Peak Jubilee

Energy procurement from this point forward will be inextricably linked with the state of our financial system. We need energy to grow...we need debt to initiate new energy projects, and we need growth to payoff debt. We also sit amidst a mountain of debt, are passed the global peak in cheap oil production, and live in an environment where not only is the gap between the haves and have nots accelerating, but so is a general awareness of this gap. With this backdrop there has been increasing talk about a 'get-out-of-debt-free' holiday sometime in the future, a debt jubilee of sorts. At the root of debt forgiveness are two issues central to our energy future: - 1) the disconnect between biophysical and non-resource-based accounting and 2) the favoring, via government rule changes, of one social group versus another (in this case, creditors vs. debtors).

Tonight's Campfire questions revolve around the implications of debt forgiveness for energy and social stability.

Jubilee n. A season or an occasion of joyful celebration

Debt Jubilee===> In 1997, Jubilee 2000 was created in an effort to deal with the problem of oppressive debt in developing countries. It is named for the Jubilee year found in the book of Leviticus, when enslaved peoples were freed from their debts, their lost lands restored, and the inequalities that were suffered, removed. Organizers of the original Jubilee drew similarities between international debt and historical enslavement.

I am of the opinion that the credit explosion of the last 3 decades was a social response to the receding horizons of natural resource availability/affordability per average person (median not mean). Debt and credit enabled a large % of society to maintain positional goods consumption in the face of flat real earnings and increased energy imports. As such, global peak oil is a symptom, not cause of the credit crisis, though $150 oil definitely pricked the bubble. As has been discussed on this channel for many years, we are surrounded by all kinds of solar based energy flows, but modern infrastructure is wholly dependent, at least in the short/intermediate term, on oil: extremely cheap, transportable great distances in liquid form, and incredibly energy dense. Combined with natural gas and coal, this high energy gain (EROI X scale X flow rate) trifecta has subsidized/powered modern civilization to its current level of complexity and infrastructure. It stands to reason that if we did have the ability to procure 90 million+ barrels of such oil at a $10-$15 cost for another few decades, our current debt crisis might gradually be ameliorated by similar forces that brought us here, namely energy gain, technology, and iterations.

But we are now on a treadmill with time in the form of public/private interest payments and funding needs for hungry mouths (municipal projects, hospitals, infrastructure maintenance and repair, etc.) Debt, and the ensuing interest payments it engenders, set in motion two dynamics at nearly all hierarchical levels of society: 1) over time, the leveraged paper money system causes a widening gap between real capital and the financial markers most of us 'believe' in and 2)over time, the debt/credit demographics favor increasing flows from poor to wealthy, both at individual and national levels. The end of growth is not the only implication arising from this set of conditions - policymakers will likely find themselves between a large rock and a very hard place, with writing off peoples/countries debts becoming a more and more tenable possibility, as improbable as it now sounds.

Debt forgiveness is not a new concept, with literary references as far back as Leviticus (Bible). More recently, the 1980s and 1990s saw many third world countries have their 'Brady Bond' debt renegotiated for pennies on the dollar. Post 2000 examples include Argentina and more recently Iceland. In the past few months Haiti and Liberia have seen their debts forgiven. On a micro level, the ability to file for personal bankruptcy is now being expanded to policies such as mortgage debt forgiveness for those in negative equity situations, etc. It has not yet happened that entire classes of personal debt are written off: if/when it did one could envision that those who used debt to buy wind turbines, educations or electric vehicles might experience a jubilee before speed boat or AR-15 buyers

Source: The Great Credit Contraction

Though debt forgiveness is not new, a debt jubilee on any meaningful scale combined with the (potentially) quadrillion+ of notional IOUs at a time in history when our energy hemoglobin is starting to run through clogged arteries, suggests a socially unprecedented event. Attempting to inflate away our debts will likely only be taken so far, the inflection point being reached when the risks of permanent loss of seignorage outweigh the benefits of printing. I agree with Gregor MacDonald* that the US will first try to persuade other countries to stimulate/inflate at a faster pace than we do - a modern day spin on beggar-thy-neighbor. But the end game (pre-overtime) will probably be some form of debt forgiveness, yet another in an increasingly long set of choices between the lesser of two short-term evils without thought for any long term plan. Ironically, both the creation and ultimate repudiation of debt, will have occurred so that certain demographics could maintain the semblance of equality.

An impartial observer might view Earths social situation circa 2009 with relative unconcern. We have amazing technology, an abundance of natural resources (still), and low basic needs, based on throughput requirements. But (a)decision-makers are not impartial and are for the most part among the 'haves', (b) our perception of 'needs' is in reality very close to 'wants' (+ we have a prevalence of addiction, formal or otherwise) and (c) the within and between country wealth disparity is at record (modern) levels.

On an absolute basis, everyone (in aggregate) would be better off if debt was wiped clean and we started afresh, perhaps tethered to reality via some kind of energy/natural resource based currency. But certain individuals/regions/nations will resent any debt forgiveness en masse, especially those who played by old school rules and did not participate in the past decades orgy of easy credit. If this trajectory comes to pass, it will reward those who lived beyond their means. As TOD regular 'Greenish' would say, this will cause our 'capuchin fairness meters' to go haywire. If the tide goes out on all boats equally, (or roughly equally), I think you'll see peoples cooperative, rather than competitive drives, dominate. If jubilee is only for a few, there will be blood.

It is an open question what happens when the 21st century version of the Prodigal Son returns home. I expect his brother to have similar, though leveraged, reaction.

Peak Jubilee is not here yet. But it's coming.

The Scarlet Debtor

Campfire Questions:

1. How likely is a 'debt jubilee', either between countries, or between internal classes of creditors within say, the United States?

2. Following a mass debt forgiveness holiday, would it be the former debtors, or former creditors (or neither) that might be viewed with a social stigma?

3. What would the implications for energy production be following a debt jubilee?

4. Is there any workable path between the two poles of debt forgiveness and eventual inflating away debt through printing/stimulus?

As usual, I don't have answers to the above questions, and there probably aren't any. The hope is that via discussing them, the benefits and drawbacks of various options might be better understood. If not, the discussion is probably still better than watching TV...;-)

Well, in lieu of complete debt forgiveness why not just give every tax payer an amount of fresh fiat currency.
Just to pick an arbitrary about linking it to the amount of tax the individual paid over their lifetime.
I know it has many more moving parts than that but at least everyone gets a benefit and not just the prodigal sons and daughters.
I have no debt and have always paid the debt that I have incurred. I lived much differently than the squandering fools over the years and I resent wholly any get out of debt free card at my expense.
Talk about a moral hazard!!!!!
Having said my peace I do think that the system is rigged to fleece the have nots by the haves and that is what needs attention. I just don't think it is fair at all to penalize prudence.

1) If the prudent individuals are not compensated in some way it will destroy the fabric of an already tattered and fragile society.

2) I think even at this point it is plain to see that the creditors are usurious vampires with no moral conscience what so ever so they are already stigmatized. Former debtors that get off the hook will be hard to indentify "socially". I mean walking down the street I can't tell who is up to their eyeballs in hock plus they are in the majority.

3)Everything will ramp economically including oil production..........this is not a long term desirable.

4)I don't think that inflation is going to work. The US economy is a hollowed out shell with hardly any meaningful occupations.
All Americans do is borrow and buy. Until we re-industrialize and produce nothing will matter.


You say:

I have no debt and have always paid the debt that I have incurred. I lived much differently than the squandering fools over the years and I resent wholly any get out of debt free card at my expense.
Talk about a moral hazard!!!!!

Yep, it really sucks! However, whether you accept it or not if you are a part of US society you are by definition *NOT* debt free. You, like everyone else has been complicit in the incurring of a massive energy based debt, which is now reflected in our national debt. You owe, you owe, so off to work you go! :-)

If you look at the U.S. National Debt Clock ( as of this writing, the national debt stands at $11.3 trillion. That is a little over $37,000 per U.S. citizen and almost two times the U.S Gross Domestic Product.


Six Syllables to a Savage Truth also found on
by Stewart DoughertyJuly 16, 2009
"...The cost of the government's financial-crisis-related bailouts and guarantees currently exceeds $13,500,000,000,000.00, which is 200 times larger than the Madoff scandal. And the nation's unfunded contingent liabilities, for programs such as Social Security, Medicare, Medicaid, government pensions and the like stand at $75,000,000,000,000.00, 1,150 times larger than Madoff's fraud....

Of course, these numbers make laughable the government's righteous indignation and shocked disbelief that a "Ponzi scheme!" as "large" as Madoff's could have operated in the United States. The government's response is a textbook example of the intelligence industry's attention-diverting technique known as misdirection.

In June, 2009, the Congressional Budget Office (CBO), a government entity, issued its "Long Term Budget Outlook" for the period 2010 through 2080. The executive summary begins with these words: "Under current law, the federal budget is on an unsustainable path – meaning that federal debt will continue to grow much faster than the economy over the long run."...

The United States has already reached the point where it is arithmetically impossible for it to pay its debts or keep its promises, unless it devalues its currency to the point where it impoverishes its citizens and creates international financial chaos. And even devaluation as a means of ending the country's budget nightmare will be difficult, given that so many government programs have cost-of-living escalators, making inflation a “No Exit” horror story. This is not subjective opinion, but rather objective, arithmetic fact, now supported even by government agencies themselves, such as the CBO. As John Williams of has observed, even if personal incomes were taxed at 100%, the United States still could not pay its bills....

Even more astonishingly, on June 26, 2009, in the midst of America's employment and economic meltdown, Congress approved $108,000,000,000.00 in loan-guarantee funding for the International Monetary Fund (IMF), so the IMF can provide financial assistance to "poorer nations." No citizens on earth are as indebted as Americans, given the nation's $11,500,000,000,000.00 federal debt, and more than $85,000,000,000,000.00 of combined federal debt and unfunded contingent liabilities.

The IMF funding is in ADDITION to the government's June 26, 2009, $106,000,000,000.00 supplemental war appropriations bill, which was supposedly meant to pay for continuing military operations in Iraq and Afghanistan, but which includes U.S. taxpayer gifts of $660,000,000.00 for Gaza, $555,000,000.00 for Israel, $310,000,000.00 for Egypt, $300,000,000.00 for Jordan, $420,000,000.00 for Mexico, and $889,000,000.00 for the United Nations, for so-called "peacekeeping" missions. War is peace. Orwell must be laughing himself sick, six feet under.

Congress is in such massive denial about the fiscal and financial crisis it has already created that its spending orgy continues without restraint. In fact, the out-of-control spending is now so outrageous that one can seriously argue that Congress, the Treasury and the Federal Reserve (Fed) are deliberately trying to destroy the United States....

Arnold Toynbee wrote, "An autopsy of history would show that all great nations commit suicide." This is exactly what we are witnessing today in the United States: fiscal and economic suicide. As America's "leadership" injects financial poison into the country's veins, the citizens stand by and watch, having not a clue about what to do to stop the destruction. Today's unavoidable reality is that tens of millions of American citizens are going to die financially before they die physically, thanks to government losses and crony payoffs that enrich and empower a small, shameless, greed-stricken minority at the expense of the entire nation....
Despite the CBO's calm outline of the next seven decades' worth of ceaseless, staggering American operating losses and surging debt, we are fast approaching endgame...."

I think the government is insane in letting the big Banks pay bonuses to management as losses were socialized by Paulsen and Bernanke. Fed loan to these banks at effective 0% is another subsidy. Even a less than astute company could make billions with direct government support. The bonuses allow the banks to avoid taxes and would give employees a "stock recovery" that we don't get.

Please drop the cent zeroes, they make it harder to read the orders of magnitude.

Hi Magnus,

I first had the same objection myself, but the reason for the zeroes is explained in an editorial note to the original article in

Editorial note: In this article, we will express numbers in digits. The government, financial "services" industry, and television talking heads, to name a few, are currently bombarding society with the terms "billions" and "trillions." The constant repetition of these terms has given people a false sense of familiarity with them, and made them appear "normal" and "everyday." These colossal sums are anything but normal and everyday. They are monsters that are tearing apart our fiscal, financial and monetary systems. Those who casually throw around a trillion here and trillion there, such as the steady parade of CNBC commentators, try to act as if they understand the magnitude and implications of these sums, but they don't, because the sums are incomprehensible and their systemic consequences are totally unknowable and unpredictable. This is patently obvious given the extreme financial crisis afflicting our nation and the world. Also, only "two" of something, such as trillions, doesn't seem like very much to most, whereas the written expression of that same number, in this case $2,000,000,000,000.00, does.

I think Magnus meant the zeros to the right of the decimal point. These are just noise and prevent someone from sensing the magnitude. If anything, they work the other way and perhaps magnify the dollar amount. This may be intentional.


If you want these numer to be understandable for most people you could divide them with the population. $11,500,000,000,000 federal debt is harder to understand then 37,000 dollar per individual.

Those of you above are proving what Newman is saying about being distracted. You are nitpicking and failing to step up to the plate by doing such.

The cents is that distracting to you? Come on..please. The numbers are staggering. The cents issue it meaningless.

This is a fault I see in TOD...Total nitpickyness in the extreme.

Sorry but your posts are soooo obvious.


