided against itself, that house cannot stand.

Sun, 08/19/2012 - 17:37 | Link to Comment GMadScientist
GMadScientist's picture

And if zero is divided against itself you get +/-INF.

Sun, 08/19/2012 - 17:37 | Link to Comment GMadScientist
GMadScientist's picture

Your God is a communist.

Sun, 08/19/2012 - 18:18 | Link to Comment falak pema
falak pema's picture

thats ironic even incongruous for a "bank guy". 

Sun, 08/19/2012 - 12:52 | Link to Comment Hype Alert
Hype Alert's picture

Exactly and he didn't even fully explaining the side of the debtor.  The moral hazard this would create is exactly the same as what the market is demonstrating with the expectation of QEx, QEy, QEz, etc.  The article on the side of the creditor should be titled "The Feedback Loop", what happens when creditors are paid back in worthless currency.  It will be no different than negotiating a default/bankruptcy where you settle for $.10 on the dollar.

Sun, 08/19/2012 - 12:06 | Link to Comment hangemhigh77
hangemhigh77's picture

Giving the people money and not some bankster piece of shit? Never happen. imagine how many yachts and mansions Jamie Dimon could buy as opposed to allowing entire families remain in their homes and not be thrown out on the street homeless and hungry? No, bailout the banks, it's the only option for crooked lying scum like Oboner or Rombot, they need more yachts. Who cares about the people of Amerika, they've been sold out long ago, give them more bread and circuses.

Sun, 08/19/2012 - 12:09 | Link to Comment john39
john39's picture

in the end, they may do something like a jubilee...  because its not really about money, but rather power...   a jubilee would leave the parasites in power... true they would like to crush your spirit a bit more by destroying the world economy further first....   this makes it easier to control humanity (look at the rise of dictators after world war I).   its all about power and control.

Sun, 08/19/2012 - 12:11 | Link to Comment hangemhigh77
hangemhigh77's picture

I agree, money means nothing to them it's printed on paper out of thin air, they use it as their weapon of power over the people.  I agree, before silver or gold is money they will push the fiat lie as far as possible.

Sun, 08/19/2012 - 12:15 | Link to Comment JPM Hater001
JPM Hater001's picture

"money means nothing to them"

"money means everything to them" - there...fixed.

Money is their tool.  It means nothing as a currency perse but everything as a tool to control.

Sun, 08/19/2012 - 17:29 | Link to Comment Uncle Remus
Uncle Remus's picture

Don't you mean debt?

Mon, 08/20/2012 - 00:15 | Link to Comment hangemhigh77
hangemhigh77's picture

Let me clarify, money means power to them.

Sun, 08/19/2012 - 12:08 | Link to Comment hangemhigh77
hangemhigh77's picture

Gee isn't that exactly what they did for the banksters?  And they did what with it? Gambled and gave themselves bonuses.

Sun, 08/19/2012 - 12:10 | Link to Comment hangemhigh77
hangemhigh77's picture

Just give everyone a million dollars and have it come out of the bank's pocket. Wipe out the banks and give the proceeds to the people that they've been defrauding for decades.

Sun, 08/19/2012 - 12:10 | Link to Comment AssFire
AssFire's picture

This is simply devaluation with a little forgiveness, as tried by the Brits...to a further disastrous end.

Sun, 08/19/2012 - 13:05 | Link to Comment Mad Mad Woman
Mad Mad Woman's picture

The Brits didn't do shit, they made their own problems and gave the people nothing and didn't do anything for the people. Don't give me that tried by the Brits bullshit.

Sun, 08/19/2012 - 13:17 | Link to Comment analyzer_66
analyzer_66's picture

the Brits did do the LIBOR fixing, and LIBOR is still being used to set mortgage rates, credit card rates, car load rates and numerous other rates for all kind and manner of consumer and commercial loans

government intervention fails, we cannot legislate economic recovery, start a recovery by ending the federal reserve control of interest rates and the money supply, set interest rates to shadow the rate of interest paid on US treasury bonds, let big banks and auto makers fail if they cannot exist without government interventions

Sun, 08/19/2012 - 12:12 | Link to Comment brettd
brettd's picture

Failing to learn the lessons of financial failure, will only lead to a repeat event. 

