Tuesday, April 21, 2020

A debt jubilee is the only way to avoid a depression — Michael Hudson


This op/ed is reposed from the Washington Post. When Michael Hudson, a professed Marxist economist, makes the WaPo you know that the times are a-changin'.

Real-World Economics Review Blog
A debt jubilee is the only way to avoid a depression
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

10 comments:

Andrew Anderson said...

Except something similar* to Steve Keen's "A Modern Jubilee" is the way to go since government-privileges for private credit creation cheat non-debtors too by, for example, driving up housing costs with their own, legally stolen purchasing power/investment opportunity.

*Keen's solution is not perfect either it does not eliminate privileges for "the banks", the root of the problem. Neither does Hudson's, to my knowledge.

Ralph Musgrave said...

I left a comment after the article as follows.

I suspect Michael Hudson does not understand that if one person's debts are wiped out, then so too are someone else's savings. He keeps very quiet on that point, as advocates of debt jubilees normally do.

Second, I am not moved to tears by the size of the stock of debts. Reason is that interest rates are at record lows. In fact debt service costs as a proportion of household income are at a 40 year low. See:

https://fred.stlouisfed.org/series/TDSP

Unknown said...

He has said that quite explicitly in some of his talks on Youtube. The part about wiping out savings, using almost your exact words

Nebris said...

The vast majority of this debt is owned by major financial players. If it wipes out their 'savings', well, tough shit.

Ralph Musgrave said...

Nebris, The "major financial players" (e.g. banks) are in turn owned by or funded by depositors, bond-holders etc. Thus to a large extent it's deposits at banks held by ordinary households and small firms which haave to be wiped out, or bonds held by pension schemes, etc.

S400 said...

“Thus to a large extent it's deposits at banks held by ordinary households and small firms “

Those also have loads of debts which would be wiped out.

Matt Franko said...

All the creditors/borrowers have to do is modify the loan agreements...

No biggie...

Left wing nut jobs too drugged up to understand...

Try to get off the weed and meth and heroin.... get sober...

Nebris said...

@Franko says the Art School drop out who's still a virgin.

Nebris said...

@Ralph Musgrave FDIC covers 'the little people'.

Greg said...


All the creditors/borrowers have to do is modify the loan agreements...

No biggie...


Riiiiiight! That’s ALL they have to do.

First off, for majority of people the largest part of their debt is their home. The most expensive interest rate wise is credit card but mortgages are the bulk of loans. It may be different now but I remember reading years ago that over 80% of loans made by banks are mortgages maybe more. Also most of them are sold off so I’m not even sure you can go to who issued your loan and ask them to do anything. So mortgages are investments for some third party, which might be some big investment company that packages them and sells them as a real estate fund.

And the ones that will work with you end up lowering your payment for a longer term and get more overall money in the end. A debt jubilee would cut some of the principle of these loans and maybe eliminate the principle in some student loans.

You act as if financial institutions are SOOOO willing to make things easier on their borrowers. Many time the incentives are such that taking their house is the more profitable alternative.