Hi Newman and all;

Yesterday while waiting for my sport viewing opiate, I happened to catch some of Australia Network's 'Inside Business". There was some barking brain being interviewed imploring, almost hysterically, that people should stop talking about the financial crisis, because it is over. I almost reached into the fridge for an early beer.

porge says

'Well, in lieu of complete debt forgiveness why not just give every tax payer an amount of fresh fiat currency.'

michael panzer of

see in right column parts 1-4 of 'when giants fall'

he believes at some point the gov./fed will bow to political pressures, & print via sending us debit cards- pick a no. he says. big nos. as hyperinflation hits & we can't buy necessities; as nate says- endgame[don't know fully the meaning.] i believe this can't last long.

michael predicted deflation; probably some more, & i think his thinking rings true of then to inflation.

1. so my above drags the system along a little while; $20,000 debit card, pay that mortgage if it gets bigger, etc. debt jubilee via debit card.

2.those living like porge.... pissed; they probably got paid for guns too.

3.nationalization is the short, eventual answer.

4.see above post. endgame few months at best.
try global currency then or they will at an earlier point. it will fail. Wad of bills; then barter for a while.

Interesting post, Nate.

My take on it is that a new approach to Equity (I was intrigued to see Taleb advocating this in the FT the other day) will actually make debt obsolete.

The current position is that credit - in the form of IOUs issued by credit intermediaries - has been monetised. That is to say, that we assign value to something which is the exact opposite -a claim over value. Emissions trading and carbon credits are the same - the political attribution of value to something intrinsically worthless.

Now, >97% of this bank money=credit is interest-bearing - and dated. ie there is a repayment date.

The balance <3% of this money is not interest-bearing, and is undated ie notes and coin.

This undated money is "redeemable". It used to be redeemable for something of value ie gold - but that ended in 1971 and now a note is just redeemable for....errr....another note.

I advocate the creation and issue by energy producers of Units redeemable for value or "money's worth". In particular I advocate Units redeemable for electricity - and for as long as carbon-based fuels are in use - in such fuels.

Moreover, it is also possible to create Units which are redeemable for the right to occupy location. Almost two thirds of money ever created came into existence as mortgage loans ie it is credit issued by credit intermediaries and backed by location/land rental value.

Whatever the basis of the Units, transactions may take place by reference to a Unit of measure or "Value Standard" consisting of a unit of energy. The result of this is, as I posted here before, a form of Energy Accounting, but with far more value in circulation than just energy.

As I said here

REIT Way to solve the Credit Crunch

there is IMHO quite a simple solution to the Credit Crunch, and that is to create Pools of affordable rentals and unitise them into what are essentially REITs where the units are redeemable for the right to occupy land/location.

And as I said at the recent All Energy show in Aberdeen

Supergrid - Energy Pool

the Unitisation and forward sale of renewable energy and energy savings enables us to fund the massive investments needed. This is because issuers of Units are receiving value now in return for Units they issue which will cost them nothing to redeem in the future.

The outcome of what is essentially a Debt/Equity swap on a large scale could be seen as a form of Jubilee. It leads to forms of money based upon value and which give us credit which is not so much "debt-free" (debt is the flip side of credit) but what I may term "date free".

I believe that a new networked financial architecture

Money 3.0

is capable of spreading virally, firstly because its consensual nature (a partnership framework) means no legislation is necessary, and secondly because it benefits from the "Cooperative Advantage" of not having to pay returns to purely financial investors.

We may turn neoclassical MSM rhetoric on its head. In a P2P world there is simply no need for "unproductive" rentier shareholders for investment, while for credit - as Gilmore (almost) put it - "the Internet interprets Banks as damage and routes around them".

I believe there will be a debt jubilee,both on a national and global scale.But it won't be in any sense be by consensus or organized.It will be a global scale mess as a result of economic and resource meltdown and it will not play out well for the reasons outlined in the article.

If the current ruling hierarchy can't get their act together on virtually any scale as amply demonstrated so far then how could they possibly negotiate a solution to the debt crisis?
Pigs might fly.I think this fundamentally answers questions 1 to 4.

I've got to agree with you thirra. Debt relief is not an "if" question, but a "when" question. It's going to happen because the exponential growth in debt cannot be repaid, no way, no how. And with how our world governments don't deal with any pressing bad news until way after anything can be done about it, those holding the debt are toast. Therefore, it really is an advantage to hold onto real assets, and keep deferring any accounting of what is due until much later in time. Possession of tangible assets is 9/10ths of the law, and when TSHTF, you pretty much will own it outright. I forsee land & real estate to revert to whomever is squatting upon it when TSHTF. There will be too much other really bad stuff for what remains of law enforcement and the military to try to quell.

This whole situation has me replaying in my head The Dead Kennedys' "California Uber Alles" & "We've got a bigger problem now":

Last call for alcohol.
Last call for your freedom of speech.
Drink up. Happy hour is now enforced by law.
Don't forget our house special, it's called a Trickie Dickie Screwdriver.
It's got one part Jack Daniels, two parts purple Kool-Aid,
and a jigger of formaldehyde from the jar with Hitler's brain in it we got in the back storeroom.
Happy trails to you. Happy trails to you.

Yeah, that's it. Just relax.
Have another drink, few more pretzels, little more MSG.
Turn on those Dallas Cowboys on your TV.
Lock your doors. Close your mind.
It's time for the two-minute warning....

1. How likely is a 'debt jubilee', either between countries, or between internal classes of creditors within say, the United States?

As a voluntary political choice, this seems even less likely than an actual revolution, given the feudal calcification of the entire system. It could probably happen only in the context of some such upheaval.

Still, I can't imagine any sane person thinks the public debt, entitlements, or a significant portion of private debt is ever going to be paid off. This can't even be serviced for much longer.

I think the debt jubilee will simply be imposed by history when the system can't take it anymore, and we have hyperinflation or federal default, at which point the dollar will collapse and all existing debt will be forcibly jubileed.

2. Following a mass debt forgiveness holiday, would it be the former debtors, or former creditors (or neither) that might be viewed with a social stigma?

It seems there's no social stigma left at all for anything other than child molestation. No one has any authority to try to bestow shame, and no one is capable of feeling shame, for anything. It's part of America's complete moral collapse, which is certainly related to the bubbles and financial collapse.

There is one exception. While none among the wealth and power elites feel any shame at all over being history's worst thieves and beggars, there are still many among the non-rich who carry this as a kind of brainwashing, who still feel a need to pay their debts to the banks who preyed upon them even as those same banks default on their own debts, receive massive bailouts, and take pleasure in committing this second round of fraud.

3. What would the implications for energy production be following a debt jubilee?

The reason the banks are refusing to lend right now is because they, better than their political waterboys and bagmen, recognize that the global economy is insolvent and "growth" is finished.

I imagine a debt jubilee would tend to confirm this perception for them. So energy projects which have to be privately capitalized through yet more zombie debt, after all the old zombie debt was just jubileed, aren't going to get that capitalization.

Will Western governments finally see the light, that it was deranged to put energy production in private hands in the first place?

Well, if they could call a debt jubilee, anything is possible.

4. Is there any workable path between the two poles of debt forgiveness and eventual inflating away debt through printing/stimulus?

No. America is insolvent now, held up as a zombie debtor by helpless creditors; there has been no real growth in over ten years, only debt-bubbled fictional growth; the productive base is hollowed out; America has no reality-based way to produce again, to provide the dollar with any basis, and all the fairy-tale ways seem to have run out. (Reflate the housing bubble? A new carbon bubble? Those don't look promising. Anyway, any new bubble would not be a "workable path", but just a way to prop up the zombie for a few more staggering steps.)

What he said...

Since the vast majority of money IS debt, a repudiation of debt is the destruction of money.

Actually, the opposite happens. Debt issuance creates money with an 'expiry date'. As it is repaid it ceases to exist, but during the term of the loan it circulates and is exchangable for real money.

When a borrower defaults or a debt is forgiven, that money remains in circulation permanently, so the result is inflation, and all other money (including other debts) is devalued.

This is in fact a good motive for governments to forgive debt. If they directly print money by selling treasury bonds to the central banks, this is rightly seen by other holders of government debt as a way of abbrogating previous debt. If governments forgive un-repayable debt, it can be passed off as good social policy, but achieves the same result.

Well, that does make a lot of sense.

You have a future in politics. Now work on accepting grift and you're a shoe in.
No, seriously I think your keen insight makes the forgiveness more plausible than I first thought.

my teeth hurt

In the late 70's, central ND, farmland sold for $500/acre. The value of the land was at best worth $300/acre from the standpoint of crop production.

Farmers were going bankrupt in the early 80's. But the best the banks could do is get $300/acre if they foreclosed. So there was as program to just write down the loans by the banks. Many thought it was not fair, but it was generally accepted as best for the farm community.

The unfairness in the debt system is the fact that the banks get to just flick a pen and own the farmers future.
The people fight with each other never looking at the real problem...........the usurious banking system.

You mention the prodigal son.

The other 2 parables of Lent are

The parable of the lost sheep.
The parable of the lost coin

Maybe there is something behind the Bible after all !!!

white men, maybe vellum?

I don't get it.

I got it.

If everything were to be put in a great pot and shared out equally that would be a true jubilee and while I think many of us here have greater than the average amount to put into that pot, we would still all be wealthier for it.

In the meantime, Nate, you put me in a great dilemma with that prospect of a possible debt Jubilee ordinaire. What is it I should do, stay in cash or use it to take out a mortgage on a castle in Spain?

If you can get the mortgage take it and then you can put granite counter tops and travertine tile in the front foyer for a quick flip on the castle.
Oh wait, that was last years scam. sorry.

Given that this is a thought experiment and not necessarily an ideological stance, here goes:

Rather than an across the board debt repudiation, how about a permanent interest 'jubilee'. All principle is still owed. The implications for different kinds of debt [long term vs short term, private vs public, personal vs corporate, debtor vs creditor etc] will play out differently. This shouldn't be a one-off event because we are hoping to restructure the economic system to accomodate the expected shrinkage economy. It would be a way of doing business with the deflationary expectation built in. It is the reverse of the current 'discount rate' where money now is worth more than money tomorrow.

Given that no matter whether we keep the same system we have or drastically change someones ox will get gored. The question is whose ox will be gored the worse.


I think this post talks about an important issue. There is no way that all of the debt outstanding can be paid back with interest. Somehow, the whole system is going to come apart--probably not nicely.

The fact that there are not enough underlying assets means that there are going to be some that are going to be left out in the cold.

One thought that occurs to me--why favor debtors or creditors? If the whole system is unsustainable, a change in government is likely as part of working out a new system. A new government could, at least theoretically, start over. It could announce that all assets will be distributed to the people, regardless of prior ownership. Large farms will be broken up so everyone gets a share. Businesses will be given to co-operatives operated by the workers. The new leaders of government will get the big houses (paid for or not).

Of course, those who own their own homes and farms would be unhappy, but ultimately another part of what is unsustainable is the concentration of wealth in the hands of the few.

Another approach would be that the new government would own all the land, and the people would rent from the government.

Realistically, one should attempt to determine how Goldman Sachs would like this untenable situation resolved (I realize the power structure is not simply Goldman, but they are a good proxy)-at this point their preferred solution would have to be considered the most likely outcome IMO.

If Goldman gets their way I fully expect it to be outrageously unfair and that may be the spark that lights the many brush fires in the minds of the sheep.

Hi Brian, Goldman would love it. When I said above that everything should be put in a big pot and divided equally I had forgotten Goldman and the likes would be in there like dropping bricks to start monetizing our bits and then divesting us of them. Sorry, I was a fool, it won't work. Guns knives, broken beer bottles and struggles in the night are the only answer.

Gail, I enjoy your posts and your comments often make me think and reconsider my understanding of my view of a topic, but your post here actually motivated me to convert from lurker to 1st time poster! Funny what that says about how people are motivated or at least me.

I think your thoughts(musings? since they seem off the cuff) and other posters with similar posts in this thread here are simply bad and have been proven by the past century to be horribly bad.

Humans have tried communal ownership of property and we've discovered that they are more destructive (lives and the environment) than market orientated political economic systems, and they actually killed more people than all of the wars in the last century.

Ours is not a good system, its simply the best one we (people) have created so far. Look at North Korea, one of the last communal systems out there and ask yourself if that is a system that you would like to live in.

There are no do-overs, but there can and will be revolutions and civil wars. I am afraid if we were to actually try your suggestion, we would end up with one or the other or both. A bigger fear that the response would have us end up in a totalitarian fascist type state, which to me is just the flipside of a communism. I am hopeful that we can do better and not play that coin.

What we won't do it seems currently, is actually do something to change the course we are on. ** Not until the pain of not changing is as bad if not worse than the pain of not changing will we begin to deal with the problems and find a better path. ** I wish it were not so, but except for a few individuals (many of the posters here it appears), are not accepting reality and won't until it bites.

Nate, interesting post. To respond to your questions, I think there will continue to be small scale debt forgiveness between countries of the core and the gap (to use Thomas PM Barnett's paradigm), within the US I think it will depend on how willing we are to bend our current laws, and if the debtors in question are considered systemically important or not (compare what happened to Lehman vs IndyMac vs GM vs CIT - think how much fates are determined by individual players vs rules-laws).

I think there will be plenty of social stigma to go around, who gets to pin the tail on the donkey is TBD, will it be like the French Revolution, the Russian Revolution, Germany/Italy in the 30's or something else?

