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Forum Post: Forgiving debt - an ancient tradtion

Posted 2 years ago on Jan. 16, 2012, 5:30 p.m. EST by jinzhao (68)
This content is user submitted and not an official statement

Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.

Hudson says that - in every country and throughout history - debt always grows exponentially, while the economy always grows as an S-curve.

Moreover, Hudson says that the ancient Sumerians and Babylonians knew that debts had to be periodically forgiven, because the amount of debts will always surpass the size of the real economy.

For example, Hudson noted in 2004:

Mesopotamian economic thought c. 2000 BC rested on a more realistic mathematical foundation than does today’s orthodoxy. At least the Babylonians appear to have recognized that over time the debt overhead became more and more intrusive as it tended to exceed the ability to pay, culminating in a concentration of property ownership in the hands of creditors.

Babylonians recognized that while debts grew exponentially, the rest of the economy (what today is called the “real” economy) grows less rapidly. Today’s economists have not come to terms with this problem with such clarity. Instead of a conceptual view that calls for a strong ruler or state to maintain equity and to restore economic balance when it is disturbed, today’s general equilibrium models reflect the play of supply and demand in debt-free economies that do not tend to polarize or to generate other structural problems.
  • Would these theories apply, for example, to student loans today?

23 Comments

23 Comments


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[-] 2 points by beautifulworld (20483) 2 years ago

I believe sociologist David Graeber, one of the early founders of OWS, says something similar.

http://spiritofjubilee.com/videos/interview-with-david-graeber-author-on-debt-jubile

[-] 2 points by jinzhao (68) 2 years ago

My old friend, good to see you.

[-] 2 points by beautifulworld (20483) 2 years ago

Nice to see you, too.

[-] 1 points by JPB950 (2254) 2 years ago

I don't see it applying to student debt, unless you let the same people keep borrowing while in debt already. Average student debt is still low, only about $23,000 per graduate. The relative few students at the high end are unlikely to be forgiven. It might apply better to nations, where the borrowing doesn't stop.

[-] 1 points by jinzhao (68) 2 years ago

Perhaps sub prime loans?

[-] 2 points by JPB950 (2254) 2 years ago

Those can be dismissed through bankruptcy which is a form of forgiveness I suppose. Personal debt doesn't often get as out of control as national debt, so in general I don't see anyone wanting to set the president. Start forgiving all personal loans and banks will back off from making them in the first place.

[-] 1 points by GirlFriday (17435) 2 years ago

A Jubilee? It was very common and I posted a link somewhere in this place regarding this very topic.

[-] 1 points by 1169 (204) 2 years ago

its in the Bible

[-] 1 points by GirlFriday (17435) 2 years ago

Actually, it predates the bible but yes it is in the bible.

[-] 1 points by 1169 (204) 2 years ago

I wish it was in my credit report :)

[-] 1 points by GirlFriday (17435) 2 years ago

Yeah. :D

[-] 1 points by jinzhao (68) 2 years ago

Good, I think they were done on a regular basis, right?

[-] 1 points by gnomunny (6647) from St Louis, MO 2 years ago

I believe it was done every seven years.

[-] 1 points by jinzhao (68) 2 years ago

Hi, this is Jim in LA, good to see you again.

[-] 1 points by gnomunny (6647) from St Louis, MO 2 years ago

Likewise. Banned again, eh? Welcome back. Again.!

[-] 1 points by GirlFriday (17435) 2 years ago

Mishram in Babylonia. Hell, for a more recent debt forgiveness look at Germany.

[-] 1 points by jinzhao (68) 2 years ago

Tell us more about Mishram.

[-] 1 points by GirlFriday (17435) 2 years ago

Misharum. I butchered it. Here, have a look see: http://michael-hudson.com/wp-content/uploads/2010/03/HudsonLostTradition.pdf

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[-] 1 points by MonetizingDiscontent (1257) 2 years ago

::::::::::::Endgame: When Debt Is Fraud, Debt Forgiveness Is The Last And Only Remedy::::::::::::

http://www.zerohedge.com/news/guest-post-endgame-when-debt-fraud-debt-forgiveness-last-and-only-remedy

If there was some sort of fraud, yes.

[-] 1 points by jinzhao (68) 2 years ago

Isn't most of it fraud these days?

[-] 1 points by MonetizingDiscontent (1257) 2 years ago

lol, well it does appear that way doesn't it. Still... it must be identified.

[-] 2 points by jinzhao (68) 2 years ago

Sub prime mortgages could be an example. Those people should not have been given loans.

[-] 1 points by MonetizingDiscontent (1257) 2 years ago

Yep, but the education bubble hasn't quite popped yet. When it does, I think you will find many of the answers you are looking for, regarding that question of fraud, liar-loans or some equivalent thereof within the student loan programs. If there are rampant problems, that is when it will come out. When the bubble pops.

"Education is an emotional purchase for parents. It’s why they continue to buy at outrageous prices. In a rational market, no one spends $68k a year for two kids in college without realizing they are being fleeced." http://www.phillyburbs.com/blogs/news_columnists/jd_mullane/biden-bypasses-the-college-bubble/article_ecb2bf94-db65-57b5-bd47-e560faed5923.html

"Here’s an alarming factoid. In 1993 fewer than half of those who received bachelor’s degrees in the U.S. left school carrying student loan debt, according to The New York Times. Today, two-thirds leave college deep in debt, carrying student loans averaging $24,000. College loans stand at $1 trillion, nationally."

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