International Man: Four thousand years ago, the rulers of ancient Babylon discovered a technique to stave off violent revolts.
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.
What’s your take on this concept and its relevance today?
Doug Casey: I’m opposed to debt jubilees. The reason is simple. One man’s liability is another man’s asset. If somebody owes money and defaults on the debt, it becomes a problem for the next person. A debt jubilee legitimizes the idea of defaulting on obligations that you voluntarily took on.
The idea of a debt jubilee is corrosive because it causes people to lose the idea of cause and effect, right and wrong. The word “jubilee” implies a celebration. But a celebration of what? The default of obligations, breaking one’s word, and using the State to defraud those who loaned you capital.
Most of us understand that current levels of debt in the US can’t be repaid. So I understand why some say we should have a jubilee. But if there’s to be a default, it shouldn’t affect private that have voluntarily contracted. I suggest it should only affect those who owe or are owed by that great predator, the US Government.
Perhaps the US government should overtly default on its debt rather than defaulting on it slowly through inflation. The debt can’t be paid off. It’s just a question of how it should be defaulted on. The honest way is to admit that it can’t pay. This would affect everyone, especially those who are enabling the State or dealing with it. You can also default on it surreptitiously, fraudulently, through inflation, which affects absolutely everyone but shields the real miscreants.
A good case can be made that an overt default by the US government is the better of the two alternatives for several reasons. It would directly punish its enablers, acting as a warning and a punishment to people who lend money to the State. It would avoid runaway inflation, which is the worst kind of economic catastrophe, by wiping out trillions of fiat dollars. It might preclude the government from borrowing again for at least a while. And most important, it might forestall future generations of Americans being turned into serfs to pay the debt off.
I realize this sounds like “crazy talk” to most people, which is why they’ll be hurt badly. But there are no really good alternatives. There are no happy endings when your government has lived way beyond its means for generations. Actions have consequences. An outright default may simply be the least objectionable form of damage control. Most of the real wealth in the world will still be here—it will just change ownership.
A debt jubilee is really a moral question, a question of what’s right and what’s wrong. A government debt default is basically a good thing at this point. Why? Because you’re saddled with an obligation that you haven’t taken on. The State has incurred it, but you have to pay it off.
You have to pay off things that politicians wanted but which mainly benefit cronies. In general, defaulting on debt is immoral and destructive—with the sole exception of government debt.
International Man: Before the midterm elections in 2022, President Biden unveiled his student loan forgiveness plan, which called for 40 million Americans to have their student loans forgiven.
The idea of a student debt loan jubilee likely helped the Democrats in the election. With the 2024 presidential election on the horizon, Biden has again unveiled another student loan forgiveness plan to help rally support at the ballot.
What are the political implications of debt jubilees?
Doug Casey: It’s pure vote buying. It’s the use of fraud to cement themselves in office. The Biden regime feels that if they cancel the debt of a class of people, that class of people will reward Biden by voting for him. This is outright Banana Republic stuff—a sign of how degraded the moral environment in the US has become.
I have no sympathy for the students; they really should have thought out the meaning of wasting four years while burdening themselves with an anchor of debt. But the universities should probably eat at least part of the debt because they’ve taken payment and, except in very few cases, haven’t delivered a viable product in return. It’s a complicated moral situation, but almost anything where the government gets involved becomes morally muddy.
For instance, if debts are canceled for current borrowers, what about previous borrowers who paid off their debt? Why should only current borrowers that get a freebie? And why should average Americans have to pay off the loans of the privileged class who go to college for four years? It’s basically a question of the poor having to pay off the loans of the rich.
International Man: Given their popular appeal, do you expect debt jubilees to expand beyond student loan forgiveness into other areas, like credit cards and personal loans?
Doug Casey: Definitely. Once people see that debt can be forgiven on one thing, why shouldn’t it be forgiven on other things? They start seeing the government as even more of a magic cornucopia. In addition, big institutions like the banks are universally (and, I might add, justifiably) hated. If the idea of a jubilee builds momentum, why stop with student loans? Why not everything else?
