Four thousand years ago, the rulers of ancient Babylon discovered a technique to stave off violent revolts.
In ancient times, there was a tendency for people to become hopelessly in debt to their creditors. Eventually, they would rise up and cause instability that could threaten the entire ruling system.
The rulers of the ancient world recognized this dynamic.
Their solution was to enact widespread debt cancellation—a debt jubilee.
Debt jubilees acted as a societal pressure release valve when there were no other options.
The practice spread in the ancient world and became codified in different civilizations.
For example, the Book of Leviticus recognizes debt jubilees as the end of a 49-year biblical cycle—seven cycles of seven years.
I think this ancient practice will make a big comeback soon as government, corporate, and personal debt have all reached unbearable levels today.
In fact, the debt jubilees have already started… and the investment consequences will be profound.
The Biggest Wealth Transfer in History
It’s important to note that debt jubilees do not magically create new wealth.
They simply redistribute it.
Debt jubilees are government decrees that amount to a massive wealth transfer with big winners and losers.
The PPP loan forgiveness during the Covid hysteria was the prelude.
President Biden’s student loan forgiveness took it to the next level.
The student loan forgiveness was unprecedented. Unilateral executive action of this size has never occurred during a time of peace. Moreover, Congress, not the president, is supposed to make spending decisions of this magnitude.
It is estimated that the immediate and deferred costs of the student loan forgiveness to be at least $590 billion.
Biden’s student loan debt jubilee went too far for even Obama’s former chief economic advisor, Jason Furman, who described it as:
“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.”
Aside from the inflationary effects—which I’ll get to in a moment—the student loan jubilee also set a precedent that I think will be impossible to reverse.
Consider how the people who behaved prudently feel.
These people took different career paths to avoid student loans, cut back on their spending so they could afford college without borrowing, or paid off their student debt.
These people are probably feeling like suckers now.
Not only do they not get any debt relief, but they will have to foot the bill in one way or another to pay for those who had their student loans forgiven.
I imagine these people will be angry and probably have considerable car, mortgage, and credit card debt, as many Americans do. So they will want debt relief too… and I bet they will get it.
Amid rising prices, consumer debt is skyrocketing. It is at an all-time high of over $16 trillion, as seen in the chart below.
With interest rates rising, the cost of servicing this record debt is becoming unbearable for many. As a result, many Americans have reached their maximum debt saturation and are hitting a financial breaking point.
As Biden demonstrated, all it takes is a President’s pen stroke to wipe out hundreds of billions in debt.
I think the political pressure to do this again will be irresistible—especially before elections—as a way to court voters.
The student loan jubilee set a precedent.
I don’t think it will be long before we see a credit card jubilee, a car loan jubilee, or a mortgage jubilee.
How will the government pay for all these jubilees?
It’s improbable they could raise taxes enough to pay for them.
It also wouldn’t make sense to issue more debt to cancel other debts.
That leaves money printing as the only way they can finance these jubilees. So my guess is that’s what they’ll do.
That’s why the coming debt jubilees will pour “gasoline on the inflationary fire that is already burning.”
But it’s not just consumer debt that has become unbearable. The big enchilada is the US government’s federal debt.
The Coming Federal Debt Jubilee
The US federal government has the biggest debt in the history of the world. And it’s continuing to grow at a rapid, unstoppable pace.
In short, the US government is fast approaching the financial endgame.
Here’s why…
Today, the US federal debt has gone parabolic and is scores of trillions.
To put it in perspective, if you earned $1 a second 24/7/365—about $31 million per year—it would take you over 1,008,378 YEARS to pay off the US federal debt.
And that’s with the unrealistic assumption that it would stop growing.
The truth is, the debt will keep piling up unless Congress makes some politically impossible decisions to cut spending. But don’t count on that happening. In fact, they’re racing in the opposite direction now that they’ve normalized multitrillion-dollar deficits.
The amount of debt is so extreme that even a return of interest rates to their historical average would mean paying the interest expense on the debt would consume more than half of current tax revenues. Interest expense would eclipse Social Security and defense spending and become the largest item in the federal budget.
Second, a return to the historical average interest rate will not be enough to reign in inflation—not even close. A drastic rise in interest rates is needed. If that happened, it could mean that the US government is paying more for the interest expense than it takes in from taxes.
