Debt Jubilee

The Remission of Debts on the Jubilee Year

The Remission of Debts every 7 years

Does Debt Matter that Much?

  • Money is created from debt via the Fractional Reserve Banking System
  • Thus, Money Supply growth is umbilically linked to Debt growth via banking sector lending
  • Excessive build-up of debt and the sudden retracements are the major cause of financial crises and business cycles.
  • Financial crises result in a reduction of debt, but not a total reset, most debts are carried over into the next boom cycle. The level of indebtedness is ever-increasing.
  • Recessions are now more common than ever before. We are now experiencing severe recessions every 10 or so years. Because debt levels are always rising, recessions could become more frequent and more severe than they currently are.
  • The world is drowning in debt, at all levels. At the national level, countries have been running budget deficits after deficits, all funded by debt. At private levels, companies are leveraged to the hilt. Consumers are also laden with debt.
  • Debt-to-GDP levels are at an all-time high. See graph below
Source: Credit Risk Monitor
  • Debt that can never be repaid because it is too large will never be repaid. So, something must be done now.
  • Corona virus has initiated a system crush and exposed how fragile the economies of the world are. Debt overhangs on corporates and consumers will stifle recovery if not addressed

What would a debt jubilee achieve?

  1. Forced System Reset — the first big one, then small ones every other 7 years and big ones every other 50 years.
  2. Known Business Cycles
  3. Smoother (Less Extremely Volatile) Business Cycles
  4. Avoidance of Depressions
  5. Forced Balance Sheet Clean-ups
  6. Forced Capping of Private Debt
  7. Panacea to reckless lending
  8. Controlled Money Supply Growth — a balancing check on the debt-based monetary system
  9. Eliminates market crashes, economic trajectory is mapped and known
  10. Reducing the size of the financial sector, to stay in touch with reality (the real economy)
  11. It would limit the coming two decades of stagnant growth to a couple of years
  12. It will be a partial cure to the cancer of excessive Budget Deficits — governments need to learn to live within their means.
  13. Reduction of The Economy’s Interest-rate-sensitivity. The economy is very sensitive to interest rates because the bond market far outweighs equity markets. A debt jubilee will correct this anomaly we ignorantly perceive as normal.

How to go about it?

Mortgage Lending defining the 50-year Super Business Cycle

  • Mortgage should not be governed by the medium term 7-year cycles of debt accumulation and eventual cancellation. It should be governed by the 50-year cycle.
  • The big jubilee will enforce a built-in downscaling on lending activity after a heating up period. From Year 1 after the jubilee to say Year 30, mortgage lending will be high. After year 30, it will start to decline as the repayment period gets smaller as we approach the jubilee year. This forces mortgage lending to rise, peak and drop systematically and predictably, thus establishing a known super business cycle inside of the 7-year business cycles that are relatively smooth

The Fairness Question

  • Insurance Companies
  • Pension Funds
  • Banks
  • China
  • Sovereign Wealth Funds

The Moral Hazard Question

Why Should the Jubilee Start in 2025 instead of Now?

--

--

--

Financial Analyst, Cloud Accountant, Citizen Data Scientist, FPL Boss

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Is Marvin Goodfriend the Worst Fed Nominee of All Time?

Taking the Lead on the Living Wage

2018 Economic Outlook: Why has inflation been so subdued?

Government Intrusion Is The Last Thing Free Markets Need

Why QE Infinity will Lead Us into Another Crash

A Credit Economy will drive Africa’s Future Growth

Capital concerns: slower growth in assets is weighing on UK’s productivity growth

Should…we…build..for the rich? EEK

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Ryan Gosha

Ryan Gosha

Financial Analyst, Cloud Accountant, Citizen Data Scientist, FPL Boss

More from Medium

Preparing for a Year Abroad

The Truth About Pumped Hydro

New authorization for emergency travel for Ukrainians seeking to migrate to Canada

How the West Runs Dry — 2/6