If we are to keep some semblance of our current system, the only way out is through time and the printing press (inflation) I think. We are still deflating and it remains to be seen if they will be able to patch the balloon to be able to reinflate it. Will it work? Only if people do not suffer such an acute threshold of pain, that they coalesce around people and ideas that allowed the events in the previous paragraph.

I do enjoy the campfire, thanks for another log tonite!

Thanks for un-lurking!

I am not saying that these ideas are necessarily what will happen, or what should happen, just that if there are major changes in the monetary system, there are often major governmental changes at the same time. These changes quite often are more than new elected officials. They may involve new national boundaries (think fall of the Soviet Union), and may involve a totally different type of government--possibly fascist or communist or something else we haven't thought of. It is possible that the new leaders will think that what they are doing is for the best of the people, since our current factory farms may not continue to work long term.

When I talk about the government owning the land, I understand that this form of land ownership has been used in China and in some other countries. People might be assigned particular areas to live on, they just wouldn't "own" the land. If they move, the land would go back to the government.

Humans have tried communal ownership of property and we've discovered that they are more destructive (lives and the environment) than market orientated political economic systems, and they actually killed more people than all of the wars in the last century.

Ours is not a good system, its simply the best one we (people) have created so far. Look at North Korea, one of the last communal systems out there and ask yourself if that is a system that you would like to live in.

It depends what you mean by "ownership".

IMHO no-one should have absolute exclusive rights of Commons (such as location, non-renewables, and knowledge) - Period. Indigenous peoples such as native americans have difficulty understanding how anyone could even claim to "own" land: other cultures assert that absolute ownership is God's alone.

Exclusive rights of use, on the other hand are essential, but I take the position - with Henry George - that those who have the privilege of exclusive rights of use of such Commons should compensate those they exclude. In other words, I advocate taxes on privilege - and the unearned rents that derive from it - as opposed to taxes on people and particularly on earned income.

The innovation I have been working on is a new approach to ownership through the application of partnership-based legal and financial agreements - as opposed to protocols imposed by statute or judge made.

Here in Scotland we recognise three verdicts: Guilty; Not Guilty and "Not Proven" and it is in this third non-Absolute space that the answer lies, I think.

Why should not Land be held in Common by a "Custodian" - with veto power, but no positive control - and then the use value or production shared in agreed proportions between the user of the land/location and any investor of "money's worth" (eg labour, bricks and mortar, fertiliser).

In a nutshell I am proposing

Pages 8 and 9

a new form of "Co-ownership" and a market which operates co-operatively on a "Not for Loss" basis of shared surplus.

If there is to be a State, then it should be a participative State IMHO, in which all Citizens are members, rather than a Jacobin State, from which citizens are alienated.

Gengis Kahn was right. Civilisation sucks.

All this nonsense about who owns the land. No-one owns the land.

Try and claim the land and we will book you with an appointment with Mr. Darwin.

How to keep our culture is the problem.

Someone told me that only 2.5% of money exists in reality. The rest is digits on a computer. A typical smoke and mirrors trick by the Master Illusionist.

Time to wake up folks.

All this nonsense about who owns the land. No-one owns the land.

Try and claim the land and we will book you with an appointment with Mr. Darwin.

Not quite sure what Mr Darwin has to do with this but I agree that no-one owns the land.

Ownership of land

It is a habitual conception that ownership of land is acceptable. Most societies are characterized by the convention of ownership. But if we claim the ownership of land, we also say that we have more right to parts of the surface of the earth, than other persons have.
We know that persons should be treated as persons and therefore as having rights. If we say here is a person who has rights, but this person has no right to stay on the surface of the earth, it does not make sense. If one does not accept that persons have the right to stay on the surface of the earth, it makes no sense to talk about rights at all. If we try to defend ownership of land using language in a rational way it goes wrong. The only way of defending this ownership is by the use of power and force. No persons have more right to land than other persons, but concentrations of power use force to maintain the illusion of ownership of land.

Good luck with handling "tragedy of the commons" withouth land ownership.
Distributed land ownership has been central for Sweden not developing serfdom
during the middle ages and it it is still working for motiviating people to do
multi generational investments. I advocate more individual ownership to get
better husbandry of resources, not less or vage ownership.

40 acres and a mule.

The total surface of the earth is 57.5 million square miles of land, which includes major deserts, Antartica and many other areas that for multitudes of reasons are for all purposes uninhabitable.

The current population of the earth is approximately 6.7 billion.

If you divide the total land area by the total population you get: 0.00862 square miles per person, That's approximately 5.5 acres per person.

So if you take the total available land and completely stop all population growth you get about 5.5 acres of land for each human being.

If you'd like to do the numbers for usable productive land by all means do so but I think just by looking at the numbers I've come up with I think we can begin to see a problem.

So since it's no secret what percentage of people own the usable land one could say that there is no such thing as human rights.

I personally think that this is a really big problem.

And khmer rouge style piles of dead bodies.

I guess we are all gaining an appreciation for Damocles.
All my life i have tried to ignore the fact that I will inevitably die. It is getting harder and harder to do that.

Yet you're the guy who just said this:

Good luck with handling "tragedy of the commons" withouth land ownership.

So just for the record while I still have a few Swedish friends left ( I really do), are you saying that you are supporting the side of the Khmer Rouge types?

Maybe it's not to late for me to reconnect with my Mongolian and Hun ancestors and lose my squeamishness about playing polo with the heads of my enemies a'la Atilla the Hun, eh? Oh yeah, the other part of my ancestry is Danish, I'll guess I'll have to dig up some old Viking skills as well...

Then again being a rich landowner doesn't rule out death by plague and pestilence which might be a consequence of messing up the commons. Sow and yea shall reap!

Shall we negotiate a new paradigm or just go to all out war?

I would withouth doubt go to all out war to protect social structures that has worked for a very long time and those structures ability to togeather with a large heritage of infrastructure and other capital produce large ammounts of food and post peak oil usefull goods. My intetion is to as far as I can better and grow this isle of prosperity and spread the prosperity via trade wich is a mechanism that is more robust then aid.

Dividing all these owned assets and giving a little slice of every part of it to every human alive would destroy those structures and even if it were done withouth a fight it would leave piles of dead bodies from the lack of production and loss of potential.

I care about seeing as manny people as possible getting a chance of adapting to new circumstances and bettering ther lives wich means doing it togeather with other people. If they dont plan ahead and do constructive stuff including cooperation and dont get their own countries institutions in order they will probably become demand destructed. I cant do much about that and forcing the issue would need military might and that would be a waste of recources that could be used among those who choose productive solutions.

Yes I think it is likey that lots of people will die and I think all of those deaths are due to bad politics including bad religion with a wide definitio of religion. We have as a species not used our most efficient technologies in a wise way and it is unlikely that we ever will be able to save everybody. It does not matter if you or me has the perfect physical solutions since we cant get everybody to do the right things. All these uncertanties and limitations makes global all changing solutions very dangerous since they can wipe out more then they create.

so, cooperate ,educate, communicate.
We don't seem to be very good at any of the above.

One possible result of communication and understanding is conflict.

Advocating remova of all property ownership followed by equal distributin of all stuff while assuming that this would be a good idea is a very effective way of communicating with me.

And I would actually like to live in a society with for instance more socialist communes as long as they respect the rights of other people and constellations of people. My limit for how crazy they can be before I get an itch to intervene in some way is more or less if they start hurting children or when it gets so sect like that relatives start rejecting each other if someone change life style. (The largets spanne in the works of such things is probably the taxation, the government wants its cut of what ever people do to support themselves. )

I have concluded that you are too smart for your own good.
The average human has no idea what you speak of.

I am not present on TOD to discuss with average humans.

But I am fairly sure that average humans can understand these
ideas in a face to face dialogue of sufficient lenght. It could
however take quite a while if you have to start with basic math
and history.

You are certainly arrogant.
Or should I say self-confident.
nuance I guess.
Are you german....swedish....norwegian the way you mash the english laguage is telling.

I am messing with you that is all.

I would withouth doubt go to all out war to protect social structures that has worked for a very long time and those structures ability to togeather with a large heritage of infrastructure and other capital produce large ammounts of food and post peak oil usefull goods. My intetion is to as far as I can better and grow this isle of prosperity and spread the prosperity via trade wich is a mechanism that is more robust then aid.

I share that sentiment, however I'm beginning to have serious doubts that the same social structures that have worked for a long time in say Sweden and Scandinavia in general will continue to work into the future, especially in other parts of the world. I'm certainly not suggesting throwing out all infrastructure your culture, or not developing your local economy and becoming as self sufficient as possible.

Trade with ones neighbor is historically the best way forward to prosperity and peace so I'm certainly for that as well. Unfortunately most of the rest of the world wants to live like the Swedish, including myself ;-) however I'm afraid we have passed the time when that is going to be possible. So resource war it will be!
Maybe pestilence and plague coupled with climate change will distract our attention and energy from direct conflict.

The end result is still the same, piles of dead bodies...

Economics of Freedom

Consider this....

Without access to this planet
and its resources you can't eat, breathe,
walk, sleep, work or play.

Land is more than somewhere to live - it is life itself. Without exception, everything around you, EVERY SINGLE THING you use and consume in the process of leading your life are products of the land.

These are the simple facts: If you have no land to live from, you are dependent on money to purchase the products of the land; if you have no money to live from, you depend on employment to gain the money; if you have no employment, then you're dependent on the State; if the State refuses you, you beg for the charity of the rich; no charity, you steal or you die.

Such is the chain which binds us to each other, and to the land.

Whose Planet are we living on?

To live is to use Land - To own Land is to own Life itself.

Every inch of our planet is now owned by some person or organisation.
The majority population (60% to 90%) in EVERY inhabited country are landless - own no part of the planet whatsoever, not even their own homes.
The richest 5% in every nation, rich and poor, North and South, East and West, now own between 70% and 95% of their own countries.

If you do not own enough of this planet to support yourself, and you cannot support yourself without this planet...
Who is it who supports you?

And do they support you...
or through their owning the land that supports you
do they now own you, own your work, own your space,
own your freedom to live as you choose?

If you own no land to support yourself, you must rent, hire or buy it from those that do, so that you may both live and make a living.
If you cannot use the planet to feed, clothe and provide for yourself then to stay alive, you must choose to either work for those who own your planet, to become a thief or a beggar, or to die.

This servitude has taken on many forms throughout history:
slavery, serfdom, day-labour, employment. The only variation being the share of the wealth produced left to the planet borrowers by the planet owners.

This simple reality underlies much of today's poverty, inequality, lack of freedom, unemployment and powerlessness, experienced as the sheer struggle to get by that looms so large in so many peoples' lives.

These latter day pharaohs, the planet owners, the richest 5% - allow the rest of us to pay day after day for the right to live on their planet. And as we make them richer, they buy yet more of the planet for themselves, and use their wealth and power to fight amongst themselves over what each posesses ~ though of course it's actually us who have to fight and die in their wars.

Land is not property ~ land is life.
Land is not created by people ~ it creates people.
We need land ~ but land doesn't need us.

These are the Powers in the Gift of the Land -
the Land Owner owns life: (food, living space, materials ~ for
tools, building homes, cities, technology)
the power to create or destroy people: (famine & war, plenty & opportunity)
and to cut people off when no longer needed: (unemployment, homelessness, poverty, starvation).

The Power in the land is the Power OF the Land

95% of the USA is owned by the richest 3% of Americans
60% of El Salvador is owned by the richest 2% of El Salvadorians
86% of South Africa is owned by the white minority
74% of United Kingdom is owned by the richest 2% of Britons
84% of Scotland is owned by the richest 7% of Scots

Whose Planet are we living on?

The Earth is the mother of our being,
for everything we have and everything we are
is created from her.

Gaia ~ our land, our planet, our only home.
To own land is in essence, to own reality.

"It depends what you mean by "ownership".

Whatever way we occupy and use space on the planet, there will be those who are responsible custodians and those who plunder. We need to be tough and uncompromising with the plunderers.

Gail, while I agree that what you propose may indeed be what comes to pass, it comes awfully close to that still unpalatable, at least in the US, idea of a Socialist State.

Actually what you describe might even be characterized as outright communism. Note: I am deliberately not capitalizing the word to differentiate it from the meaning it has in political science and all the associated baggage with regards Marxism-Leninism.

I am using this definition:
From Wikipedia, the free encyclopedia

Communism (from Latin: communis = "common") is a socioeconomic structure and political ideology that promotes the establishment of an egalitarian, classless, stateless society based on common ownership and control of the means of production and property in general.

Debt forgiveness should be seen as part of a system of remodeling our basic societal system to something fundamentally sustainable. As I wrote in A Problem of Growth, the fundamental unsustainability of our society is that it's current structure requires perpetual growth--even where (as we are and will see) resource constraints or credit bubbles cause the structure to collapse to a smaller size, it continuously reverts back to searching for ways to grow and expand all over again because its fundamental structure remains the same. I described that structural predicate for growth as hierarchy, but I think debt is the flip side of this coin. Debt--as is made clear by by its alternate name "leverage"--tends to result in hierarchal structures that, because they are in peer-polity competition with other hierarchal structures, must find ways to grow or be consumed by more aggressive competitors. Debt isn't the sine qua non of growth or hierarchy, but we'll find it difficult to address either hierarchy or growth without addressing debt.