In short, the Federal Reserve is trapped.
Raising interest rates high enough to dent inflation would bankrupt the US government.
In other words, it’s game over. They have no choice but to “reset” the system—that’s what governments do when they are trapped.
How are they going to reset the system?
Nobody knows for sure. But I’d bet a debt jubilee of biblical proportions will be a big part of it.
So then, how will the US government repudiate its impossible federal debt burden?
My guess is that they won’t be explicit. That would look too much like a default. It would destroy the role of the US as the center of the world’s financial system.
Given a choice, I don’t think the US government would choose immediate self-destruction. Since power does not relinquish itself voluntarily, we should presume they’ll decide to stealthily implement their federal debt jubilee through inflation.
Inflation is a big bonus to debtors. It allows you to borrow in dollars and repay in dimes.
And since the US government is the biggest debtor in the history of the world, it is the single largest beneficiary of inflation.
That’s why I think the federal debt jubilee will come in the form of a massive wave of inflation.
Here’s the bottom line.
The coming debt jubilees could have the effect of wiping out many trillions worth of liabilities and creating previously unfathomable inflation.
That could trigger the largest wealth transfer in history.
Remember, debt doesn’t exist within a vacuum. It is a liability to the borrower and an asset to lender.
Those storing their wealth in government currencies, bondholders, and creditors will be the big losers.
Debtors and those who own unencumbered scarce assets will be the big winners.
It’s certainly not a just outcome.
Prudent savers shouldn’t be made to pay for the excesses of the debtors.
But notions of what is just or not did not impede Biden’s student loan jubilee—and they certainly won’t for the coming jubilees.
Although that will be unfortunate for many people, there is simply nothing anyone can do now.
The debt levels have already reached a point of saturation, and the government could soon see jubilees as a politically attractive option.
That’s why it is best to recognize the reality of this Big Picture and get positioned accordingly.
That means owning scarce and valuable assets that are not simultaneously someone else’s liability.
Crucially, this excludes fiat currency in bank accounts.
Remember, fiat currency is the unbacked liability of a bankrupt government.
Further, once you deposit currency into a bank, it is no longer yours. Technically and legally, it is the bank’s property, and what you own instead is an unsecured liability of the bank.
In an era of jubilees in which debts are wiped clean, you won’t want to be on the other end of unsecured liabilities or IOUs of any kind.
I suspect it could all go down soon… and it will not be pretty for many.
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Jews dont do debt jubilees to help goyim. not going to happen.
If I didn’t know better I’d say this article is satire. Debt jubilee? Give me a break. Are we really expected to believe they’d let their slaves go?
Already happened with a stroke of the pen. Although alien to us, OP is probably right that it will be an irresistible temptation for politicians. The money is all fake anyway.
Spoken like some one with a true slave mentality.
What if they simply DON’T have a choice ?
Since when did they not have a choice, fool. When was the last jubilee? During the great depression they hunted people down and hounded them to the end of their lives to collect. Not kidding.
I’ll trade you one Debt Jubilee for the Expulsion of all Jews in America and banning them from banking, politics and medical fields worldwide.
The problems will resolve themselves naturally after that…
How do a million rule hundreds of millions?
By magic?
It’s an ad for the accumulation of precious metals.
But not the one that matters when all hell breaks loose.
You think the privileged classes (negroes and other feral minorities)
are just going to quietly accept a meager lifestyle and play nice?
No, they are going to go house to house and try to take everything
you have, including any gold or silver you may have stashed away.
Give them all your lead instead!
Thus endeth the lesson.
There is nothing magic in fearlessness of the Lord. All it takes is foolishness and these Jews have spent more than 2000 years perfecting their foolishness.
you forgot media…
Debt jubilees would work if you could get the lenders to agree to a default. Problem is the US has borrowed from some formidable adversaries that may not be so quick to forgive the debt. The other alternitive is war and the most likely option.
So the Italian Catholic wants to pretend that the Jews didn’t come up with Jubilee at the order of God.. in favor of a pagan antiChrist society?
See? THIS is why I have a problem with Catholics. They think confession brings absolution. It never did. Repentance does that, and Catholics won’t be bothered.