Remember that 90 percent of Americans are current on their mortgages.

Do we really want to let the failings of a few drive the policy for the many?

Sun, 08/19/2012 - 16:36 | Link to Comment RockyRacoon
RockyRacoon's picture

You've stopped too soon.  The game is only in half-time. 

"Do we really want to let the failings of a few [banks] drive the policy for the many [citizens]?"

The final play is a long time from now.   The moral hazard that has already been perpetrated could actually be offset by some of the same medicine for the general populace.   At least a sense of balance would be restored.   It'll be chaotic for sure, but wouldn't it be a fun ride?

This natural sense of "fairness" is what is now missing.

Here is a fuller explanation:

Punishing Cheaters Promotes the Evolution of Cooperation

Sun, 08/19/2012 - 12:16 | Link to Comment Troy Ounce
Troy Ounce's picture

 

 

 

I want the representative of status quo brought to the guillotine. Do whatever you want afterwards.

 

Blood! The system must come down!

 

Sun, 08/19/2012 - 14:10 | Link to Comment Things that go bump
Things that go bump's picture

The government seems to believe that they have the wherewithal to triumph this time around.  

Sun, 08/19/2012 - 17:30 | Link to Comment Uncle Remus
Uncle Remus's picture

Phhht. Deficits don't matter.

Sun, 08/19/2012 - 12:16 | Link to Comment booboo
booboo's picture

I'm kinda old fashion, been debt free for years. Paid it all off through excess production and living frugile, so it's a "fuck me" plan on my savings. I guess the "fuck you's" out number me.

Does not Bancruptcy do the same thing without sinking the prudent and their stores of wealth. After the Great Depression the prudent were able to expand on that wealth by buying up cheap assets at fire sales and before you go all "greedy mother fucker" on me is it not greed that motivates the debt burdened to be freed from their bad choices.

Sun, 08/19/2012 - 15:14 | Link to Comment toady
toady's picture

We are debt free too... finally got out from under the mortgage last year.

I've always been pretty lucky financially, got out of .com before the crash bought the real estate before the bubble, made some decent cash along the way.

The trouble now is I just can't see what's coming next... Even if I did receive this nest egg I would just stack PM's and buy more weapons...

Maybe gun maker stock....

Sun, 08/19/2012 - 18:00 | Link to Comment GMadScientist
GMadScientist's picture

Well...now we know who's not John Galt.

Sun, 08/19/2012 - 12:20 | Link to Comment El
El's picture

This is about the tenth article I have read in various places about having a "debt jubilee" but whether the article has been "DJ" pro or con, no one goes as far to explain who is supposed to pay for it...so I have some questions.

1. If all money is loaned into existence and has the interest debt attached to it from the get go, then when the central bank creates the money and writes a check to every individual in the nation...where is it coming from? (i.e. who is supposed to repay the interest?)

2. Wouldn't such a huge increase in the money supply create hyperinflation?

3. What would prevent people from finding themselves in the same situation a few years later (a la Ed and Peg Bundy style of feast or famine)?

A “debt jubilee” is the latest attempt to make a silk purse out of a sow’s ear. It is the latest pretense that we CAN print our way to prosperity, but only if we do it in the “right” way.

Amen, because the idea IS a sow's ear. The debt is just a symptom of the illness of a broken system. What we should be discussing is how to get rid of this debt based monetary system. Anything else is just putting a band-aid on cancer.

 

Sun, 08/19/2012 - 12:49 | Link to Comment Duke Dog
Duke Dog's picture

Exactly! Finally, someone that understands the root of the "inflation as an option to solve the debt problem" bullshit argument.

