Do we need a new debt jubilee?
January 4, 2012
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The book Debt: The First 5,000 Years by David Graeber is essential reading if you want to understand what is happening now and how to get out of the mess.Gillian Tett in FT reviewed the book back in September (to her credit, she was ahead of many) and now it is quoted daily. And recently her colleague, Martin Sandbu (yes, a Norwegian) picked up the line in his well written piece just before Xmas. Graeber, who is an anthropologist, reviews the history of debt and suggest that the need for a Jubilee is imminent.
For a short version that essentially says the same as Graeber, read this article by Michael Hudson in Frankfurter Algemeine Zeitung.
Steve Keen from Australia has also proposed a new debt Jubilee in his recent post on the Debtwatch Maifesto (see also my earlier post on his BBC interview).
He suggests that the the choice now is either one and a half decade of self imposed austerity (i.e. repeating the mistakes of the 1930s) or some form of Jubiliee that can speed up the debt de-leveraging process. His suggestion is a form of Quantitative Easing Policy where we all receive the money (rather than the banks) and those of us with debt are required to pay of that debt before anything else. Those without debt will be free to spend the money. In this way we can get the wheels running again, reduce the debt/GDP ratio and start growing. Otherwise, we are doomed to a slowgrowth-highdebt scenario.