A jubilee is really a euphemistic way of disguising bankruptcy. Bankruptcy sounds bad—but a jubilee sounds happy and good. It’s another example of the language being corrupted. Student loan forgiveness is the camel getting its nose under the tent.
International Man: It’s important to note that debt jubilees do not magically create new wealth. They simply redistribute it. Their government decrees amount to a massive wealth transfer with big winners and losers.
Who are the winners and losers?
Doug Casey: The winners are the most profligate borrowers. The losers are the prudent savers. It encourages the wrong people and rewards bad habits.
Debt amounts to living above your means. It’s stupid, destructive, and immoral to reward the profligate while punishing the prudent who lived within their means. Forcing the country to subsidize its most imprudent citizens is destructive of the whole basis of society.
International Man: Even Obama’s former chief economic advisor, Jason Furman, thought Biden’s debt jubilees have gone too far, describing them as “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.”
How do debt jubilees affect inflation and other aspects of the economy? What can speculators do to profit?
Doug Casey: First, let’s look at the nature of debt.
In principle, debt should only be incurred to finance production, increasing the amount of wealth in the world. It should never be used for consumer goods. But most debt today allows people to live above their means, not produce more. So, most of the debt in the country is very deleterious for that reason alone.
The banking system is the source of all this debt. It’s able to create consumer debt only because of a fractional reserve system—where, in effect, the dollar itself is a debt instrument, and every dollar that a bank lends in debt is redeposited in the banking system and re-lent for more debt. It’s a debt pyramid.
The fractional reserve system amounts to a Ponzi scheme that can only exist and go on because the Federal Reserve is there to bail out the banks that made the bad loans. But to go deeper, the government is the root cause of the problem. It set up the central bank and created paper dollars, fiat currency. It’s all based on debt, backed by the “full faith and credit” of the manifestly bankrupt US Government.
So, what can speculators do to profit from it?
A couple of years ago, it was possible to get a 30-year mortgage with fixed three- or three-and-a-half-percent interest. That’s a form of consumer debt, true, but it was also an excellent way to “short” the dollar, an excellent form of speculation.
However, now, with mortgage rates around 7% and housing in a bubble, it may be too late to do that.
What you should do now is get out of debt if you can and own real money. By which I mean gold and silver.
You should have a substantial cache of gold and silver coins. That’s where you want your savings. Why? Because the whole debt pyramid will collapse sooner or later—I think sooner—starting with the value of the dollar itself.
Your best bet is to withdraw your capital from the system. Start by owning gold and silver coins.
Editor’s Note: Unfortunately, there’s little any individual can practically do to change the trajectory of this trend in motion. The best you can do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation.
Most people have no idea what really happens when a currency collapses, let alone how to prepare…
How will you protect your savings in the event of a currency crisis? This just-released video will show you exactly how. Click here to watch it now.
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WAR , followed by a ‘ cyber – pandemic ‘ as Klause-the-louse said. Then a new system can be rolled out.
A debt jubilee means that creditors do not get paid. Debtors have a wonderful time until they realize that creditors will no longer lend money to them under such conditions.
It is a release from credit obligations today but no more credit tomorrow. Folks will have to save before they spend which is great most of the time but it can be hard to buy a car or house out of pocket.
I bet this guy is a hoot at parties!
Correct
Debt forgiveness is a sin.
Forgiving the interest on the debt?
Different animal altogether.
Forgiving the interest seems fair.
What will motivate creditors to lend in the future if there is no return (interest) for their effort?
PS: I’m talking about creditors who loan out earned money and not creditors like the Fed or fractional reserve banks which create money out of nothing and then charge interest.
How about a flat rate? Of 2%
Or a max interest apr of 2%?
They charge interest rates up to 29% to some people.
Anything above two percent is bignose shylocking.
