To Forgive or Not

SUBHEAD: That is part of prospering in a new non-growth, resilient, self-reliant and sustainable economy.

By Juan Wilson on 3 April 2013 for Island Breath -

Image above: Reverend Billy presides as Doug B. declare a debt jubilee by burning his 312K student loan papers in celebration of all Student Debt in Union Square, NYC. Photo by Erik McGregor. From (

The world is in a financial pickle. The global industrial system that has dominated our economies for almost two centuries has hit the limits of the planets resources. This should be no surprise to anyone because the system was predicated on the assumption of growth - growing population, larger occupation of the natural landscape; increasing use of raw material; burning more fuel for energy; more consumption per person and greater profits.

It's the American Dream!
Dick Cheney was actually speaking for more than just Americans when he made the vow that keeping our energy cheap (by conquering the Middle East and as a result keeping the American Dream alive) was a non-negotiable posture.  Well, look how well that turned out.

There is no amount of US military presence that can make oil cheap, or get the world growth machine humming again... and that's the good news.

The only thing that has kept the guise of prosperity going since America hit its peak energy production back in the early 1970's has been a combination of three elements:
  1. Consumer consumption of imported goods paid for by credit available from financializing suburban sprawl.
  2. The military dominance we have spending more than the rest of the world on weapons systems.
  3. The dollar used as the world currency because of the size of our economy and because oil is traded in dollars.
Well number one blew up in 2007. Twenty trillion dollars into the housing bubble hole has not fixed that problem. So much for financialization.

Number two was soured by our continuing poor military showing in the Middle East  resulting is a less stable friendly region. So much for cheap energy.

Number three is coming shortly as the BRICS (Brazil, Russia, India, China as well as Indonesia, South Africa etc) are setting up a new World Order with another World Bank not using the dollar to do international trade.

America as we know it is screwed. So is Europe. The Eurozone fiasco has its wheels coming off the cart in Cypress as the mask is removed and we see that the Euro banksters are as willing to eat their own as the American Too Big To Fail (TBTF).

We certainly threw enough mortgage holders to the lions. Now we are creating a generation of college loan debt slaves living with mom and dad and working at Burger King for minimum wage. 

What to do!
Ben Bernanke isnow singing a two note tune. Keep interest rates at 0% and buy US debt at a rate of $85-billion a month in treasury notes. That's the equivalent of producing 425,000 suburban mortgage financing at $200,000 a pop every month. Who needs the housing industry, or for that matter any industry if you can invent that much money out of the void.

At this point in our effort to fill that yawning maw of debt as even as we dig it deeper we must come toa conclusion. We are never going to pay it off. Even we could, it take the value of more than all the resources in the world. We will have to destroy the planet to break even. Not a good deal.  However, there is a suggestion that some have made, but only a few have tried.

Getting rid of all the debt!
If the debt cannot be paid back there are two ways to go about that.

One way to get rid of debt id to refuse to pay it. That is to go bankrupt. That was one option back in 2008 as the TBTF banks came a begging. We could have told them to go to hell, but we were too scared of the consequences so it goes on. Iceland didn't take that route.

When the financial crunch came it took the hit by letting its TBTF institutions do just that - FAIL! They recovered rather quickly. We had hoped Cypress was going to go that same way with the Euro. But, like us, they were terrified of the heights they had climbed to. The way down was to fearful. So they soaked their bank depositors for $5 billion to get a temporary bailout of twice that in more EuroDebt. Bankruptcy isn't for everyone.

The other way to eliminate debt is to forgive it. Just tell whoever owes you money that you know cannot be repaid that they don't have to pay it back.

There have been some efforts in the US to aid those buried in mortgage and student loan debt. The Mortgage Forgiveness Debt Relief Act of 2007 was extended to 2013 and The Student Loan Fairness Act was meant to give relief. But these are pennies on the dollar of the debts we face as a nation.

Forgive me Father for I have sinned!
What if we faced the music as a nation and simply forgave all debt? That would be your student loan, your mortgage; tour car payment; your credit cards. It would also include all town; county; state and national debts.

We'd start over fresh. You'd be able to keep your stuff - the house, car, computer, TV etc. But you would have to subtract from your avail money all the deby you once owed. In other words if you had $300 in your checking account, and you owed $3,000 on your car your checking account would be reduced to zero. Under such a regimen most people would wind up with a punch of stuff, no debt and no money.

What would you do then? Would there be any changes in the way things worked. You betcha!

The Great Debt Jubilee!
By either refusing to pay debt (bankrupcy) or being relieved of debt (forgiven) takes from the imaginary world of money just that much "wealth" out of the system. If we reset the debt clock to zero we will be free of its yoke, but we will be impoverished.

That has already happened. We've been running on fumes and our children's future for some time.  At least after a total debt jubilee we will have to admit that we have already been impoverished. And the sooner the better. Let's stop the failure of industrial machine before it stops us.

We cannot keep papering over the cracks in the foundation. The sooner we accept our new status as "what we have is what we will have" and that we will live with a whole lot less than we once expected the sooner we can get going in the new reality.

We will then know that what little we have is precious and comes from hard work. That is part of prospering in a new non-growth, resilient, self-reliant and sustainable economy.


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