That said, while I wholeheartedly support a debt jubilee on all levels (for the reason above), I'm concerned that it is highly unlikely without--or in lieu a threatened--violent revolution. Additionally, it could be devastating in isolation to our current economic model (not that this model needs any help collapsing). Take mortgages: if a widespread jubilee looks possible, then one result may be a dramatic reduction in available credit, which would exacerbate the housing markets' problems even further, requiring the resulting jubilee to be either cancelled or dramatically expanded.

Additionally, because it would take some time to transition our economic model from credit-based to savings-based, there could be significant disruption (economic and political) during this transition period...

Not sure what the impact on energy production would be. My initial thoughts are that 1) oil majors have been more able to continue operations in the midst of credit constraints than other companies because they tended to be in a better cash flow position, and 2) the most detrimental impact would probably be in the alternative-energy startup arena.

Additionally, because it would take some time to transition our economic model from credit-based to savings-based, there could be significant disruption (economic and political) during this transition period...

In fact the transition will not be from credit-based to savings-based IMHO, but rather will be a re-basing of credit and savings.

I see a transition from "deficit-based" to "asset-based" credit and investment, and the productive assets in question, or maybe "Factors of Production" are:

(a) Location;

(b) Energy (in static material and dynamic immaterial form); and

(c) Knowledge.

I outline my rationale here.

Towards an Economics ofCommon Sense

1. How likely is a 'debt jubilee'?

Sovereign defaults are far more common than one might suppose from the risk premia (
This Time is Different: A Panoramic View of Eight Centuries of Financial Crises; Reinhart, Rogoff, 2008-04-16
Given the loud noises about the demise of the dollar as world reserve currency, some tectonic shift is clearly countenanced.
I think some complex arrangements are more likely in a bretton-3 than simple dollar default, for example political concessions and agreements over spheres of influence, control of resources, etc.
There is also talk of arrangements with IMF Special Drawing Rights, which could for example be redfined so that the exchange rate to a currency is related to the net credit of a nation plus it's gold reserves in e.g. 1 gram fine = 1 SDR.
SDRs could also be used to 'print' quantities of currency in equal proportion, thus devaluing the money supplies of world currencies in lock-step.

Sovereign default has some subtleties I don't grasp, to do with the relationship between banking grops and nation states - if a nation allows all it's banks to default on non-deposit debt, this isn't quite the same as a sovereign default.

There are reports of international trade shifting towards barter, and I suppose we'll see that in workplaces - public travel passes and lunch vouchers have been commonplace in London for years, and such things may expand.

I overheard yesterday an Irish member of parliament telling his homies that he though rationing (of food and fuel i guess) is possible in future.

So credit and debt may become less meaningful.

2. .. social stigma?

The mass media that several generations have grown up with have been enormously effective if pursuading us that we are incomplete without a welter of gadgets and status symbols, and have conditioned us into passive pliant consumers. (watch this stuff (adam curtis)).

As the means to pay the vig on those surround sound systems and 50" plasma tvs subsides, we might find people being more alientated from the mass consumerism, and having the time (being unemployed) to engage in more group activities, politics, social activism, awareness-raising.

I guess whether one's hill of beans is convex or concave will be less important than social skills and charisma.

3. .. energy production be following a debt jubilee?

The mechanisms of production and distribution functions pretty much like a commodity, so this would continue, with fuel and electricity rationing.
It's anyone's guess how the resources will be allocated between countries - perhaps forms of barter will appear here too.

4. .. path between the two poles of debt forgiveness / inflating .. ?

I was talking to a guy who worked in a US bank before the Y2K thing; he said that the bank really couldn't fix their systems, so they actually reverted to a paper based system. I think this kind of return to simpler lower-energy systems [1] could become widespread, so some of the more organisationally-demanding complex solutions mightn't be feasible once the mail is delivered by horse once a week.

Ilrgi is pretty pursuasive that deflation will continue for some time (though I'm hedged 70/30 against deflation/inflation - more because of risk/benefit than probability).

Overall, I think there will be a sort of sobering-up and walking-away-from-the-circus, where the locus of narrative is with the person, rather than the mass society we see ourselves as members of. Community, Food, Water, security - money was only ever a means to these ends, there are many other means.

More than one way to skin a cat (which my german girlfriends' granny knew as "roof-hare").

[1]: sure, paper+ink+horses might end up higher energy overall then netbooks and wifi.


I think an important place to start is at the beginning and then walk back from there. It's a structuralist approach, which has its faults (when you take something apart and put it back together, you don't get the original thing: you get the thing that was one thing, then taken apart and put back together) but these are faults I am willing to live with for now.

So, first: What Is Debt?

Debt is a claim on labour. I borrow - I work to acquire funds/resources/whatever to "pay the debt".

That is personal debt - between two sentient beings.

Then there is imaginary debt: the debt between organisations. The national debt does not exist. I don't owe someone in China or the UK a damned nickel. Organisations (governments and corporations) are likewise imaginary. I exist. You exist. Governments and organisations only exist insofar as we "let" them exist.

Viz lyrics by Young Marble Giants from 1980, the song NITA. The emphasis is mine because of relevance:

It's nice to hear you're
having a good time
But it still hurts 'cos you used to be mine
This doesn't mean that I possessed you
You're haunting me because I let you

Shape up your body "Let's be a tree"
Visual dynamics for you to see
Nature intended the abstract
for you and me

(watch it, performed 28 years later by the same group Here)

We let debt haunt us. Example: Today I am in debt. I declare bankruptcy. No more debt. I am still breathing. I still eat. I no longer have to labour to pay off that debt. If I did not labour to pay it off in the first place, causing the bankruptcy, then the debt never existed. If I do not give power to the debt, then the debt has no power. I didn't possess the debt and it only haunts me if 'i let it. This is an abstract point, and only has meaning because "Nature intended the abstract for you and me".

So, we need to unpack this a bit more.

A personal debt (between you and me) is only binding insofar as you and I share a similar notion of property. You're haunting me because I let you: we agreed to this "bond".

An impersonal debt isn't between you and me. It is between classes. Nature intended the abstract...

The ruling class uses debt instruments to get richer. In the end, it is the labour of the working classes that pays it off. A debt jubilee would render signifiers of class distinction meaningless. If I knew that a debt Jubilee would occur on 25 DEC 2009, I could BURY myself in debt and buy a giant mansion and an airplane and a nice car and spend my days snorting coke off some stripper's tits. And afterwards, I'd still have the plane and the house and a burned out septum - just like any other irresponsible jet set jackass.

There will be no credit jubilee. There will be a radical immiseration of the working classes who will be stunned and distracted by their entertainment systems. Killing people "isn't cool" so rather than rise up and actually invent a truly socialist society, they will piddle around with mythologies of wealth, or put their trust in a system that calls itself "socialist", viz Jay Hanson, and do whatever they can to keep their crack/culture/class/whatever habits going.

Again, the Young Marble Giants:

Go for credit in the straight world
Look a dealer in the eye
Go for credit in the real world
Won't you try?

I got some credit in the straight world
I lost a leg, I lost an eye
Go for credit in the real world
You won't die

Instant credit in the straight world
Leaving money when you die
Lots of credit in the real world
Gets you high

Watch them perform it 28 years later Here.

I lost a leg I lost an eye. Go for credit in the real world you won't die.

There is no debt. There is no credit. As far as social object go, only what we say exists.

What you believe is what you see.

If I knew that a debt Jubilee would occur on 25 DEC 2009, I could BURY myself in debt and buy a giant mansion and an airplane and a nice car and spend my days snorting coke off some stripper's tits.

If it was known in advance that a debt jubilee would occur on 25 Dec 2009, no one would lend anyone any money.

I think he meant if he knew it but no one else did.

Actually what he describes is exactly what America is doing. Those among the government class who have brains (not many, I suppose) know this federal debt will never be repaid, and are simply using it to fuel an idiot binge of bailouts, weapons spending, pork, and war.

This is what I argue in favor of running up debt to spend on potentially useful things like stimulus (if it was rationally targeted, a big "if", I grant) and real health care reform. If you knew that shortly all debt would become worthless, the sane thing would be to run up as much debt as possible procuring USEFUL things.

Then when it was all over, you'd still have those things.

But the way things are going, no one's going to be left with anything but a wasteland. Not even any good memories.

Debt is only as valid as it is collectable.
Once this thing blows who is going to come knocking and repossess things that have no "market" to sell them in anyhow?
This entire mess has passed the stage of surreal.

On second thought there is an opportunity here.
A combination repo-man/auctioneer is the future of the US economy.
Once established one can have Goldman underwrite an IPO and sell the overpriced shares to the pension funds for 100s of millions and walk away laughing.
Oh wait, that was the tech bubble.

One man's debt is another man's asset. Hence writing off debt is the same as destroying assets. If all debt is forgiven, then all financial assets are automatically destroyed.

1. No one will lend money and all credit activity ceases
2. Banks will not be able to return money to depositors and all banks will shutdown
3. Corporations and businesses will cease to function when credit is not available to meet payroll and buy raw materials. Also, customers will not be able to buy finished products without credit.
4. There will be a desperate attempt by everyone to convert financial assets into physical currency; this will cause all financial markets to collapse and shutdown.

I just don't see how it is possible to have a debt jubilee. Instead we will have more and more people and corporations go bankrupt which will deflate the value of assets bought with borrowed money (e.g. real estate). Eventually we will reach a new equilibrium when debt reaches a more manageable level.

i think this is what i meant when i said above that debt repudiation is destruction of money:
if i deposit $10 in a bank, they lend out $9. if that debt defaults, $9 of my $10 is destroyed.

Unfortunately, securitization [etc] stuffed all that:

But of the .9 of the 9 that gets deposited and lent again and so on.............the fractional multiplier creates roughly 10 times(at a 10% reserve ratio) your deposit in the swindle bankster system and that doesn't blow up into smoke when someone can't pay it back.
It is all notional and that is why everything is crashing..........never existed in the first place.

Thus, as stated above, debt forgiveness equals the destruction of money. Your point four forgets that you have already proved that debt and money are the same and so currency also becomes worthless. Look at a dollar bill. "This note is legal tender for all debts public or private." If all financial assets are destroyed then we would be left with whatever tangible assets that remain in our individual possession. I don't think I'd like that as I am owed a lot more than I owe. But as a proper hedge one ought to secure as many tangible assets as possible come hell or high water.

Great Topic Nate!

Believe it or not, I spend most of my waking hours thinking about - coke and stripper's tits - not that! Debt, currencies, foreign exchange, bond markets ... how to make a living. You know ...

There are many examples of debt forgiveness, one only has to Google 'Bono Debt' and get back over a million hits. I can forgive Ghana's sovereign debt, easily! They don't owe me any money!

The real question is whether the amassed OECD debt is collectible. If it is, than in what form? This is unanswerable right now because there is no consensus about what sorts of income flows will be available in the intermediate future.

If the USA has a $30 trillion GDP then servicing and repaying the current debt load is not too difficult. The issue of whether this $30t is inflation is irrelevant, the debt is also inflation and in an inflationary context all inputs are slso inflated; even rising energy prices and other input costs can be and are inflated; the context allows those closest to the money source to fund the resulting costs and still earn large returns, regardless.

The rest are simply unlucky, too bad for them!

This then is the ideological force behind the Wall Street bailouts and the other strategies of the Federal Reserve, the Treasury and the other Central Banks ... which are all engaged in similar reflationary efforts. Energy costs are real but the most important part of that term is the 'cost' part rather than the 'energy' part.

The short version here then is the current debt burden is manageable provided that a) the structured finance and securitization machine can be restarted and b) energy or social costs don't become too distorting.

Adding to this is the realization that GDP is measured on the curve; growth exists whenever the markets are not actively collapsing says Janet Yellen of the San Fransisco Fed (via Calculated Risk):

The Uncertain Economic Outlook and the Policy Responses.

[I]t takes less than many people think for real GDP growth rates to turn positive. Just the elimination of drags on growth can do it. For example, residential construction has been declining for several years, subtracting about 1 percentage point from real GDP growth. Even if this spending were only to stabilize at today’s very low levels—not a robust performance at all—a 1 percentage point subtraction from growth would convert into a zero, boosting overall growth by 1 percentage point. A decline in the pace of inventory liquidation is another factor that could contribute to a pickup in growth. Inventory liquidation over the last few months has been unusually severe, especially in motor vehicles—a typical recession pattern. All it would take is a reduction in the pace of liquidation—not outright inventory building—to raise the GDP growth rate.

What this means is the current approach tends to perform an end run around the issue of debt issue since it is simply another cost that can be manipulated. For instance, in China there is growth and this is supporting the US"s funding needs:

This tension has torqued Chinese currency and trade policy even as its neo- Keynesian stimulus plan and lending bloat leveraged against those dollars has pitched the argument in the direction of the dollar being valuable. The continued strong economic 'growth' depends on the increase in dollar reserves. This makes these dollars proxies for Chinese growth. Each dollar printed by Bernanke is buying some of it. Seeing this and measuring the value the dollars have to China, the US Federal Reserve is massively inflating the number of dollars it issues, trying to buy some Chinese growth.

China is giving the Fed a free lunch, just like always. Courtesy of China's inability to come to terms with its dollar surplus.