Sun, 08/19/2012 - 12:55 | Link to Comment falak pema
falak pema's picture

free money has no interest attached. Zirp, blurp and rezirp.

Sun, 08/19/2012 - 13:19 | Link to Comment boogerbently
boogerbently's picture

Simplified:

IF they are going to print, your options are:

Bankers get the money, and WE pay it back.

OR

WE get the money, and WE pay it back.

Choose.

 

 

Sun, 08/19/2012 - 14:11 | Link to Comment El
El's picture

Uhm, no. You have mistaken me for someone else, Mr. Bently. Do not think I will select only from the options others present to me. I'm not that girl. There is always another option...like neither. I will support neither of those two really bad ideas.

As I've said elsewhere on this forum, I would benefit as much as anyone else from a jubilee. I have student loans and other debt. It would be great to see them all disappear, but I refuse to continue being short-sighted about my actions. I had my head in the sand long enough, thank you.

Sun, 08/19/2012 - 16:47 | Link to Comment Anusocracy
Anusocracy's picture

"but I refuse to continue being short-sighted about my actions"

Exactly. Why reward a high time preference government or the high time preference fools that support it?

Sun, 08/19/2012 - 15:47 | Link to Comment OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Yes.

Steve Keen in Australia is championing this idea. People with debt must pay it down; all others can spend or save as they see fit. It shrinks the amount of debt outstanding. It shrinks the size of the banks without forcing too many bankruptcies. And who cares if it's mildly inflationary.

Sun, 08/19/2012 - 12:20 | Link to Comment falak pema
falak pema's picture

If the US pax Americana is assumed as being a given, if the MIC supremacy and the ME Oil/USD treaty/copulation is considered a catholic marriage agreement; aka until death do us part; if fiat debt incurred by US corporations can be transferred without impunity to the public debt ledger, if the FED is then authorised to print to infinity in Reserve money that de facto debases the currencies of other nations, then only then, the FED can print free checks to every citizen; like the Pope gave Indulgences to the "happy few", rich enough to buy their way into eternal heaven!

Well what say you to this incredible tale from mythological times that even Zeus on lofty Olympus would find worthy of a raised brow and Pallas Athena of a knowing smile, wise of wily Odysseus's audacity. 

"Humm, what a Trojan Horse that is!"

 

Sun, 08/19/2012 - 12:20 | Link to Comment kito
kito's picture

The problem goes way beyond debt. There are massive structural issues for a society that grew as a result of a credit based, cheap energy and govt entitlement paradigm. Like an overpopulated area of deer that resulted from too much protection, there arent enough resources to support a society where a false economy kept people "prosperous"......everyone knows what happens to that deer population.........

Sun, 08/19/2012 - 12:34 | Link to Comment falak pema
falak pema's picture

+10

econ/ecolog/food/water/waste Paradigm change, and deep monetary reforms of compound interest Fractional reserve banking; hollowed out of derivative casino plays. And no more budget deficits.

Sun, 08/19/2012 - 13:19 | Link to Comment centerline
centerline's picture

Exactly.  Suddenly debt becomes the distractor from the larger picture and the idea that a system built on perpetual growth can somehow be kicked-started back to life when the fundamentals of growth are rolling over.  Talk about false hope.

Sun, 08/19/2012 - 15:38 | Link to Comment techstrategy
techstrategy's picture

Kitko:

 

Nice analogy.  

The reality is that we are out of balance with sustainable consumption levels.  What we are really witnessing is simply the decline of real purchasing power to bring the system into balance but there is a catch.  we are using a top down approach to do it, which cannot work because society becomes unstable when he masses see their quality of life decline.  

Sun, 08/19/2012 - 17:34 | Link to Comment Uncle Remus
Uncle Remus's picture

Wait - you're saying SNAP isn't an evolutionary event?

