July 5, 2012 in Daily Bulletin
James Rickards argues that it’s time to consider the unthinkable: debt forgiveness.
- America has found success in fresh starts before. The 1920s dustbowl convinced people to go to California where jobs were plentiful. The 1980s recession got autoworkers jobs in the technology industry.
- Forgiving the debt of Americans would give them the opportunity to begin a fresh start.
- There are already mechanisms in place for debt relief. Declaring bankruptcy for example. But it has become harder and harder to do so.
- A lot of people cannot move to where the jobs are because they are trapped by debt. Debt forgiveness could help free up the labour market.
- This is actually an ancient solution. In the Bible’s book of Leviticus there’s a section that describes how debt should be forgiven every 50 years.
- Creditors are unlikely to voluntarily forgive debt. But it would be in their interest to forgive some of it. Because if they insist on full repayment there could be another recession and thus bankruptcies that mean they recover none of their funds.
To read more including how the system described in the Bible worked, why it has become more difficult to declare bankruptcy, the moral grounds of the argument, why it’s not too late for the government to act, and the operational realities of what this would look like, click here.
Source: US News