With all this maneruvering, is any sort of large scale debt relief possible? What would trigger its application? Will the maneuvers actually work?

First of all, the one realization is the US and other sovereign deadbeats are just that. Can they pay or won't they? This is not easy to answer. Fortunately or otherwise, there is no 'off- planet debtor's prison' where defaulting countries can be sent. While individual can be, the actions of the governments to date have tended to shield individuals; they lose their houses but not their freedom of movement.

Additionally, who would forgive? All countries are running large (temporary) debts in attempts to restart their speculative economies. Debt is being passed back and forth, who are the lenders and are any of them able to make a creditors' claim without that claim being superseded by others? This is a real problem in the mortgage industry where original claims are sold to others, sold again, repackaged and resold, etc. The same actions take place with all kinds of debt and synthetic debt. (Don't ask.)

Additionally, the event or 'Force Majeure' that would be the trigger relief is hard to quantify in advance. It is likely that the establishment would not see a need for relief until circumstances that required it had rendered the issue moot. See Citigruppe ...

If there is a dollar crisis or a default - and a sovereign default under the current commercial/energy constraints would likely be unremedieable - the debt might as well not exist anymore. It would be uncollectible; the US is lucky its neighbors are peaceful Canada and poor Mexico. We are greatfully too far from warlike Vietnam.

As for the rest, it would seem that bankruptcy is the means to do just what is suggested. The knock- on effects are to be felt by the banks and the banks' investors; hedge funds and insurance companies. These in turn will wind up in the hopper, in the end. All roads lead to Washington, DC which has put all of its hopes into the one basket of inflationary speculation.

I doubt the money machine restart efforts will work. The establishment simply has no idea how our current system works. It claims that speculation can improve standards of living and this is demonstrably false. Our Chinese adjunct - and our history - suggests that manufacturing/industrial commercial ventures can propel living standards just as well. This paradigm is grounding itself upon the increasing energy costs and is failing as well.

Any new regime would likely pivot away from debt. A new preferred system would lever toward resources rather than against them; legacy dollar- or money debts would simply not be applicable ... Like debts of the Confederate States of Ameerica.

So yea, we can forgive those.

Jim Willie's latest missive address some of the questions of this Campfire, by the way it is remarkable how Obama's teflon coat prevents even cursory questioning re Goldman's frontrunning of the markets

I believe that the debts both on and off the books are so large that they will not-simply cannot- be repaid.
I'm thinking not only in terms of mortgages and credit cards but also pensions and medicare and social security ,etc.

One way of looking at this is that,except for the resulting upheavel,the creditors will have
simply made bad investments,and lost.Just like people why buy the wrong stocks lose.

Younger folks who are paying big bucks into current programs that promise a check or benefits later are going to get a check,probably, but one that represents a negative rate of return.

The folks who enjoyed the easy ride are going to benefit enormously at the expense of the folks who played by Nate's "old school rules".One thing that really frustrates the hell out of me in regard to liberal thinking is that no allowance is made for the people who really have "played by the rules".I personally know many people who have worked two jobs for decadesand gone without many things considerecd necessities by my liberal friends so that they could own a home and hold thier head up and say "I took care of MYSELF and mine and nobody ever give me a thing (-or if not pious,a GODDAMN THING)"

Followed by "And now somebody who pissed away ever nickel he ever made goes to the hospital and walks out an don't pay a dime and but theytook old Joe (or Susie or Garfield) for his last nickel.Had it to do over agin,I'd never even try to get ahead,I'd jis take it easy an enjoym'self"

And the liberals can't get thier heads around this man's value system,and they can't understand why he voted for Reagen.(Or Bush-but he was probably holding his nose as he pulled the lever for Bush.)

(I wonder how many people here on the Oil Drum know how Bush made his personal fortune
at taxpayer expense playing baseball?)

So to get back on track,there are going to be a lot of strange bedfellows against a jubilee,but by some means or another it will come about.

The backbone of the conservative voting coalition may already have been broken by the current economic crash.If not,it may still break as more and more formerly fairly successful voters find themselves on the receiving end of the income transfer schemes,rather than the paying end.

And although I can't prove it,my very strong impression is that people dependent upon government paychecks,military excepted,are about 80 or 90 percent liberal once in the voting booth.And there a lot of them.They can imo be counted on to vote for more government nearly every time.

So we could see a sea change in American politics,and wind up with a lot of nationalized industries,as people come to believe that such is thier best hope of a fair shake.

We might have a revolution similar in many respects to the French Revolution, but hopefully not so bloody, if the people can't get thier way otherwise.And the nature of the game is that a politician COULD rise who is ready to sell of the current ruling class for galley slaves if he thinks doing so will put HIM

in office.

Every system of government and finance/banking/business,so far as I can see,can be gamed.

The winners rig the rules so as to stay on top as long as possible.

But the top,historically speaking,is a very slippery place.

One way or another,peaceably or not,the debts will be ,if not forgiven,forgotten.

I think things may get a little out of hand as the process of debt repudiation unfolds.

If we are really lucky,we might get by with a few million very lenient bankrupticies and a lot of lenders effectively liquidated.

A few of the debtors may feel a little shame in private,but more and more will simply feel like the luck is finally running thier way and celebrate.

Creditors may have to go into hiding.Once the righteous(to them if to no one else) indignation of the working classes is made manifest,nobody who ever accumulated a lot of loot will be safe.

Inflation will play a very large role in the eventual repudiation of current debt,and it might just be the safety valve that keeps the lid on the pressure cooker.

In the end the world will still be here,minus most of the easily exttracted minerals of course,and after things settle down life will again become routine.

And a generation or two or three down the road there will be another crisis as bad or worse.

I wish I had a week to organize and polish this little rant!

ps and to think i used to be a publican!and wrote this!!

if you would indulge a little reductio ad absurdum...

The folks who enjoyed the easy ride are going to benefit enormously at the expense of the folks who played by Nate's "old school rules".One thing that really frustrates the hell out of me in regard to liberal thinking is that no allowance is made for the people who really have "played by the rules".

the ultimate "old-school rule" is environmental sustainability, still practiced only by a few tribes in africa, new guinea, and the amazon.

both liberal and conservative thinking makes no allowance for these people, who really have "played by the rules." to the contrary, both studiously exterminated such peoples. when i mention this to a conservative acquaintance, she says "they had low population so they were wasting the environment. it was correct to seize their land."

does this frustrate the hell out of me? it tickles my sense of justice. but if we step back a little, it's obvious that all societies eventually become sustainable. the game, it seems, is to go unsustainable long enough to gain advantage and annihilate sustainable peoples, then collapse, and thus ensure that only your genes stand a chance to live in the sustainable future.

this is amoral, but it's what we do. evolutionarily adaptive traits are amoral, you know. if tapeworms are amoral because they feed on us, are we moral because we feed on plants?

even the most moral liberal is embedded in a society that will follow the arc of unsustainability and collapse, regardless of the liberal's personal moral code.

now here's the interesting bit - those of us who were fiscally sustainable are comparable to the environmentally sustainable peoples we're all guilty of exterminating. do the fiscally sustainable get (fiscally) exterminated this time? are the fiscally unsustainable pulling the same trick on us, that we pulled on environmentally sustainable peoples?


You are on the money and we are on the same page mostly.The biggest difference is that I was thinking mainly in terms of American society and the liberal conservative paradigm of current politics,whereas you moved to the broader aspects of world wide society and jumped of from there and expanded my " can be (and are)gamed."

There is no way Greenish's "capuchin fairness meter" can ever be kept in the green in a world with a lot of people in it,but "It would be Paradise" it that were possible.
The world is and ever was and ever shall be a Darwinian place and the "lower" species will always determine the social rank of individuals by brute strength.

We and the other brachiators will use a combination of brute strength,politics,and deception-the forked tongue,the ethical system that says it is fair to have one employer for every thousand workers,etc,and insists that "it's fair cause you don't have to work for him"

As I remarked in closing,it would have been nice to have a to have week really COMPOSE my comments.

Well, you have your head deep buried in the sand if you really think that any tribe on the Amazon is sustainable. I can't say anything about the others, but I doubt they are all that different.

Besides that, well, great comment.

You may be right - I have never read that Amazonians are sustainable. I may have extrapolated there.

It's worth mentioning that neither the African nor the New Guinean "sustainables" practice agriculture of any form. Amazonians are deeply dependent on manioc (cassava) agriculture, however. This may be the key.

I expect the smart-rich, like Richard Rainwater has already done earlier [google Rainwater Prophesy], to convert their paper assets into real assets. Rich farm land with a good, nearby stream & shallow aquifer/well, then a 10 year-stockpile of seeds and I-NPKS inside the farmgate, plus O-NPKS recycling and much more to stock the bunker.

IMO, Richard will not trade foodstuffs for PMs, big screen TVs, worthless paper currency, or any debt instruments. Now if you have some 'future-oriented' I/O-NPKS plus your volunteered manual labor to trade with him: you might come back home with some bread, bacon, and eggs for your family...

NPKS-->food surpluses-->job specialization-->civilization. How could it be otherwise? We are evolved to do the nightly darkness [no FFs], but not starvation.

Recall my prior postings on this subject: Currency serial # based to exactly correlate with the serial # on a bag of NPKS. No usury allowed, but our future is REAL PHYSICS stockpiled in my speculative 'Federal Reserve Banks of I-NPKS'. Otherwise IMO, we get the dire Ft Knox scenario...

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Turning paper assets into real assets works great for a while. Long term, it may or may not. If land is bought in an area where there is inadequate fresh water, or if a new government nationalizes land owning, if or you have a need to move and cannot sell, the originally great idea may look less great. (Still, I have done some of this myself.)

Printed money is not wealth. Real wealth comes from a productive workforce. Rewarding unproductive behavior (such as extending unemployment benefits, increasing welfare payments, providing free health care, etc.) will cause the collapse of the economy. As Margaret Thatcher once said "The problem with Socialism is that you eventually run out of other peoples money".

Without the free enterprise system, the Republic itself may collapse in favor of the more universal Oligarchy (rule by a small group of elitists). A Bill has in fact been introduced that would eliminate Presidential term limits. Democrats in the House have quashed the ACORN investigation. If the government continues in this direction, the economy and the Republic are doomed.

Since Presidential term limits are in place by Amendment, it would be quite a high bar to pass to repeal them.

Funny thing is, I heard a lot of the same things from Liberals for the past 8 years.

Until more people learn to look past party to what's really going on the game will continue on the same.

Thatcher's Britain had higher unemployment than when 'the other lot' were in charge that the Conservatives replaced.

The answer to unemployment is simple. There is only so much human labour required in the world to live at a certain comfort level. Every labour saving gadget/concept reduces this person hours total.

You add up the amount required, divide by the number of people and make it an enforceable standard 'working day' - or - if that's tricky..

You reduce the statutory working week until employment = 100%

There, that wasn't hard was it?

The truth is that employers and money types don't want 100% employment, otherwise they might have to co-operate with workers - and where would that lead us??

Nations have a different set of morals to individuals.
If I kill it is murder. If my nation kills it is war.

Nations are under no moral obligations to honour their debts.
The nation must only consider the cost versus the benefit of abrogating their debt.

What are the benefits of debt forgiveness? What are the costs?

These are the issues that must be ballanced.

"If not, the discussion is probably still better than watching TV.;-)"

Probably, but not depends on what you are watching. As I write this, I am watching (for about the 5th time) the movie "The Longest Day." It is about the preperations for and the invasion of Normandy beach and the beginning of the liberation of Europe from the Nazi regime.

But in one way, it is about something else: It is about a nation (the United States)that managed to launch the greatest boom in construction, manufacturing, technology and science the world had ever known by way of the war effort. And it did so coming off the worst,longest most devastating depression in world history.

It is about a nation that came out of hyper inflation and what was essentially a state of subjugation due to the terms of the Treaty that ended WWI (Treaty of Versailles) and launched one of the most expensive and daring war efforts in all of history and took control of a continent. Germany was essentially bankrupt going into the dawn of the Third Reich but still managed to build one of the most impressive war machines in all of history in about a decade.

It is about how another nation that in it's declining days of empire, and after having it's major city almost bombed to dust managed to hold off an enemy, avoid invasion and act as the launching pad for one of the greatest invasions in history. The United Kingodm defeated the German air force in the Battle of Britain, and retained control of the air and the English Channel, and retained control of enough home food productiona and industrial capacity right through the blitz to remain a competitive fighting nation until the U.S. could get organized and arrive.

Coming into WWII, there were no dependable jet engines. In 1946 it was obvious that the piston engine warplanes would soon be scrapped. Comming into WWII there was no dependable radar. By 1946 any nation without it was essentially blind. Coming into WWII, there were no workable rockets. By 1946 the high tech nations were already planning for the space age. Coming into WWII a "computer" was a giant building that had to have water carrying laborers keep the buckets moving to keep the tubes cool enough to function. By 1946 the concept of the portable computer was already on the drawing boards and moving forward at blinding speed. Coming into WWII virtually no vehicle had an operating portable alternator. By 1946 alternating current was the wave of the future in automobiles, planes and ships. Coming into WWII the world had never seen and most people had never heard of nuclear weapons or power. By 1946 we had entered the 'atomic age".

