October 21, 2011 · 12:13 pm
In a word: Debt.
There have of course been many protest movements against many of the same issues that Occupy Wall Street and We Are the 99 are raising: poverty, wealth inequities, unfair housing laws, financial greed, race-to-the-bottom “globalism”, neoliberal policies that are really just a guise for corporations to take advantage of the poor, and also debt.
But there is a debt-related process happening now that underlies and unifies all of the current problems in a way that hasn’t been seen since the Great Depression.
This is one of the reasons debt is at the heart of so many OWS and 99 complaints. The media has picked up on the common complaint of student loans, and the debate has resolved around the “personal responsibility” meme. But the same thing happened three years ago with housing – whether to help those “underwater”/in foreclosure or blame them for their “extra-bathroom”. And three years before that there was the same debate (this time “big screen TVs” were the sin, rather than the extra bathroom) with credit card debt as Congress made bankruptcy more difficult for credit card debtors (and simultaneously making bankruptcy virtually impossible for student debtors).
There is a misunderstanding inherent, however, in the debate about a debt jubilee and supposedly “personal” responsibility. Those who have realized that the economy as a whole needs a debt jubilee are not asking to be forgiven by lenders who will be compensated by the public. This is what DID happen with the banks, which is why the Tea Party (rightfully) became furious (but wrong in rejecting debt cancellation for homeowners).
But no – a debt jubilee is about not paying the bankers. It is about “We The People” declaring the usury of the 1% null and void. Debt jubilee is not about a free ride for debtors, but about declaring the Ponzi scheme of the banks illegal and voiding the contracts that the banks abuse the populace with. This will in effect transfer the idle wealth of the 1% to the public, which will truly be a stimulus to the economy, unlike bailouts and tax cuts to the rich, and unlike the absurd “quantitative easing” which is actually just more debt creation which only makes We the People that much more beholden to the financiers and ratings and IMF technocrats (austerity, anyone?) and empowers the banks and is anyways just pushing on a debt-deflationary string (while the public hangs by a thread).
No – in this ”bailout” it is actually the bad guys who lose their shirts. The entire public regains a debt-free and more transparent government.
Those who look at any one group – those underwater on houses, struggling with medical bills and unemployment, or students with zombie loans, and are angry that a debt jubilee would somehow be unfair overlook several things.
First, if you look at just any one group, it seems like a jubilee is helping a smaller group at the expense of the larger group. But as noted, the debt won’t be paid by the public, but declared null and void by the public, making the banks the rightful losers.
Second, looking at any one group overlooks the fact that as a whole, the people suffering from debts constitute a very large part of the public – what percentage of American families doesn’t have a member or members suffering either from large credit card debts, unexpected medical expenses or debts from caring for a family member, debts resulting from unexpected unemployment, debt from student loans, or a household underwater on their home? A debt jubilee would spread the ill-gotten gains of the banks quite evenly throughout the public.
The other big argument about a debt jubilee is that it creates moral hazard – i.e., that in the future the same process will happen again, even faster probably because people will expect another debt jubilee.
First, however, as we noted, this is a once in a lifetime – actually – once in a three or four generation time – problem. Not much incentive to take out loans and then wait another 80 years for the next debt bubble in the hope of another crisis and jubilee.
Second, and much more importantly – the moral hazard argument only makes sense if we are planning to return to the absurd credit-money system we currently have. Which of course we aren’t. Not enough of the public, not even the Tea Party or Occupy Wall Street protesters, understand that the credit-money debt-driven system we have is entirely chosen by those in power, and kept in place by those who benefit from it. A perfectly sound, sane and proven system has existed before and was laid out by the Yale economist Irving Fisher over 75 years ago among others. (See these links to Steve Keen’s work).
Finally – the general public might be afraid that not propping up the banks will plunge the economy into a deeper depression. This fear mongering was the subterfuge used to add insult to injury after 2008, when the banks that got us into this mess used the crisis to steal still more money from the public.
Not only debtors, but everyone stands to gain from changing the banking system, which means first killing the existing zombie banks. There are perfectly sane and fair money systems where the only credit is money whose use is truly foregone by another, so that a credit bubble is impossible, as no “new” debt money is created. The current system of credit-creators we call “banks” serve no social purpose but to enrich those associated with them, with credit-money gobbled up by the financiers and trickled down onto the politicians. The only way for the public – all of the public, to thrive again is to stop feeding the zombie banks that hold the entire system down. This can be done in an orderly way by declaring all debt under the existing system null and void. These types of reboots have occurred before in history – don’t let the banks convince you that it can’t be done.
The mathematically unpayable debt will disappear anyway, in one of three ways: 1) painful hyperinflation, which will allow seemingly huge debts now to be paid and Ponzi contracts” honored, but at a great cost to the economy as a whole 2) deflation, with massive and disorderly debt repudiation and high unemployment, with even greater pain to families and households, many of whom will be ruined for life (something already happening with student loans ). 3) The third option is to change the system in an orderly way, with the public in charge, by denying the 1% their ill-gotten usurious gains, erasing the debt created in an inherently unfair system, and starting over with a non debt-driven, non-credit money system.
In the future “bankers” will be no more than what they should have been all along – public servants who serve as the bookkeepers and papershufflers of the public’s money, and nothing more. And paid the same as the bookkeepers overlooking our supplies of milk, soda-bottles, or spark plugs. In other words, a respectable, honest job.
(Image by worradmu)
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