Sun, 08/19/2012 - 12:37 | Link to Comment Aziz
Aziz's picture

That Bill Buckler dislikes the idea of a debt jubilee doesn't change the fact that we cannot grow our way out and so if we reject debt forgiveness we must eventually choose one of inflation or liquidation if we do not want to experience at least 20-30 (or more) years of Japan-style QE-contraction-QE-contraction stagnation. And Japan's total debt is higher than it was in 1991 both in absolute terms and as a percentage of GDP — they're not successfully deleveraging, and eventually the debt will be inflated, liquidated or written off.

The modern debt jubilee is an attempt at dealing with overindebtedness in an orderly way. Of course, it is trying to make a silk purse out of a sow's ear — and it is a big, nasty sow's ear. But if we can't deal with the problem of excessive debt in an orderly way now, we're going to have to deal with one of the two messier routes out as well as probably years of a weakening economy beforehand.

To give Buckler the credit he deserves, he will tell you to buy gold, which is a good bet for preserving purchasing power in all three possible cases. 

Sun, 08/19/2012 - 12:42 | Link to Comment Duke Dog
Duke Dog's picture

There it is again - "hyperinflation" is NOT a Solution! You can either pay the debt back or default/write it off. The hyperinflation scenario simply creates more DEBT. Why do people continue to propose this as an option for resolving a "too much debt problem"? The additional debt created at the Federal level of governments to mobilize "hyperinflation" would be several times greater than any possible reduction in debt achieved at the individual/corporate/local government level.

Sun, 08/19/2012 - 12:53 | Link to Comment Aziz
Aziz's picture

Inflation is a soft default on all debt simultaneously. Weimar economy ended up with a very low debt to GDP ratio.

It's not a solution. It's a painful mess — one of nature's ways of dealing with excessive debt. So unless we deal with our debt problems, we can end up going through it. 

Sun, 08/19/2012 - 12:55 | Link to Comment dwdollar
dwdollar's picture

This debt is just the consequence of unsustainable/bad behavior. It's that behavior which needs corrected.

Any life lesson is usually a messy affair. To sterilize it defeats the purpose.

Sun, 08/19/2012 - 15:26 | Link to Comment techstrategy
techstrategy's picture

Aziz:

 

As usual, you and Kitko get it.  QEP would provide the POSSIBILITY (not the certainty) of an orderly winddown.  Kitko's deer reference is correct as well.  years of this false wealth has weakened out foundation.  the existing conditions, if you were to think of them as  initial conditions in a new system, could not support a return to the levels of consumption and thus feeling of wealth/QOL that we've had.

Those who adjust now to lower consumption / material SOL will be way better off.  Drive down your personal minimum efficient scale / cash flow breakeven.  you will be better off.  Those inviduals and businesses that are able to generate net savings/cash flow in the coming years (which WILL BE deflationary, despite all the rhetoric)will do the best.  transitions are a time of opportuntiy for those that are proactive.

The travesty is all those poeple burning wealth they have now trying to sustain standards of living and overhead, if you will, that simply cannot be sustained.  Was rolling over part of my FMR IRA so that I could direct part of it to physical gold and talking to the FMR guy doing transfers.  He said that the rate at which 401K balances are being pillaged to try to sustain ot "bridge" until things get better is crazy.  I think it is happening WAY more broadly than people realize and all those people are screwed...

 

The right answer is for people to scale down.  It is what neture/markets will eventualy force anyway...

Sun, 08/19/2012 - 16:51 | Link to Comment RockyRacoon
RockyRacoon's picture

I hope the good Captain, Bill Buckler, will forgive me for this...  The paragraph preceding the "article" above (which is only a small part of the 12 page current issue) goes like so....