How was all of this paid for by a group of nations on all sides coming off of the greatest worldwide economic depression, decline of empire and utter defeat and destruction in the cases of the Axis powers?

There is one word that matters more than any other, a word that is now considered old fashioned and superstition, that is now regarded as not at all keeping up with the "rational" modern de-constructionist way of viewing the world. That word is WILL.
Remember it: WILL. WILL. WILL. WILL. It is a tool. WILL can be used as the ultimate device for human destruction, The WILL TO POWER, or as the device to propel humanity forward, as in the WILL to CARE, the WILL to better our neighbors along with ourselves.

The world and the world economy will be designed by those with WILL and the rest will live by their insight and concept of what is desirable. Depending on who these people are and how they view humanity and their role in it will decide the fate of millions, even billions of people. So it has always been, so it will always be.

So it was with Alexander the Great
So it was with Christ
So it was with St. Paul
So it was with Charlemagne
So it was with Alfred the Great (the only English king called the great)
So it was with Napoleon
So it was with Lenin and his 32 allies on the "sealed train"
So it was (sadly) with Hitler
So it was with the Polish labor leader Lech Walesa and the South African revolutionary Nelsen Mandela

Economics is a human invention. Economics is a social science. As Lewis Carroll once famously said of words, "Are you the master of the word, or is the word the master of you?" So it is true of economics...are humans to be the master of economics or is economics to be the master of humankind?

Economics will follow the course chosen by those humans who have the will to take control of destiny and guide it. So it has always been. So it will always be. All other discussion is simply a matter of working out the details...but the devil is in the details.


is "WILL" subject to laws of thermodynamics?

Ofcourse not Nate!

The thing is that China, the largest holder of US debt is in a very strong and influential position now. Remember, Debt is power! The creditor holds sway over the debtor. Yes, the US could default on it's debt through hyperinflation or direct default but that would isolate the country as the Saudi's, Japanese, Chinese would stop accepting little electronic green digits for their very real physical assets like oil and trinkets. Also the US is entirely dependent on imports of critical minerals and metals and 70% of it's oil is imported, defaulting would be akin to an instantaneous isolation and dramatic drop in living standards, though that is going occur anyway. (before people say but the US has it's military might, what happened to the Soviet Union and it's 29,000 strong nuclear arsenal in 1990? Did it prevent any sort of collapse?)

Historically, debt has been used by the West to control the world, not through colonization or invasion anymore but by debt. The west has long used it's leverage through the WB and IMF to get assets and natural resources on the cheap in Africa, South America and Asia. So when they are on the backfoot why would these countries forgive Western debt? If they force the US into consuming less or even collapsing economically while still holding the debt, that becomes an attractive strategy as that means more resources for their people.

Resource wars seem inevitable at some point but for the time being the creditor will rule. China has increasingly become dominant in Africa and South America, going after resources and building infrastructure. Traditionally these regions have been under the influence of the US, UK, France and Spain but not so anymore. They respond timidly to the China's growing influence as you don't mess with your biggest creditor. (The heroin addict doesn't want to harm his supplier now!)

In one sense, yes, in another, no.

Will (or commitment or intention) operates in a different realm from the physical because it is a concept thus it can be present at all times regardless of the situation (it is 'eternal'). (Short digression: the way we use will does require a brain of some sort, but even the brain is just an arrangement of molecules organized to produce results. We like to think it is special but it could be viewed as simply another expression of the universe doing its universe thing, no different than a tree growing toward the sun. Does a tree have "will?" Coming from this angle, it does. Thus it's probably fine to say that will is eternal.)

But will must eventually operate in the physical world and that is where the laws of thermodynamics come in. At that point will must acquiesce to these laws.

However, we often stop ourselves from embarking on an undertaking after convincing ourselves that something is impossible. The trick has been and will always be: how does one convince oneself or enough people that their will is sufficient to overcome the given obstacles? It is difficult enough to convince when a clear pathway is visible and it is also difficult. It becomes almost impossible when there is no pathway visible, or the pathway is visible only to the leader of the effort.

The most powerful groups of people, interestingly enough, are those who can work toward a goal with no evidence at all that it is possible. They "trust" or "have faith" that each obstacle currently in the way will be overcome, and that the obstacles that inevitably show up only after the first ones are cleared away will be overcome, too.

This is the phenomenon that is operating when we say "he or she did it through shear force of will." The implication there is that there was no visible pathway to the observer or even to the agent themselves.

It's a remarkable skill to cultivate especially because the agent must always deal with the people who say that the agent is mad or stupid. (And sometimes that is the case.) But often people say that because they don't understand or aren't trained in the incredible power of "will." Their mind focusses only on the obstacles and they can't get beyond that point.

I like your comment, aangel, and agree with it as a practical matter. Whether will is "eternal" I don't know, but there is a large gap between where we generally give up and where actual hard constraints lie.

So saying, all the will in the world won't find a solution which isn't there.

This brings 'Triumph of the Will' to mind. There are after all 2 ways to keep per-capita energy consumption up...

Nate asked:

is "WILL" subject to laws of thermodynamics?

Answer: Yes, but not relevant.

Example: Let's pretend that tomorrow, the entire planet wakes up and says "enough with this fossil fuel nonsense. Enough with this capitalist horror show. Enough with the pollution and destruction. Enough with the massive overpopulation. Let's fix it now in a way that is most humane and just as possible."

Bingo - no more debt bombs, no more peak oil problems, no more insane industrial nightmare, no more thermodynamic sword of Damocles over our necks, as we would be actively engaged in living underneath our energy income.

That is why, yes, WILL is subject to thermodynamics, but will and intention can subvert and change our relationship to the systems most sensitive to thermodynamics.

The guy who posted about WW2 is totally correct. with a similar international commitment to a powerdown, we can get there, and get there quickly. But it will take a great deal of willpower and a transformed political economy. And those thinking of it - don't give me crap about "oh, boo hoo it will never work, you will never change the political economy, people are sheep and the government is corrupt and in te pocket of the corporations running us off the cliff, bla bla bla." If that were true, we wouldn't have the political economy we have today. It just didn't always exist. Things can change and they can change quickly. If we let it happen.

WWII is an inspiring analogy to me in a slightly uncomfortable way, and should be for anyone who doubts the potential of nation-states marching in lockstep toward a goal. (both sides showed similar productivity and ingenuity during which a lot of low-hanging scientific fruit was picked).

Wars are uniquely well-suited to "fit" in human brains as an organizing principle, which is why they won't soon go out of style. Confrontation with the 'evil others' is a very motivating concept passed down to us from far back in time.

What we face now is more like a degenerative disease. It doesn't cause any of our evolved motivations to click. People react, if at all, idiosyncratically and not in any sort of general phase-state shift.

Perhaps that can be changed, but it'll take more than "letting it happen".

The guy who posted about WW2 is totally correct. with a similar international commitment to a powerdown, we can get there, and get there quickly. But it will take a great deal of willpower and a transformed political economy. And those thinking of it - don't give me crap about "oh, boo hoo it will never work, you will never change the political economy, people are sheep and the government is corrupt and in te pocket of the corporations running us off the cliff, bla bla bla." If that were true, we wouldn't have the political economy we have today. It just didn't always exist. Things can change and they can change quickly. If we let it happen.

That reads like a paragraph I've written over and over to generally uncomprehending audiences.

Almost all of America's problems are purely political problems. This includes even Peak Oil-related issues, since what is likely to make energy descent such a travail is not oil depletion in itself but the fact that a society like that current in America refuses to make the adjustments to prepare, and this in turn is a political problem.

It's true that things look dismal and hopeless at the moment. But so they have many times before in history, right before great changes.

And that could be the case today as well. But only if there are people of vision and will ready to seize the opportunity when it comes, ready to answer the people when the people call out, "We want Change!"

Obviously that won't come from the political class, and it won't come from nihilists who use the reactionary catcall, "nothing can be done", to justify their own laziness and cowardice.

So I guess the first step is for willful people to agree that (1) something can be done, and (2) it can't be done as "reform" within the existing structure.

Nate, I have to be direct on this one: I think that human technology is so very far from exploring the limits of thermodynamics that it is not a concern to me. I could be wrong. The amount of waste in the world is to me nothing short of ASTOUNDING. And by waste I am not talking about things like a comfortable car or air conditioning in hot climates where it can be life saving, I am talking about waste that no one gets to use, wasted packaging that goes immediately in the garbage (the food provides calories, the package provides none), the lost efficiency in the automobiles that cause it to consume three times the amount of fuel for EXACTLY the same performance/comfort that could be provided in a car that gets triple the fuel mileage, houses so poorly planned they could be heated or cooled for 5% or 10% of the amount now used, etc., waste that provides NOTHING.)

The discussion of thermodynamics touches upon a very fundamental and basic point of difference that causes me to to get into much discussion and sometimes causes contention between my friends and I here on TOD: Many on TOD take the fundamental position that the problem is too much technology attempting to provide humans with too much.

My fundamental position is that technology at this time is FAR too primitive and attempts to provide humans with far too little REAL benefit, comfort, quality of life, etc. This gets back to economics and whether we see technology as limited by the economic factor, or whether it should be more like art and limited by the abilities of the best designer/technicians. My view is that if the mind of the best is correctly applied, the economic challenges actually shrink to marginal factors. There are thermodynamic limits indeed, but we humans have not even traveled a tenth (maybe not even a hundredth) of the way down the path to reaching them, often we barely even understand them. Humility is another great word: We must know how EXTREMELY primitive our current technology is, it is just a hair above stone age at this time (most humans still produce heat and cook using the same method the stone age human burning something...human energy production for the most part has been based on burning for over 10.000 years)


Entropy, entropy, entropy, .........your recoil from the ridiculous waste is natural and it should be.
We didn't get to this level of developement because we threw things down the toilet.

Roger: IYO why is the pace of human technological advance slowing? In 1979, looking back at the advance from 1949 to 1979, there was a lot of optimism about the expected technological advance over the next 30 years. Almost all the techno advance has been in info tech and drugs-the Net is a huge one, but cameras that allow you to text or phones that allow ritalin/prozac,etc. addled kids to send naked pictures isn't exactly a great leap forward for mankind.

I've seen "The Longest Day" probably 15-20 times. One of my all time favorites.

WWII certainly does show what people can accomplish if they put effort into it. That's what saddens me about the situation in the US now. It would be easily solvable if our leaders demanded sacrifice and people were willing to do it.

Agreed. It does appear to me that all our problems are resolvable were only we able to get consensus on key issues. I try not to dwell on this too much because it makes me sad, too.

For a man(?)who's out you sure are "in the money" in your comment here.I spent most of the day today trying to compose somrthing similar in my head,and would have used some of the same examples,but I was going to begin with tyhe pyramids and the irrigation canals and terraces of Asia.

So you beat me to it! and probably did a better job to boot!

You have so far as I am concerned made the case that we can,in theory at least, solve just about any and every problem we face today-if the political cards fall right.

But the odds appear to be very very high that we will not be so lucky.

This is one of the best posts ever in my humble opinion.

To reply to RC and his treatise on WILL.

This is how I recall those times. Being I was born at the ending of the Great Depression and lived thru WWII and worked in the areas of farming,then building jet aircraft, then flying in naval aircraft, then teaching computers and electronics in the aerospace industry then working as a field engineer for one of the best and greatest computer companies in the known world at that time and then coming back to the beginning,,to to the farm.

Its was like this.

A man had an idea. He wished to build a product or start a service and create a business to do so. His wish was a better product or service and thereby serve his fellow man and in doing so serve his own interests but his goals were admirable.

And so men did this and we prospered as well as they did. The goal was 'customer satisfaction' and not greed. Not cheating. Not cooking the books. Not influencing politicians. Not stealing. Not being a criminal. Their goals were altruistic in nature. Build a better product or serve. Serve mankind. Do so with honesty and hard work.

Of course later generations prevailed once these good men and women faded away.

And so we have just the opposite. Unhealhty dirty contanimated food.
Products that are made elsewhere so the profit is greatly increased will the customer satisfaction is gone. In fact knowningly destroyed.

We all see this but expect it as normalcy now.

So this is what we therefore reap. But it didn't start that way. I was there and part of it.

Now you are considered a redneck fool to volunteer to serve your country and being what this country has came the label may be far truer than ever before. Yet the modern soldier is just basically as before just another government employee. As we were told at boot camp way back.

So that great nation of men who went to WWII? Many did it to flee the farmwork. Many to see strange women and lead a different life and many never returned to those farms but went to work in the new industries.

Did in fact the seeds of our present culture actually start with those men going away and seeing a different world before them?

The start of that "American Dream" that eventually led us to where we now are? To become the 'best' and then lose it all in the end?

I think so. Yet I remember some of those old vets. Some were great men and some were just fleeing. Some left children to go bad. Wifes to cheat on them. They cheated as well offered the opportunity.

But somewhere along the way someone else started pulling our strings. I think it was the advent of the Mass Media and the advertising world. The sex wars and the fall into the depravity of sex and drugs depicted by Hollywood and California...

Funny that now California, leads the way as they say,to in this case Bankruptcy and overkill. To sink to the lowest. And meanwhile states who had little influence and were considered 'backward' are in far better N. Dakota and some northeastern states.

Like I say,something in the hearts and minds of men made a huge turning point.....near as I can tell about the mid or latter 80s...what I call the Time of The Yuppies. I think the Yuppies started it.