The market must determine the price of money just like everything else. Imagine a world in which a small number of banks did not have control over the money supply — a world in which people were free to transact freely and voluntarily.
It might be a pipe dream but I’ll have a hit.
Most people in trades are paid while they learn.
It’s a holdover from the evil patriarchy called apprenticeship.
Potlach. Tribal get together where everyone gives away all their stuff to others. A means of cementing alliances, punishing enemies, accumulating power, redistributing from the successful to the range, though the practice would tend to keep ranges identified and mostly separate. Potlaches were heavily frowned on by the white Christians (and papists) as they tended to discourage thrift and work while encouraging a lax and even negligent attitude toward property of all kinds.
If everyone gives away all their stuff to others then everyone is going have to wear ill fitted clothing, eat food they detest and listen to music that sucks. I prefer getting and using my own stuff.
But I’ll play along. What do you have for me?
Hahahaha!
Debt forgiveness!
None of the evil bastards will forgive one red cent of anything.They have been striving for centuries to get here, why give up now?!
Perhaps they may grant a little leeway if you willingly convert to CBDC, but don’t bet your life on it.
Nigs gonna Nig, and bankers gonna bank…
BOHICA
Social Security is entirely invested in government debt. A large percentage of pension funds are too. Lots of regular folks are owed money, not just bankers.
Yessir
and if I’m not mistaken, the banks hold most of those govt bonds.
Pension funds hold bonds too, and I’m not sure if they are subordinate to the banks or not.
l would certainly benefit from a debt jubilee, but one hasn’t been seen in centuries, so l for one will not be holding my breath…
Kings could issue the jubilee, but few kings remain that could possibly hold sway over today’s banking establishment.
Throughout history, big bankers seldom lose.
As I said, SS recipients will lose all funds if the government defaults on it’s debts. Everyone who has a pension fund or investments in debt instruments will lose. It wouldn’t just be bankers.
In fact, the bankers would insulate themselves as much as possible and the little folks would be the first to be bled. But they’ll say it’s a “jubilee!”
All remember that under Dodd-Frank your bank account is not your money — it’s a loan to the bank. If debts are forgiven then your bank account is gone.
Hyper- inflation burns off most debt. If you owe 100,000 dollars on your mortgage balance and a loaf of bread is 100,000 dollars THEN would you not take your pay that week and pay off your house instead of buying the loaf of bread? The mortgage balance if fixed while other commodity prices are not. The problem is being able to pay the tax and insurance on the house….which is where gold and silver come in. Metals will aid in your being able to buy food also.
Yes, you will receive 150,000 Zimbabwe/USD bucks pay for the week. Good luck and Godspeed over the cliff.
Until they say, “sorry taxes must be paid in electronic monopoly money”
I didn’t voluntarily take on ANY DEBT.
Same! Guess that’s why I’m a called a “loser”. 🙂
I bet it’s all been scripted out at least since the 2012 Olympics. I’ll bet a cookie TPTB want to start pushing this idea new to get the conversation started and people considering it, then make debt relief conditional on accepting CDBC’s. We’re seeing the acceleration now because it’s close to critical mass.
Do unto others as they have done unto you, start with how we got here:
There have been families funding both sides of wars for centuries to make $$ off death, destruction and rebuilding.
They created these deficits through bribery, coercion and blackmail.
They moved those tactics to the consumer sector, manipulated the laws then the housing, food, precious metals and investment markets (derivatives??).
They fund and profit off the illicit drug and human trafficking industries.
They destroyed the nuclear family.
They’re the ones who took health care in the monetized direction it went.
They DGAF if everyone is a wage slave or dies trying to take care of their families.
They don’t play by the same set of rules we play by,
If they did, it would be a different story.
They make and hoard obscene profit and interest off of all of it and use it as leverage. .
Take it from them.
They’re the biggest “investors”. They should really be tried for crimes against humanity but I’d settle for redirecting their assets to something more beneficial. .