Let’s Have A Party:
Back in the second half of the 1990s when the world seemed a very different place with everyone shopping till they dropped and the investment markets going to heaven with no end in sight, an international coalition was formed. It spread to over 40 countries and called itself Jubilee 2000. The purpose of this international group was to pressure the banks and governments of the developed world to cancel all third world debt by the year 2000. This movement coincided with what was called the Great Jubilee - the celebration of the year 2000 in the Catholic Church. For the more secular of all those looking towards the third millennium, a great jubilee became a debt jubilee. In this, the reference was again the Bible, specifically the year of “jubilee” as quoted in Leviticus which occurred every 50 years. During that year, those enslaved because of debts were freed, lands lost because of debt were returned and communities torn by inequality were restored. In the mid 1990s, such a step was only seen as being necessary for the Third World. Fifteen years later,
the concept had widened to include the entire world. Nowadays, articles which examine ways in which the US economy and the US government might get out from under their crushing debt burden routinely mention as a possible alternative a “debt jubilee”. Let’s just rip up all the IOUs and start again!

So, it seems that having a mass injection of funds to the populace at this point would only lead to more debt and subsequent destruction.   Things should get much worse for normal folk to do the "right thing" with their windfall.  Having the so-called Jubilee too early would only make the final reckoning much worse.   People are irresponsible doncha know, whereas, bankers are responsible!   Right.

Sun, 08/19/2012 - 12:29 | Link to Comment Azwethinkweiz
Azwethinkweiz's picture

Let's put this to a test: give money to all the homeless who stand on corners and see what they use it for...drugs & liqour or food and new clothes for a job interview.

Sun, 08/19/2012 - 12:29 | Link to Comment michaelh
michaelh's picture

Never going to happen!

Sun, 08/19/2012 - 14:02 | Link to Comment Poor Grogman
Poor Grogman's picture

It already did in australia a few years ago, everyone got 900 bucks from the government and most of it ended up going to china for imported plastic crap.

Shoe stores went berserk....

Apart from that it didn't do a thing.

Sun, 08/19/2012 - 17:13 | Link to Comment r3phl0x
r3phl0x's picture

Shoes in every pot.

Sun, 08/19/2012 - 12:33 | Link to Comment Heroic Couplet
Heroic Couplet's picture

Wae arbitrage says money is going into the hands of a few people. So be it. Whatever banks are carrying on their books as "assets" may over a much longer term and a couple business finance quarters turn out to be uncollectable and therefore liabilities.

Prosperity and cash on the barrel head are not measured in business finance and accounting 101 reckonings. The bankers can wait it out.

Sun, 08/19/2012 - 12:39 | Link to Comment Piranhanoia
Piranhanoia's picture

The oligarchy needs people to keep paying.  You get a small chunk of devalued money you must give back to them.  The money supply weakens,  inflation rises.   You are worse off faster than QE.  Hello Big Bro.

They will steal everything. The thieves are getting very nervous. Expect more of this kind of propaganda. 

Sun, 08/19/2012 - 13:42 | Link to Comment Hannibal
Hannibal's picture

If or when people can't or refuse to pay off fiat debt, it will kill the status quo (criminal banksters).

It will starve the beast!

Sun, 08/19/2012 - 12:44 | Link to Comment HurricaneSeason
HurricaneSeason's picture

The interest on the national debt was only $104 Billion for the first half of FY2012.  That's a pretty good deal because we can pay that out of the $1200 Billion we'll borrow this year. We should borrow $2400 Billion this year and give every man woman and child a check for $3820 from borrowing the extra $1200 Billion. Just this one time to get the economy going.

Sun, 08/19/2012 - 12:46 | Link to Comment DonutBoy
DonutBoy's picture

I think this posting misses the point.  We are alrady printing money and giving it away to the banks, who in turn are guaranteed a profit on it to hold it in reserves.  This proposal - from Steven Keen I believe, is not to start printing money - it is t change where the money goes.  Instead of printing it to pay-off debts held by Citibank, we print it to pay off debts held by thr 99%.  Of those two options, this is better.