You think Jesus Christ wants repentance without confession? Read again.
Show me the scriptures where I am wrong. How is it even possible to repent without acknowledging sin? I am not speaking of RC confessional booths.
We’re not discussing Jesus here at all. The topic is Catholics and what they believe and how they act based on those beliefs.
Nice try, but a fail none the less.
Maybe you just don’t know enough about it. Happens to me all the time.
“Repentance does that, and Catholics won’t be bothered.”
Shows what you know. There have been studies time after time, and they always show that Catholics who go to confession are more moral, have better values, overcome vices easier, and are more accountable. It has also been shown that Catholics who confess are more psychologically stable, since they know that they have both repented and been absolved.
Humbling yourself in front of a priest and actually confessing all of your grave sins in kind and number is not a fun thing to do. You have to spend time thinking about all the ways that your actions and thoughts have fallen short, think about the harm you’ve done to your family, friends, and fellow man, the offense you’ve done to your Lord Jesus who gave His life for you, and then, you have to admit it all out loud to a person that you don’t know and may not actually like. And you have to admit that you have failed yet again, then pick yourself up and keep trying.
The requirement for a valid confession is fourfold:
Repentance, confession, making restitution or performing penance, and true intention to not sin again.
Without those four things, the confession is invalid. So you can’t confess to viewing porn, but still keep your pornos. You can’t confess to stealing and keep your plunder. You can’t confess to using drugs, but still keep your stash.
Compare all that to “god understands,” “god made me this way,” “I’ve said the ‘jesus prayer,” or “i’ve accepted god’s forgiveness, so i’m off the hook forever and ever…,” all the while never taking responsibility for your actions, for your harm to others, and continuing to offend your fellow man and God without ever have to be accountable to anyone.
Catholic confession is not only necessary for salvation, but it is both personally and socially healthy. It is also one of the reasons that well-adjusted people continue to be Catholic, despite the often obvious ways that the hierarchy in our own church fall short or betray us.
“Study says” Get the fuck outta here! Ol Uncle Remus warned me about your shit long ago!
So you’re better understand Christianity and are a better Christian than St. Augustine, St Patrick or St. Francis all who were Catholic. ….you must be some sort of special holy Langely bot…reeee
Why.
Is.
Every.
Sentence.
It’s.
Own.
Paragraph?
Its. Not “It’s.”
It was written by an AI
Or a typical modern illiterate.
Each paragraph typically requires an intro, a body, and a conclusion. So each paragraph must be constructed to either inform or propose an argument (as in logic). This information must be communicated to the recipient, but often the recipient may be either unwilling or unable to follow anything less than simple declarative sentences. So information must be conveyed in bullet point format.
Paragraphs are too hard to write or understand.
I don’t trust you to intake information.
I just tell you in small bites what I want you to know.
I hope your attention span is long enough to catch a bullet point or two.
If you can’t understand that, you’re no different that anyone else on the interwebs.
Central Bank Digital Currency is how they will do the reset. In the meantime, the Republicans just removed the debt ceiling for two years. Money printers go brrrrr.
Yup, the repubs are our friends, I am shocked they didn’t hold the line /s
“I think this ancient practice will make a big comeback soon as government, corporate, and personal debt have all reached unbearable levels today.”
How is it even possible to do it fairly?
I think much of our debt problem stems grom “growth at all costs.”
In an entropic, zero-sum, predatory Universe, wherein the Earth eats shit and shits wheat, there is no growth; only transference of energy from one form to another. There is no free lunch; only pragmatic decisions.
Biden’s student loan debt jubilee went too far for even Obama’s former chief economic advisor, Jason Furman, who described it as:
“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.”
Otherwise it would be ok?
Biden’s student loan debt ‘jubilee’ never happened. And it never will.
Biden’s student loan ‘forgiveness’ never happened, and the debt ceiling bill Congress just passed made sure that it never will.
A politician lied to get votes? unbelievable.
I know, we are all shocked, as this has never happened before. We are still trying to process it, and don’t forget to vote harder
US offering debt jubilee are you kidding me, no way. Sorry bud but this time around the bankers want to be paid. As long as the US can keep its interest payments up which it can the longer the empire runs.