Debt Jubilee

What if ALL debts were forgiven and everyone just started over?

It sounds crazy but it’s actually been done before - a lot - every 50 years in some cases. And it’s exactly what it sounds like - ALL debts are forgiven (in modern terms that’s mortgages, car loans, student loans, credit cards, medical - EVERYTHING). There are even examples of properties being GIVEN BACK to the former owners after jubilee.

Critics call it socialism but a debt jubilee actually stimulates the free market system much like a forest fire clears away old brush. It’s an economic reset that everyone benefits from.

What’s more the system is “self curing” at each stage of the jubilee cycle. For example, in the beginning, consumption is high, credit is cheap and the economy tends to grow. As time goes by, the “party” calms down a bit, people are a little more responsible with their cash and the economy stabilizes. A year or two out from the jubilee is the “fasting phase” where spending drops and very little lending occurs — usually only to the most qualified and reliable borrowers but the lending tends to be profitable and creditors benefit from this. This is a period where the society rediscovers the value of thrift and the economy gets “lean and mean”. Importantly this phase also prevents giant economic bubbles from forming.

Then, the whole cycle resets, theres a heady period of cheap credit and massive growth and on it goes. Doing this every half century means that, no matter where someone gets born in the cycle, they’ll live to enjoy at least one period of good times.

The net effect is healthy balance between extravagance and frugality.

What do you think? Could a debt jubilee work in the 21st century?