Sun, 08/19/2012 - 12:48 | Link to Comment nowhereman
nowhereman's picture

Since all money now is just 0's and1's in some computer somewhere, rather that issue more zeros and ones, why don't we just eliminate them?

No need to hand out anything.  Then mark to market the bankster's fantasy wealth, and start over again.

Sun, 08/19/2012 - 13:39 | Link to Comment Hannibal
Hannibal's picture

nowhereman, you're making too much sense. Stupity must prevail!

Sun, 08/19/2012 - 12:50 | Link to Comment Hedgetard55
Hedgetard55's picture

So, there IS a free lunch.

Sun, 08/19/2012 - 13:08 | Link to Comment deflator
deflator's picture

 Yep, and eating our cake after it has already been consumed or some amalgamation of pork, turkey and chicken parts that we can call, "cake."

Sun, 08/19/2012 - 13:11 | Link to Comment falak pema
falak pema's picture

According to Draghi there is a free lunch scheduled for Italy/Spain in the fall : 

ECB Interest Rate Spread Caps - Business Insider

Question to Aziz : is this compatible with what Merkel has been saying and if so will it save Italy before the ECB  goes belly up as a  dodgy HF? 

Sun, 08/19/2012 - 13:23 | Link to Comment Aziz
Aziz's picture

Europe will print the money required to service the debt as late as they possibly can, and only after they have pretended that they won't. It's amusing to watch. 

Greece is printing euros to stay afloat (contrary to the terms of being in the euro), but Germany doesn't seem to care because their utopian integrationism comes before playing by the rules.

http://www.zerohedge.com/contributed/2012-08-08/greece-prints-euros-stay-afloat-ecb-approves-bundesbank-nods-no-one-wants-get

Sun, 08/19/2012 - 14:43 | Link to Comment falak pema
falak pema's picture

well here's our answer ! 

Even Greece prints! So debt jubilee via print is not so unreal! 

"As late as possible"...now that is a good clue...make Merkel do her best for her to say I did what I could to resist we nearly had financial Armageddon. Now you must elect me in 2013....it all fits in...the personal agendas, Obammy n Merkel,  and the NWO print to infinity agenda to "save the Titanic" by central bank print cabal.

Sun, 08/19/2012 - 12:53 | Link to Comment roadhazard
roadhazard's picture

debt jubilee for the citizen = Pie in the sky.

Sun, 08/19/2012 - 12:56 | Link to Comment deflator
deflator's picture

You can't have a debt jubilee when the "money" it's self is debt, it would destroy confidence in the currency/debt.

Sun, 08/19/2012 - 12:59 | Link to Comment dragoneyes74
dragoneyes74's picture

I can't see how a debt jubilee wouldn't cause massive inflation.  For everyone who has debt that this would extinguish, thereby keeping that portion of this new money out of circulation, what do you think those people would do next?  They would borrow.  And the banks would fall over themselves to give out loans because they're now in a better position too, right?  And all the people who didn't have debt and now have a bunch of new money to spend...all that money would chase the same products.  Not to mention that every currency speculator in the world would short the dollar.  And what about the effect on bonds?  

A debt jubilee is an attempt to solve a systemic problem all at once.  It is socializing debts and creating moral hazard.  A better way is for the government to stop doing anything at all.  The free market is an immune system.  It will heal itself.  It will guide interest rates back up to the level the market sees as accurate.  Sure, a ton of bankruptcies and defaults would follow, but it would happen in little pockets at a time, like tiny brush fires that flare up and then go out.  And people would learn lessons.  To attempt a systemic all-at-once fix is risking all kinds of unintended consequences that no one can forsee.  I will admit, though, that we've distorted the free market for so long that the trouble we're in might cause those tiny brush fires to consume the whole forest, but the point is the process would be a natural burning off of excess, as opposed to a man-made attempt at preventing any fire at all, which doesn't correct the underlying structural problem, and merely kicks the can down the road.  It's going to happen anyway.  The longer we wait the worse it will be.  Eventually, the markets always win.   

