The History of Money: Forgiving Debt
by Efin Advisor | December 18, 2008
The Ascent of Money: A Financial History of the World is a sweeping history of finance written by scholar Niall Ferguson that affords readers a rare, historical glimpse of how money has evolved since biblical times.
One historical recounting looks at the subject of debt forgiveness. As Niall writes, “In the Old Testament Book of Leviticus, God commands the children of Israel to observe a jubilee every 50 years.
The biblical conception of a jubilee was a general cancellation of debts. “Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the Lord’s release.”
In 1788 BC, for example, about 500 years before the time of Moses, King Rim-Sin of Ur issued a royal edict declaring all loans null and void, wiping out some of history’s earliest known moneylenders.
The economist John Maynard Keynes had repeatedly called for a general cancellation of the war debts and reparations arising from the first world war. Though no such intergovernmental jubilee was ever proclaimed, debt cancellation was effectively what happened after 1931, beginning with President Herbert Hoover’s one-year moratorium on both war debts and reparations
As 2008 draws to a close, there are many people on both sides of the Atlantic who yearn for such a simple solution to the problem of excessive indebtedness.
It is all but inevitable that we shall see serious political and geopolitical upheavals in 2009, as the recession takes its toll on weak governments (Thailand and Greece are already reeling) and raises the stakes in inter-state rivalries (India-Pakistan). In the words of Hank Paulson, the US Treasury secretary: “We are dealing with a historic situation that happens once or twice in 100 years.” The stakes are high indeed. Has the time arrived for a once-in-50-years biblical jubilee?
Over the past few decades we have forgiven trillions of dollars in debt to nations all over the world, and now in our time of need other nations are not willing to do the same. Forgive me if I’m not too sympathetic to this general idea. Where are the foreign diplomats and activists coming out of the woodwork with their sob stories about the bad shape we’ll be in without debt forgiveness? I’m so tired of America being the pariah of the world, with every nation pretending we owe them something and never admitting that they should help us out in our time of need. Maybe next time there’s a financial crisis in Africa (whatever country that happens to occur in this week) we’ll conveniently forget to help out and let the rest of the world do the dirty work for a change.
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I know this isnt entirely related to the US economy, but I’ve thought for a while that the IMF should forgive all world debt. Let’s be honest: the IMF is probably never getting most of that money back from the countries it is dealing with. It may get some back from some countries, but most is probably never going to be seen by any world organization. With that in mind, instead of trying to get these countries to pay back some debt, we should ensure that they can concentrate on building their economies. Most do not have the money to pay anyone back, and if we take money from them, their economies suffer which is the exact opposite of what we want to do when we lend them money.
We can also remember for the future which countries are terrible at paying back loans, we can still make smart loan decisions in the future.
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I think it would be a great gesture for the U.S. to forgive some of its debt. It would show that even in these tough economic times, the American spirit is still strong and we are still willing to give in order to help those less fortunate. Just as this economy shouldn’t stop the middle class from donating to the lower class, it shouldn’t stop America, still a very rich and blessed world power, from helping countries with fewer blessings than we have. Plus, it might have the extra added effect of making other countries a bit more charitable toward us. I know it’s not all that likely, but perhaps the global community could get into the spirit of giving as well if they see we’re just as willing to help out poor countries.
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Imagine if all americans forgave their debt to each other this year? Our economy may be able to spring back instantly. We would have millions of people able to spend money again and not have to worry about the money they owe and being stuck in a constant cycle of repayment. Everyone would be better off if we just wiped the debt clean.
This would also allow businesses to take on more people since they wouldnt have to worry about repayments. So we could even create more jobs this way.
Maybe there is some way the federal government could implement a nationwide debt forgiveness. I’m not too familiar with fiscal policy or politics, so Im not sure how that would happen
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I think it would be a great gesture for the U.S. to forgive some of its debt. It would show that even in these tough economic times, the American spirit is still strong and we are still willing to give in order to help those less fortunate.
Debt Managing
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