Greed and conspicious consumption at any cost. Any cost and no matter the fallout. At his time my company changed markedly. I left soon thereafter but saw exaclty how BULLSHIT RULED instead of truth and reality. How asskissing was developed to a high art form. How greed killed all. How dope and stupidity began to rule everywhere.


And so men did this and we prospered as well as they did. The goal was 'customer satisfaction' and not greed. Not cheating. Not cooking the books. Not influencing politicians. Not stealing. Not being a criminal. Their goals were altruistic in nature. Build a better product or serve. Serve mankind. Do so with honesty and hard work.

You are idealizing the past, Airdale. There were plenty of snake oil salesmen, grifters, butchers or produce sellers with hands on the scales, unscrupulous employers who cheated their employees (did you know that in the earliest factories, long before you were born, workers were not allowed to have timepieces? So that they could not know when their shifts ended and were forced to depend upon their employers to tell them when it was quitting time?)

Do you know much about the labor history of this country? I could list countless specific examples before you were born - the Triangle Shirtwaist Factory fire, the Radium Dial company and the women poisoned from the radium they painted on clock dials? (Oh, and the owners knew the health consequences. Once workers got sick in one locale, they moved to another where people were ignorant about the health hazards of radium and started all over again.)

Also, unhealthy, dirty, and contaminated food was recognized as a problem before the 20th century. But this post is getting long already.

What has changed is the concentration of corporate power. Whereas in the past, smaller businesses and individuals (not all, of course) could exploit workers and consumers, now large powerful organizations can do it with greater efficiency.

RE the consumer culture, that was a conscious effort of business beginning in the 1920s. You may find this article of interest.

The Gospel of Consumption


What is the point with a consumer culture if the consumers dont pay?

Wonderful comment.

One ever so minor nit: before WWII 'computer' was a job description, not a machine.

"But certain individuals/regions/nations will resent any debt forgiveness en masse, especially those who played by old school rules and did not participate in the past decades orgy of easy credit. If this trajectory comes to pass, it will reward those who lived beyond their means. As TOD regular 'Greenish' would say, this will cause our 'capuchin fairness meters' to go haywire. I can only imagine.... "

Let's not forget that a sizeable portion of the population has been incentivised, and well- rewarded, for getting people into debt - realtors operating on commissions, salespeople in stores, advertising agencies, brokers of all kinds - the list goes on.

Advertising, particularly, is an exercise in stimulating basic needs and desires, and the wish to have acceptance by one's peer group. i.e. the adolescent wish to "fit in", by having the things one's neighbor has. Perceived success. Or the wanting to fill the voids or peceived failures with "stuff".

I think the ability to be swayed by advertising must, in some way, be connected to the ability to be hypnotised, or to be addicted to drugs, and, therefore, it is as difficult to kick the habit.

It makes no more sense to me to rail against those who have got into debt over their heads as to rail against the cocaine habit, if cocaine were as pervasive as tv advertisimg.

Personally, I am resistant to hypnosis, drugs, and, to a lesser extent, advertising. It takes a conscious effort of will, at times, to get over that "oh, cool, gotta have that" feeling.

Nate, what had happened through the last 3 decades does not look to me like a ‘social response’ to anything. First of all, the ‘receding horizons of natural resource availability’ or ‘peak’ of oil, ores, or whatever else has not in fact been observed with exception of peak oil which we still see being disputed by many. Debt and credit indeed enabled a large % of society to maintain consumption in the environment of flat earning through three decades but I think this has nothing with resources and their availability. This is, IMHO, a pure financial matter showing who really matters in this world or in other words, who has power in its hands. Why is wealth not distributed more evenly through the society (not only American society)? Instead of having to approach the bank for a credit to buy a car, a house, tractor or truck why the income is not such that would allow us to do that – without the credit? OK, it is unreasonable to expect that one can buy a house without a credit but why people cannot pay the bills for everyday life without getting buried under the pile of depth on their credit cards? Stagnating average income during the past decades is the result of the fact that system had been designed by the same people who are using it for their benefit – our benefactors are at the same time the beneficiaries; the people behind the world financial system (who owns Fed we all know, I guess?).
Debt forgiveness is not something that will have to be planned for or designed. Its coming is as probable as the sunrise tomorrow morning. It will come as a result of chaos and will result in even greater chaos. It is not only US who can not repay its debt. Many, many countries are so indebted today and so much oriented to ‘services’ and not material production that repaying all those debts looks as probable as directional change of Earth’s rotation. The only possibility of avoiding such scenario may be in some kind of worldwide central government and one currency which has long been the idea of David Rockefeller and his flock. A while ago he was recorded saying that ‘one worldwide crisis would convince everybody that one world government is a solution for all problems’. So now, when we read how Greenspan ‘was forced/requested’ to produce another bubble after dotcom bubble blew up, does all that look somehow ‘synchronized’ to produce required results? Is it really possible that all those bankers (Goldman Sachs’ elite, ‘Bilderbergers’ & Co, so to speak) are so blindingly stupid that they really thought the party that just finished can go on forever???
For conclusion; yes, we have a resource problem which has not showed up yet to any significant degree. When it does show up in a few years the economy as we know it will be dead because it will dawn to more than present 1ppm of population that our present problem of indebtedness is a function with only two solutions. One is ‘zero’ and the other one is ‘∞’. Which one is more realistic is not hard to guess...

If there are species in the universe a million years more advanced in technology and applied morality than us, I suspect that they have learned to maturely embrace unfairness.

If I owe the bank $1000 and can't pay that is my problem. If I owe the bank $1,000,000,000,000 and can't pay it's the bank's problem. Essentially we have suckered China and the oil Arabs into loaning us so much that our inability to repay is more their problem than ours. They have to keep lending in order to keep their oppressed populations under control. The money needs to keep circulating for the world's economy to keep alive just as blood needs to keep flowing for an animal to stay alive.

The Jews had a away around the ban on usury. They invented the silent partner. That way if they loaned someone money to buy new tools for his business then they would share in future profits for as long as possible or until they were bought out at a profit. Financially the debtor may have been better off paying interest for a short time then sharing profits for decades. This silent partner concept eventually evolved into the modern corporation and the stock market. We have to our detriment whole heartily embraced the sin of usury and mislabeled it a virtue.

If I owe the bank $1000 and can't pay that is my problem. If I owe the bank $1,000,000,000,000 and can't pay it's the bank's problem. Essentially we have suckered China and the oil Arabs into loaning us so much that our inability to repay is more their problem than ours

You are correct - but apply this dynamic within USA as well.. Instead of China/US, substitute rich class vs middle/lower class domestically (or in Europe). 50%+ of population have next to zero net worth. This has now become the rich peoples problem too, even though they have majority of wealth, they won't be able to enjoy it if some changes aren't made...

All that needs to be done is transition to an alternative currency and cut them out.
The problem being that any currency is a confidence game that needs building up.
Good luck with the build up phase.
The powers that be will actually kill any one that tries to usurp their authority............this has been borne out in history.
You know as well as I do that sooner or later we are going to have to quit talking and take the fight to the oppressors.
Do you have the will?
This question is to all TODers.
I can't wait to hear the responses.

Yes, you have suckered China big time-in fact you have been kicking the living crap out of them for the last 30 years. This is why China, which was a huge global power 30 years ago (while the USA was insignificant) is now struggling to keep the juggling balls aloft.

Here, here you and I could have a conversation.
Why is this not obvious???

If you look at a break down of the National debt, it's in great part from stealing (oh sorry, borrowing) from social security and medicare. If the debt is forgiven then all that social security money taken out of everyone's checks during all those years of employment, will go bye bye. Ouch!

I find it fascinating, that during Bush jr.'s two terms the mantra was the increase in debt was small in comparison to GDP, but once a Dem is Prez the mantra is the debt is unmanageable and we now need to discuss how to lose it on the back nine.

No, deal with it in whatever manner is necessary.

Debt is nothing new. It has a long history, and this suggests to me that this is one thing where historical precedents really can offer some guidance.

When it comes to the little guy - ordinary people - in debt, you can forget about any large scale "jubilee", it just won't happen. It has rarely, if ever happened anywhere, any time, under any circumstances. Most commonly, the only way for masses of ordinary people to get their debts wiped clean is in the midst of a sweeping social, political, and economic revolution. Ordinary people in China pretty much all got their debts wiped clean, because most of their creditors were killed during and after the revolution. Need I point out that such an event can be very much of a two-edged sword.

Short of something like that, don't expect much help if you are an ordinary person in debt. I would point out that having masses of people in debt is a powerful tool for social control, and it is a tool that those in power love to use. Notice that there has never been much concern expressed by government leaders about the extent of personal indebtedness, or much said to discourage it.

More likely, what will happen is that ordinary people will stop taking on new debt (this is happening now), and one of three or more things will happen with the remaining debt:

1) Among those who are fortunate enough to have the means, they will eventually pay their personal debts off.

2) Many will run out of life before they run out of debt; their next of kin will inherit nothing of much value, but neither will the debts be passed on to the next generation; the creditors will just be "stiffed". (Excuse the pun!) This is one case that might be considered "debt forgiveness", but it will be of no benefit to anyone living.

3) Some will avail themselves of bankruptcy and discharge their debts that way. This has been made more difficult for many, but not impossible for all. Again, this is a form of debt forgiveness, but it is being made an increasingly painful route for debtors to take. In times past, to file for bankruptcy meant financial and social ruin; it also meant that the career prospects of the bankrupt were extremely bleak. There was a definite and very high personal cost to be paid for bankruptcy, and I suspect that things are going to head back in that direction.

4) In the past, there were other possibilities. Debtors could be thrown into debtor's prisons, or enslaved, or transported to places like Australia. We could speculate whether any of these more draconian possibilities, perhaps updated for modern times, might come back into play.

As for businesses, the historical pattern has pretty much been that you pay your debts or you are no longer in business. We are probably going to have to increasingly be moving back to that rule, as we cannot afford it to be otherwise.

Which leaves us with governments, and the issue of sovereign default. The historical pattern is clear: governments LOVE to run up big debts, and then to default on them. This has happened over and over and over again. Debt is too tempting to resist for most governments, and then sovereign default is too tempting to resist. Betting that the USA, and all big debtor nations, will eventually default in some way or another is a pretty safe bet - especially given that we've racked up a national debt that cannot possibly be liqidated, or even serviced, with a likely stagnant or declining economy. Don't think that this will have no consequences, though. Nations can get away with sovereign default when they are small fry and their debts don't loom all that large from a global perspective. There is no way that a nation like the US can default on our national debts without there being very major and serious negative consequences.

two things. you really think that at this stage of human history we will see debtors prison? I think you are making too much of history.

2nd. Regarding governments and default.He who has the guns makes the rules. you really think that at this stage of human history we will see debtors prison?

No, nothing exactly like what they were before. But we might get to the point where those who are found to be capable of making a good faith effort to discharge their debts but are failing to do so might have some legal restrictions placed upon them. I expect the garnishment laws to be toughened up considerably in favor of creditors and against debtors. Once one is in the garnishment system, one will not have the freedom to not work. If a debtor is able bodied and cannot find employment, the court will assign the debtor to some work detail. There will also be restraints imposed upon the type of lifestyle debtors can live and the types of things debtors can spend money on. It won't exactly be slavery or imprisonment, but it will be close.

"History doesn't repeat itself, but it does rhyme." -Mark Twain

I do not share your faith in your opinion that the current structure will survive and morph into another form.
I think that our future is one that will be defined in terms of chaos (is that possible).
You must be invested and hoping.

My father once ownned three very nice farms and had built his own brick home. He also had a fairly large business.

He died a pauper. I sold some of his business for pennies on the dollar(the only part he had given me). His home and 10 acres sold on the courthouse steps for pennies on the dollar as well.

He was my father but he was stupid about debt and money. His wife, my stepmother, pushed him into a nursing home and there he died in a very ugly fashion and she locked the business up and what was left gave to her relatives.

I told here she best leave the state and to return to where she came from and never come back. She did so.

He was unwise with money and women and never took care of his children very well. That sadly was his ephitet.

Mine will be similar in some ways. I once had a lot of land and a very nice home..but the proclivities of marriage/divorce and the legal system took most away. But I will not die owing a single dime.

Everything I worked my entire life for was taken by the divorce courts,property laws and lawyers with the aid and abetting of my wife.

But I will die free and unencumbered by anything. I live peacefully at last and at peace with my surroundings. Its the best way after all is said and done.

This country has changed way beyond what this member of the Class of '57 would ever recognize. It has reduced down to the ugliness of the lower possible extent that it can. There is not much worse that can now happen to it except a massive die off of the populace.


First, kill all the lawyers.
We are so effed up it is not even recognizable.

Great article. I enjoyed reading it. Many of the ideas you presented are things that I have been asking myself, as well. Though I hesitate to make predictions, its fun to guess.

So far there's been a little luck in all of this in that it seems to be in most nation's best interest, yet, to support the dollar. And, two, the economic crisis is global which should provide some kind of safety net and the possibility of negotiating repudiation internationally, for example. Maybe I'm just a dreamer.

If we have any givens by now, they are that our "democratic" process has been corrupted by financial institutions and lobbying and deregulation which in combination with American apathy seems likely to stick around for a while. Two, is that the Fed and Treasury will do about anything to keep up the charade and to prevent a meltdown. The moral hazard question goes out the window on this platform. I would expect government to choose monetization over repudiation, except through legislation such as writing down all underwater home and CRE loans, for example.