Sun, 08/19/2012 - 13:07 | Link to Comment Aziz
Aziz's picture

I agree with you.

Problem is that the people who run the system don't believe in the free market or liquidation and so would never dream of letting such an event occur.

Sun, 08/19/2012 - 13:19 | Link to Comment Mad Mad Woman
Mad Mad Woman's picture

But it's ok to bail out the banks, right?  Bad to bail out Main Street, moral hazard and all. Right?  That's a fucked up ideology. You really believe that stuff you just wrote?

The "free market" is an oxymoron and is believed by morons. Haven't we been socializing the banksters & Wall Street debt for the last 4-5 yrs?  And still the govt is giving all these players back door bailouts in one form or another. STOP THE FUCKING BAILOUTS FOR WALL STREET AND THE BANKSTERS!!!  

It's high time to start bailing out Main Street. NOW BITCHEZ!!!

Sun, 08/19/2012 - 15:33 | Link to Comment malek
malek's picture

If as Bill Buckler proposes, everyone (even people having no debts) gets the same amount of money, how can that be socializing?
It is in effect a default of a lot bad debts through the back door.

If on the other hands only the debtors get some debt forgiveness, that would be moral hazard writ large.

Sun, 08/19/2012 - 13:03 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

JUST STFU & GET THE FUKING CHECKS 4theFUKINGPEOPLE IN THE FUKING MAIL FOR FUK'S SAKE, YA FUKING FUKERS!

Sun, 08/19/2012 - 13:32 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

...and furthermore...

Sun, 08/19/2012 - 13:31 | Link to Comment centerline
centerline's picture

+1.  Just get on with it already.  Where's my check?  Is that check thing per person including my kids?  If they don't have debt, but I do - and they did not legally cause such debt - does that mean we can use our kids money to party like rock stars?

 Need some advanced warning though.  Got to get a shipment of fancy rims, expensive booze, and assorted bling in place at the edge of the hood in a hurry.

Sun, 08/19/2012 - 14:21 | Link to Comment Winston Churchill
Winston Churchill's picture

Wot,no thingajigs ?

Sun, 08/19/2012 - 14:58 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

...and furthermore...  please join me in DEMANDING TO BE PAID IN 1/10 OZ GOLD EAGLES---10 OF 'EM IN A SLEWIE-PROOF TOOB FROM THE USMINTs = $1600+  tyvFUKINGm, YOU FUKING FUKERS

after all...  rules are rules!

Sun, 08/19/2012 - 13:02 | Link to Comment bankruptcylawyer
bankruptcylawyer's picture

how on EARTH is a bailout recast as a jubille?

I've seen a few people on television make this same argument, or rather lie. 

they call a bailout a 'jubilee'. 

a jubille is the cancellation of debt, not the paying off of debt. they are not the same and never will be. 

 

Debt cancellation requires the creditors to lose money. that is what a jubilee is DEBTORS WIN CREDITORS LOSE. 

a BAILOUT IS WHEN BORROWERS AND LENDERS WIN, AND PEOPLE WHO DON'T RELY ON DEBT LOSE BY WAY OF INFLATION. 

 

THE FIRST IS GOVERNMENT BEING AGAINST THE USE OF LEVERAGE AND REQUIRES A DEFLATIONARY PERIOD AS FINANCIAL FIRMS COLLAPSE. 

THE SECOND IS THE GOVERNMENT ENCOURAGING LEVERAGING AND CONTINUE FINANCIAL CYCLE RAPE BY MONEY LENDERS. 

 

THE CANNOT CALL THE SECOND A JUBILLEE WHEN IT IS A THEFT OF PURCHASING POWER FROM NON-FINANCE PEOPLE. 

 

The article needs to be DIRECT about pointing out the proper undrestanding rather than just explaining that it is 'printing' . people dont' even understand this. ZH you gotta educate this dull sheeple.

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