We hear much about the cancellation of student debt. While a worthy effort, not much thought has been given to its implications. And I do not mean economic implications alone. Let us start with a brief examination of a few social implications.
Social Implications
When you give special treatment to any segment of society, you inevitably segment society into pieces. This automatically sows seeds of destruction. You set one group against another.
No. You should not do that. Are not people whose mortgages are “underwater” deserving of such equitable treatment as cancellation of their debts? One can argue that they are more deserving because, while students knew they were incurring debt with the accumulation of interest, and compound interest, mortgage holders did not know that “the Market” would cause a collapse of the value of their houses.
“Are you saying that some are “first-class” citizens? Who is to judge?”
No. You cannot be the judge of who is “more” deserving than the other.
Worse. Are you saying that some are “first-class” citizens? Who is to judge?
Political Implications
When you set one group against the other (or even more simply temporarily you set one before the other), political failure is the result. To win such awesome social and political battles as cancellation of debts on a systematic basis, you need the broadest possible coalition of citizens. To select one group for “preferential treatment” is politically self-defeating.
Theological Implications
Moses and Jesus, as they so evidently did, invoked powers of a higher order when they advocated the cancellation of debts.
[Yes, Virginia. The Israelites had the wisdom to implement Moses’ recommendations, and so did many Kings and Emperors over the years upon installation.]
As Transcendentalists, New Agers, and Mystics of all ages and traditions have always known, we have to be in the same spirit to win. The program of cancellation of debts has to be our common goal; it has to be a systematic program.
Above all, the design must benefit the entire population.
Financial Implications
Paolo Uccello, a Florentine painter of the Quattrocento, was so in love with the newly discovered perspective that he abandoned his conjugal bed in favor of practicing with and proclaiming the beauty of the new tools. Unfortunately, there is no similar anecdote to diffuse the importance of double-entry bookkeeping, an invention by Luca Pacioli, a Tuscan Franciscan, at about the same time. But the science of finance has had, and might still have, deeper implications for humanity than the exploration of the perspective.
The Beauty, Truth, and Goodness of Double-Entry Bookkeeping.
Double-Entry Bookkeeping is a construction of beauty. This is a self-evident characteristic. What is not generally emphasized is that this technique allows us to discover the truth about personal, corporate, and governmental affairs. As such it has done and can do much good for mankind. But, like any tool, just as it has the potential for good it can also be used to commit much mischief. The biggest mischiefs are those allowed by economists with their fictitious construction of externalities. Mother Earth suffers most from this lie: If you look at the world as a whole, you discover that there is no such thing as an externality.
Recently, very recently, I made a discovery that might set straight a few millennia of abuse of the lender: The lender, I discovered, is not a hoarder. And then the function of interest, as Keynes intuited, interest as counted in accounting books, became utterly clear: Interest is the reward of not hoarding.
“there is no such thing as an externality.”
Would the world be better off if people with extra money in their pockets were to hoard their financial assets?
This is a question too deep to explore in these lines. It is the reverse perspective that is of interest at the moment. The basis of much bookkeeping is the addition and subtraction of zeros. If you add them – or subtract them – systematically, you do not affect human, substantive relationships one iota. People are just as “rich” as they were before.
If we build on this simple verity, we might avert the impending disaster that is ready to engulf us in a sea of indebtedness. Zeros are compounding so fast and furiously that we cannot grasp them any longer. If we grasp them by the tail, and systematically reduce them on a recurring cycle every seven years, as Moses advocated and the Israelites were wise enough to put into action, we will all be that much richer together.
If not, we will likely plunge into an abyss with no light in sight.
How Can We See the Light?
Just as recently as the last few days, I believe I have seen a ray of light out of the current morass. With a new twinkle in my eye, I have lately suggested that the Federal Reserve System, and all other Central Banks of the world, can set – anew – our financial fortunes on a steady and just path if they create a new monetary unit for us. Offering a nod of approval to Keynes, I have suggested that our Central Banks ought to create the American Bancor, the Swiss Bancor, the Russian Bancor, the Chinese Bancor.
“The basis of much bookkeeping is the addition and subtraction of zeros.”
The new currency will be issued following four rules recommended by Concordian monetary policy. Create new money as a loan:
- only to create real wealth of tables and chairs, not to purchase financial instruments;
- to individual entrepreneurs, cooperatives, and corporations with ESOPs and/or CSOPs in their constitutions;
- to public agencies with taxing power to repay the loan;
- at cost.
We thus divert national credit from Wall Street to Main Street.
Toward a World Without Reserve Currencies
Reserve currencies will not be needed if the new money is created on the basis of identical rules all over the world. With the help of today’s computers, we will know the respective value of each currency at each instant in time. This will establish a fundamental condition for mutual respect among the nations.
Trade wars? Why trade wars any longer?
Toward a World Without Fear of Crashes
If the flow of new money is directed toward Main Street, let the crash of the financial system come. The sooner, the better. That will do no damage to the real economy.
The behemoths of international finance will collapse. They periodically collapse because their design is structurally unsound: Infinite debt does not exist. No longer should artificially reviving these behemoths with the taxpayer and bank depositors’ money occur.
“The systematic, periodic cancellation of debts is going to create economic freedom for all on earth”
Few jobs will be lost – at no damage to anyone. Those who want to enjoy retirement, they can; they have accumulated the means to live comfortably. And those who want to start the business of their dreams have the knowledge to do so. The “new” money will be available to them as well as to any other entrepreneur. They will create new real wealth. Additionally, those who might want to remain in the banking business, only need to inform local banks of their availability.
Economic Implications
What are the economic implications of winning the struggle for the systematic, continuous cancellation of debts, as Moses advocated and Jesus in the Our Father singled out? The result is going to be as revolutionary as anyone has ever dared to dream. The systematic, periodic cancellation of debts is going to create economic freedom for all on earth. The creation and distribution of money along sacred principles of justice will create all the real wealth that we individually need.
We shall then no longer be blind followers of the “dismal science”. Rather, we will be happily practicing The Economics of Jubilation.
