Wednesday, July 8, 2015

“Don’t Know Much About History…” *

O.K. I know many of us absolutely hated history class. In fact, given a fire, many would feed it history books.

However, it is well known, that doing a little research into the past to uncover how our ancestors solved their challenges can have certain benefits today. Benefits like avoiding the plethora of camouflaged traps which are patiently waiting or us to ignorantly stumble into.

One of these is the debt trap.

Dealing with the debt trap goes back at least to ancient Mesopotamia, around 2400 BC, when King Hammurabi declared debt forgiveness under certain circumstances. In fact, “Historians have counted around thirty episodes of general debt cancellations from 2400 to 1400 BC, noting they were occasions of great festivity which often involved the physical destruction of the tablets on which liabilities were recorded.” (1.)

Our ancestors learned long ago that debt relief or debt cancellation was the best ladder up and out of the debt trap for citizens as well as for countries. 

Impossible sovereign debt has been repeatedly forgiven throughout history. For relatively recent examples, one need only look to the 1934 debt relief agreements (see chart below) and 1947-1953 agreements through which Greece as well as other nations forgave German debt after WWII (see below).

In the USA we should forgive the mountains of personal debt, as well as student debt, which accumulated prior to and since Depression.2 (2008). After all, the government did bailout the banksters. We should compel our government to declare debt relief in order to help the millions of citizens who were defrauded.

We are not talking about missing a few credit card payments or missing the mortgage or car payments, or even the local property tax - all of which in the USA will cost you your home and whatever home equity you previously had, your car, plus condemn you and your children to a life of misery as untouchable vagrants.

Rather, we are talking here about stifling, suffocating, overwhelming, impossible-to-repay debt, like the debt which the European Commission (Eurogroup), the European Central Bank and the International Monetary Fund, otherwise known as “the Troika’, has compelled the Greeks to suffer for the past five years and insists on condemning generations to come to suffer far into the future.

For those who believe the inability to pay outrageous debt is some moral failure, or “character flaw”, I suggest that they simply don’t understand how the world works today and how it has always worked.

I'm sure you have noticed, as I have, that some people are simply coin-operated and driven to accumulate all the wealth they can through any means legal or illegal.

Most others are just not wealth-accumulation-oriented or are simply naïve. The coin-operated people see this majority as low-hanging-fruit for the taking because they “deserve” to be fleeced. Otherwise, from their demented perspective, the majority would be just like them, pilfering the last doubloon from the poor and homeless.

In my experience, the coin-operated people seem to include a great number of psychopaths, crooks and other types of “banksters”.

In the USA, we once had laws prohibiting various forms of usury. Now that we don’t, we all have become chum for the financial sharks. For those with eyes willing to see, it is painfully obvious that our world must have laws (which are enforced) to protect the majority, the 99.9%, against these predators.

While employed, many people in the USA believe they are above the less than human scum debtors (or, debtor nations, such as Greece) because at this moment in time they can pay their outrageous credit card debts, for instance, while the debtors have defaulted.

But their time will come, too, when they can not. Then they will become chum just like the Greeks.

They, too, will learn a harsh financial lesson: if the "loan" is impossible to pay back... no matter how long you live or how much you make... well then, it's not debt. It's debt slavery.

At the end of WWI, European nations were in a depression and seriously in debt. From 1932-1939, the governments “had a significant portion of their liabilities written-off for good”. “The average debt relief amounted to 19pc of national output in advanced economies, according to economists Carmen Reinhart and Christoph Tresbech. For the likes of France and Greece, the jubilees were closer to 50pc and 40pc of GDP respectively. Full repayment was so rare, that Finland was the sole European sovereign who managed to honor all its post-war obligations.”

German Economic Miracle Rooted in Debt Relief After WWII

“Following the end of WWII, the London Debt Agreement of 1953 saw the abolition of all of Germany's external debt. The total forgiveness amounted to around 280pc of GDP from 1947-53, according to historian Albrecht Ritschl.”

“The cancellation, along with an extension of its repayment schedule, allowed Germany to return to the financial markets, and become part of the IMF and World Bank.”

“The London agreement also helped set in motion the country's incredible export performance as Germany was required to service its debt through money earned from foreign trade.”

“In the words of historian Ursula Rombeck-Jaschinski, Germany's ‘economic miracle would have been impossible without the debt agreement.’” (1.)

* “Wonderful World" (“Don’t Know Much About History”) by Sam Cook, 1960, composed by Sam Cook, Lou Adler and Herb Alpert.

1. “The biggest debt write-offs in the history of the world”, Mehreen Khan, 2 Feb 2015, The Telegraph.
In addition to the citations noted above, the author points out: “In Jewish Mosaic Law, every seventh Sabbath year saw the wiping away of all debts, where creditors cancelled all the obligations of their fellow Israelites. Every 49th year (seven Sabbath years) was the 'Year of the Jubilee' when freedom from all debt and servitude was proclaimed throughout the land.”

For this particular post, my intent was to remain “secular” and try to direct the reader’s attention to the historic reasons that debt forgiveness has made good economic sense and really has nothing to do with being a forgiving Christian or Jew.

However, I found it interesting that the author references the Lord’s Prayer… “forgive us our debts as we forgive our debtors”. I had never thought of those words from an economic perspective. But, the author pointed to the historic religious philosophical thinking that everything was created by God, hence everything belongs to Him and charging interest on God’s “creations” was immoral. It is that philosophy which is the root of the ancient Jewish tradition of forgiving debt every seven years. “Unlike modern notions of debtor distress, where default is seen as the result of profligacy or misfortune on the part of the borrower, Judeo-Christian traditions rested on the principle that both creditors and debtors had a duty towards God.”

In Matthew 18:27, the Parable of the Unforgiving Servant, and again in Luke 7:41-43, the Parable of Forgiven the Greater Debt, Christ discussed debt forgiveness.

Finally, now that I have written this, I have come to the conclusion that one can't separate the "secular" economics of debt forgiveness from the "moral and ethical" issues related to usury and avarice. In the end it does come down to who we are as people and what we believe and practice in our daily lives. Shall we continue to allow corporations, banks and governments to financially “rape” human beings around the world? Is not time to end this lunacy once and for all?

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