What will be…will be! Why?
13 hours ago
Tuesday, January 20, 2009
What a Jubilee Would Do
In a Jubilee, you get to keep all of your real asset (cars, homes, etc). You would lose you paper assets if they involve debt to someone else. You would not lose your savings accounts, within the 250K FDIC coverage. The banking industries would be hit hard, obviously, but could quickly rebuild based on the new spending, saving, and investing, as the real economy was jumpstarted. Imagine how the economy would take off if no one had any house payments, no car payments, no credit card payments, and our gov't no longer had to pay interest on its debt. As you can easily see, there would be little credit, but lots of savings. Governments would be forced to run balanced budgets, as well as a balanced trade account. The upside, for just about everyone, would be huge.
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2 comments:
A very cool and Bibical idea.
I am sure there would have to be some tweaks to make it work well. For instance, you would probably want the banks reserve ratio to be high to prevent massive inflation. Since you would be taking them from insolvent to fully capitalized. To prevent a hyper-inflationary boom you would need to make sure lending was restrained.
It may be unrealistic to imagine Congress being able to pass it in any logical timeframe and to not effectively destroy it's value. But then again if things crash hard enough we might actually see them work as a team.
As a liberitarian at heart the concept is vert wrong. But when the inmates are running the asylm and every entity (individual, corporation, government) is so far overextended I have to admit it makes sense.
We could also formalize the procedure. The bible mandated jubilee every 7 years so why not. Credit would die and be replaced by a much more sustainable system.
Anon, I agree, I am a libertarian at heart too, and it should not have to happen. I am not proposing a Jubilee out of religious or Marxist revolutionary reasons.
I am proposing it because it is the only thing that will work! The only cure to debt deflation is debt cancellation. This is common sense.
As for the Bible, I think the Jubilee only happened every 49 years. The Sabbath year happened every seven, but the Jubilee was every seventh Sabbath.
It is odd, but the more you think about about it, a periodic Jubilee year might be good for the modern world too, preventing these 60 year crash cycles.
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