Monday, August 30, 2010

David Knox Barker Recommends Jubilee Cycle

Boxer has a nice consideration of the macro-economic effects of Jubilee (here). He correctly points out that a regular Jubilee cycle would eliminate the long wave Depression cycle, by preventing a toxic build up of debt. As he puts it:

"The Jubilee law was actually crafted astutely to prevent the buildup of excessive debt levels in the economy, and not primarily to justify its cancellation. Debts were only forgiven if banks violated the Jubilee law that prevented the buildup of excessive debt. The Jubilee was not a bank bailout or stick taxpayers with others bad debts. Consider the passage from Leviticus 25: 8-19. This ancient text provides remarkable insight into the current global financial crisis, which is at its heart a global debt crisis."

Barker rightly condemns any attempt to transfer the debts of some, such as mortgage owners, onto the public purse, as some form of dishonest debt forgiveness program.

A Jubilee Year, correctly done today by the federal government, would not violate any contracts, because it would pay all debts in full. The federal government would simply write checks on behalf of private citizens to pay off their debts.

The creditors would be paid, the contracts would be honored, and the end result would be the cancellation of all debt, the resetting of the financial system, and the freeing of the productive economy. As Barker describes the renewal process: "The only way to address a debt problem is to reduce the amount of outstanding debt and create conditions for a booming economy and new long wave spring season..."


Anonymous said...

There have been ocean's of "Too Much Debt" analysis written in the past few years. The common problem, as I see it, is in the failure to discriminate between debt for production vs debt for consumption.
In the time of Leviticus, debt was used to produce "Real Wealth".
The question is, how much "Real Wealth" exists today in the US and how much is a mirage?

To put it another way.
Are the charts which show the diminishing returns from each $1 of new debt reflecting the lack of "Real Wealth" in the system?

Do you think the US has enough "Real Wealth" left in the system to have a Jubilee or are we left with war/revolution?


Justin said...

Good question, Morgan. I would think we have enough plant capital and human capital to rebuild, if we did it now.

I just don't see war/revolution happening. I see a long slow painful decline. But we are too soft, and too disunited, for anything else.

debi Oak lawn Ill said...

please view my facebook page. keith and debi oneil oak lawn illinois. I have posted the jubilee plan, and i'd like feed back. i agree about debt cancellation, but have a plan to do it without creating collapse.

Anonymous said...

What is your view on bond holders?

Anonymous said...

Justin, when you weigh out the current U.S. debt estimates(see 70-130 trillon-I think the implementation of the year of Jubilee is the compliment to the growing national realization that not only can we not sustain current levels of government spending-but we cannot seriously reconcile our current obligations

Anonymous said...

The case and point by point lay out, rebuttals, references and links are interesting;but ultimately -God will bless our nation following His model.

Justin said...

Anon, as for bondholders, I think they will be paid back. There is nothing guaranteeing the worth of the dollars they will be paid in, however.