What a great read! But I have to ask, could Jubilee really be a thing? Could total debt relief really happen in America? M. Barnett Tooele, Utah
I’m glad you enjoyed the book. And to answer your question, yes. Jubilee, either total or partial, has existed in the past and is happening to a certain extent today. As long as lending has existed there have been those who have used it to acquire power, call it “predatory lending”. (Think loan sharks and credit card companies.) There have also been those who, through stupidity, greed, bad luck etc, have gotten overburdened with debt. At different times in world history the debtors could lose everything, including they or their families being forced into slavery or put into debtor’s prison.
Anciently powerful leaders ordered debt forgiveness for a number of reasons.
*A king might declare Jubilee to curry favor among their population.
*A ruler might order his sub rulers to forgive debt to limit their power.
*An invader might promise debt relief to those in the country being invaded to get the population on his side.
*Since those forced into debt servitude are not paying taxes, debt forgiveness could be declared to reestablish a tax base.
There are a multitude of other reasons for debt relief being mandated. Most famously, it was the Isralites who are remembered for debt forgiveness. They are the ones who actually wrote it into their law and regularized the event. Where other rulers did debt relief on an as needed basis, in the book of Leviticus in the Bible, debt relief was codified. Debt was to be abolished every seven years and included the freeing of any Isralite forced into servitude for owing money and the return of the property they may have lost. This was done for more altruistic reasons than other debt relief events but also recognizes that people free from debt and in a position to support their families are simply better citizens.
The most notable method of debt relief in the modern era is bankruptcy. When someone reaches a point where a debt cannot be paid, there is a legal mechanism to walk away from the debt. A case can be made that this is a good thing in that it frees someone from an impossible to pay debt load and permits them to start afresh on a more productive path. Besides, what is the alternative? Should we go back to debtor’s prisons?
Of course there is a cost to bankruptcy. The process isn’t always easy, initial investment in the failed venture is lost, and a defaulter may be less likely to be able to get loans. Oh yes, and you have to deal with lawyers, rarely a pleasant prospect.
There is still some loss of reputation for those who go bankrupt, but this is much less a problem than in the past. After all, we have a newly elected president with numerous bankruptcies.
Bankruptcy filings totaled 452,990 in the year ending December 2023, up from 387,721 cases in 2022. As noted in Jubilee: The Day Everyone Was Free, most of these came as a result of medical bills.
Often banks will “renegotiate” loans to keep someone from defaulting. This debt forgiveness may be an extension of the repayment time, a lowering of interest rates, or a partial reduction of principal. The thinking is that it is better to get back some of what was loaned than to get none of it back.
Of course these can’t compare with the more complete debt forgiveness of ancient rulers or the Israelite law of Jubilee. Bankruptcy and renegotiating loans are formal, ritualized legal affairs that are much less dramatic and beneficial than what is described in my book. However, there have been debt renunciations that are nearly as far reaching in recent history. They always come on the heels of a dramatic event.
*Czechoslovakia (1952) and Cuba (1960) defaulted on debts after communist takeovers.
*Germany defaulted shortly after WW1 and basically wiped out debt after WW2.
*Russia defaulted after losing in WW1 and again in 1998 during their economic collapse after the USSR dissolved.
*Belize, Zambia, Ecuador, Argentina, Lebanon, Suriname, Sri Lanka, Ghana, Ecuador, and several others have all defaulted on loans in recent years partially as a result of the pandemic.
* In essence, the United States defaulted on its debt in 1971, when President Nixon took the country off the gold standard. Where the US had promised to repay with money backed by gold, it now will repay with paper backed by nothing but the good faith and credit of the US.
Whenever a hyper-inflation occurred, debtors were able to pay back loans with money that had become worthless; in short, the debt was ended.
In Jubilee: The Day Everyone Was Free, the economic status of the country is shown to be so bleak that an unexpected incident is sufficient to push the US into an emergency. Could this happen in our country? Our current debt situation and the trajectory we are on makes one wonder what lies ahead. The book is a work of fiction but…
Note: The Case For A Debt Jubilee by Richard Vague is an instructive, well-written book on debt cancellation.