What we need above all right now and going forward is good, strong, unbiased leadership.

My two predictions would go something like this, and one is congruent with your post, here. Maybe, in reality, something in between will happen.

1) On the one hand I could see dominoes cascade into a deflationary crisis with 2-3000 banks failing, including some of our too-big-to-fail ones, CRE defaults, Fred/Fan disasters, unfunded pension and state budget deficits, SS and health obligations, insurance cos. etc., to the point where our treasury and Fed try to monetize all debt failures that come along, or 70% of them. Government would take on a role of nationalized ownership in much of what was previously private enterprise (at least for an interim) as well as required social services (food distribution) and this could be quite a wild card. If totally overwhelmed with this process, a failure of democracy and incompetency in dealing with the crisis situations could lead to chaos. Regions would deal with the problems because the national government would be ineffective. We'd be acting as a nation, at this point, and the global bond market would not be an issue. This is my worst case scenario.

2) A better version of the above would be that the government does much of what I mentioned including starting a huge government work program to stabilize unemployment and the economy gradually comes back. The debt problem on a national level would be solved through negative interest rates, combined with monetization and a return to fiscal conservatism and strict regulation. American's would wake up from their complacency to produce a renewed improved government. To deal with the debt on a global level, central banks could coordinate percentage of agreed upon repudiation, country by country to stabilize the global bond market. Derivatives could be resolved through negotiation, write-offs and regulation.

I think part of the key is the rate at which the process unwinds. If it is more slowly, we could have a better outcome. (I'm speaking of the next one-5 years, and ignoring the PO issue for this post.)

Kalpa @ Financial News Express

Okay, since this is a Campfire string, let's get to work and ask folks waht they are doing down at street level, and what they are seeing down at street level:

1. How many folks here are willing to take a poll of how much debt they are carrying? Are folks who read and/or post on TOD in any different situation regarding debt than the average American? Do we keep our debts down? Do some folks here feel that since the system is going to collapse anyway they don't have to worry about it? Where will the debtor get the gasoline to come out and collect the debt after the crash?

2. Has anyone here made a real effort reduce debt? Have you succeeded? Has anyone here went deeper into debt due to spending on "peak" preperations?

3. Credit cards are widely perceived by financial planners to be the absolute worst form of debt. How many of us still have them? Why? What are the terms you are paying on them?

4. How many people here have attempted to get a loan or a mortgage recently and so have had real world experience with the "credit" crisis?

Since I am asking the questions, I will go first to this set of questions in replying to it. In a post up the page, I mentioned the power of will. We all seem to agree that debt, both personal and national is a huge problem, maybe a critical one, so let's see if we can appply our will here on this issue at this time. How many of us are working on our WILL to reduce our own debt?


Hey thats it,
I have no debt and I consider a credit card a 30 day interest free loan.
Take that MFer.

I know that you have a point though and most here are probably worrying complainers because they got caught in the trap.

In my own case:

1. I am carrying about $7000 in personal debt. I currently have a negative net worth of about -$2000 or so. I know, I am embarressed by it too, but it is the truth.

2. I have come down from over $25,000 in debt only two years ago. I have also been pushing savings into my 401K as the rules allow and trying to max the contribution of my employers as much as possible.

3. I feel that debt is a big issue, but that hysteria is being now created about it by the mass media. If the value of my house has dropped some 15% or 20% in the last two years, then my balance sheet can go from +20% to below it due to no action of the homeowner, who is still paying the mortgage, still employed, etc. I have a freind who was in a state of panic a year ago on a set of condos he has, terrified he would lose everything. The resort business has since rebounded and they are now paying handsomely in rents, but a year ago it looked like a catastrophe.

4. Credit Cards: YES. I still have them. I have reduced the number I have down to two, but that is two too many! They should go away soon and be DESTROYED. Mine will be. Credit cards are without any doubt the greatest legal theft of American wealth, and one of the single most horrific financial tools ever created.

Lastly, banks. If you qualify for a credit union instead of a bank, join it, join it now! Even if you keep your bank account, JOIN THE CREDIT UNION, and really look at moving most of your business to them. The banks are now to be considered an untrustworthy co-partner in most cases, so be ready to leave them AT ONCE. There are a thousand reasons that the above sentence is true, and can be easily demonstrated, but for now, just be ready to leave your bank as soon as possible.


I have bad news for you buddy.
Many "Credit Unions are now owned by for profit banks and they kept the same name!!
I have one Bank and it is USAA. Even they have reduced their friendliness toward their own share holders(me).
Why in the world are we putting up with this shit!!@!
It is theft plain and simple.
Wake Up. Wake Up.

Crash coming...

Have you ever read the Merchant of Venice?

porge, good point, you want to make sure you know who owns the credit union (it should be the depositors, if not, it is a credit union in name only). With the credit union, like any other financial institution, due diligence is still a must! :-)

By the way, the banks have long pushed for looser legislation to allow them to "monetize" the credit unions and basically buy them up. Know what your senators and congressmen voting record and philosophy is on this issue. Thank you.


I have empathy and want to see the same co-operative environment that you feel so passionate about.
However I do understannd what a far reach that is from here.
We can only keep working on it.......that is all we can do.
The culture changes slowly.

I own my land and living quarters outright. No loan. And I pay no property taxes on it either.

I do have ONE credit card. It has gotten out of hand but I do not worry about that.

I only have one loan and that is almost paid off. Its for my motorcycle of which the value far far exceeds the loan amount still due.

Otherwise everything else I own is owned free and clear.

There are no taxes on food here in my state and none on drugs. There were none on alcohol until recently when the governor created it and now it and his increased tobacco tax are causing businesses to close,,,smart fool he is.

All around me I see huge downturns here locally. It is already taking hold very strongly. Crime is increasing rapidly as well. Jails are too costly so they release the criminals early to save money and then have to go right back out and apprehend them all over again...real real smart move there.


I think you might be surprised at how many of the 'nilhist' bent are the most prepared. We are the ones that saw this coming a long time ago.

Personally I have no debt and own my humble home outright. At one time or another all of my 3 previous properties have been eventually paid in full or purchased outright.

My use of a credit card is strictly for convenience as I live in the boonies and do use it for mail order items.

The loss of credit cards will be a boon as we all pay 2-3% more for goods to cover the fees the credit card companies charge the vendors.

The last loan I applied for was a homeowners line of credit on my previous abode to purchase my current property. As it was almost 2 years ago I don't know whether it has relevance. It was simple, even though I have a very modest fixed income. I however have a very high FICO score and was only borrowing less than half of the value of the property. The bank guy said 'we don't see scores like this very often.'

I have always bought homes that were marginal in the market and bought down freeing up cash, rather than trying to lever my way up into unaffordable places.

My going against the 'wisdom of crowd' means that I have a home that is unlikely to be taken from me. And I have some cash to indulge my insatiable reading habit and gardening hobby.

I am in the 'can't do nothing about this mess' camp. But as you can see I have taken action to cover my own behind. It's more like the 'do nothing' of zen rather than rolling over and playing dead.


A woman after my own heart.
Good for you.
How can the crowd actually have wisdom? It seems oxymoronic.
I am just now recognizing the "wisdom" of Zen. I do, however, see that this way of approaching life was developed in the grossly overpopulated old world.
This may be why it is so introspective.......viz. the average person owned nothing and probably turned inward for comfort and security. Maybe it is just an elaborate coping mechanism......a fantasy.....a hope if you will.
But then again life is nothing if it isn't your mindset..........right?

I have a substantial (5-figure) personal debt from a failed business venture that I am still paying off on a five-year schedule. I am on track to have this liquidated in two more years. (BTW, I suspect that the business debts of the self-employed (who cannot find any other source of credit) and the medical debts of the uninsured or underinsured make up a much larger portion of the personal debts outstanding than most people realize. There are people who just go overboard on the shopping sprees, of course, but this is far from being the whole story.)

Then there is the home mortgage. I am hopeful to have that paid off in another 7-8 years IF we can both manage to stay employed and things don't get too bad. (I realize that those are very big "ifs", but one does what one can.) In another two years we can tap into our retirement funds without penalty if need be to accelerate that debt liquidation; that's my Plan B. Fortunately, we are still well "above water", as housing values have not declined to any significant extent at all around here.

I use a debit card for all in-person transactions. For internet purchases, I have a very low credit limit credit card, which I pay in full each month. In fact, I often don't wait for the statement but send off a payment as soon as I have used it for something - I am that anxious about avoiding running up a balance.

For the last few years, the banks have been advertising to encourage the elderly to do a reverse mortgage. All up, the fees are outrageous but for many, this is a real source of income. The value of the house is determined by an appraiser and about 80% of that value is the reverse mortgage minus whatever the original mortgage is remaining. This is a direct loan to the former owner as long as they live in the house. It is guaranteed by the government. When they, for whatever reason, leave the house for one year, the house must be sold and the debt settled. So this is a debt with the house as collateral just like a regular mortgage. In this buy off of debt the original owner got in cash money (line of credit, or whatever) 80% of value of their house … then the debt is cleared and the owner gets the house back free and clear. No bad deal … go AARP.

They had just better hope that we never have hyperinflation. In that case, the elderly get worthless bits of paper (the RAM is usually structured so that they get regular payments rather than a lump sum up front), while the lender gets a still-valuable house.

On the other hand, if deflation continues to be the order of the day for a very long time, then the elderly on this scheme make out like bandits: a continual flow of increasingly valuable cash, while the lender is stuck with a house that is decreasing in value. I suspect that there are not many lenders interested in doing a RAM right now, and if things continue on their present course for long, there will be none.

All this talk about debt jubilee reminds me of Russia, 1917. "Take everything and share it." - P.P. Sharikov
Pretty sad, actually.

"Expropriate the expropriators!"

Worked real good, that. Not that things were working all that well previously, either. Or presently, for that matter. Most peoples manage to make a mess of things, most of the time. The human condition, it appears.

This whole subject of debt forgiveness is ludicrous in the extreme.

Will never happen for reasons take about 1 minute to understand.

What should be discussed it the ridiculousness of our national debt and the willingness of our government to spend us into bankruptcy.

We are not the idiots. We are led by idiots. They empower stupidity by such. We are the idiots who let them continue this charade.

We just finished electing one to the highest office. That is our sin.
He promised much. Now we see the delivery.


Is it time for pitchforks and torches?

Ditto, airdale. Have people already forgotten the spectacle we watched in disbelief just a few months ago, when the banking and financial interests (AKA "creditors") were showered with massive, incomprehensible amounts of money? Have people forgotten that the US Government has been and is effectively being operated as a subsidiary of Goldman Sachs? I have not forgotten, and will not to my dying days.

The idea that the puppets are going to cut the strings of the puppeteers and turn around and stick it to them is ludicrous. It isn't going to happen. Ours is a government of, by, and for the creditors, not the debtors. Most governments are, unless they have come to power via a violent revolt of the debtors. If people are looking for massive, across the board debt forgiveness then what they are looking for is something like the Russian or Chinese revolutions. If that is what they want, they had better be prepared for unimaginable bloodshed unless they can turn the US military on their side (in which case we end up with a military dictatorship). If they take this route, they may find that in eliminating their debt problem, their real problems are actually only just beginning.

If you don't have a something that you will die for than you don't have something to live for.
Eventually it will come down to self-respect.


I truly believe in personal ownership of property being the only true value of freedom. That unless you own it you will not care to take care of it. All else could descend from this important factor.

Otherwise not having property you learn to become dependent on the efforts of others.And others can then take what little freedom you do have beyond that.

Ownership of land gives you rights no other object can. And freedom to create your own habitat.

That is why I always owned farm land when I was able.


I whole heartedly agree.
It not only gives rights but it also engenders responsibility and that, I believe, is the most important aspect.
The tragedy of the commons........

Forgiveness, waiting to be given something etc.
These are the thoughts of a slave not a man.
No one "gets" anything they go out and take it.
I think Darwin would agree and probably most people reading this as well.

One of the goals of the occult ruling class is to make people into debt slaves. That is where the bankers get their real power. The ability to control entire populations by choosing, arbitrarily, whose debts will be forgiven.

Underwater on your mortgage? No problem! All you have to do is lick some boots! You will have to become a supporter of "the system", or else your underwater home will be foreclosed upon and your credit cards will be cut up. However, if you're a good little debt slave, you might not even need to pay your mortgage. Hell, they might even toss in a credit card. Do you understand the level of corruption I am talking about? If it doesnt make you sick to think of this country succumbing to such a fate, you must not be thinking in enough detail.

The financial oligarchs setting up this "perfect system" (ie New World Order) dont even care about money. They'll gladly let people stay in their homes for free. Because those homes are the epitome, the culmination, the testament, the sacrement, of all things "consumer". Big spacious McMansions are the center of the consumer world. And "consumption" is all the ruling class cares about. They want to bring the world past the point of peak energy as quickly as possible, because after we are past that point the entire world will revert back to feudal control.

There will be jubilee, but only for those those who serve the system. The choice of who does and does not receive debt relief will be determined outside the bounds of the constitution. The "right" of selective debt forgiveness will be protected by the cloak of "private enterprise".