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Old 12-10-2019, 07:59 PM
 
Location: Outside US
1,730 posts, read 707,205 times
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Edited to keep within copyright rules.

Is this "Debt Jubilee" possible with some debts or is this just more campaign cycle false promises?

Regardless, student loan and medical debt can affect individuals and perhaps an economy that is 71% by consumer spending.

Feasible? Consequences?

Opinions?

If debts were wiped out or some of the debts written off the system would need to be changed to keep these debts building up again.

I'm skeptical of this.....



A 5,000-Year-Old Plan to Erase Debts Is Now a Hot Topic in America

Bloomberg
Ben Holland
BloombergDecember 10, 2019

A 5,000-Year-Old Plan to Erase Debts Is Now a Hot Topic in America

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(Bloomberg) — In ancient Babylon, a newly enthroned king would declare a jubilee, wiping out the population’s debts. In modern America, a faint echo of that idea -- call it jubilee-lite -- is catching on.

Support for write-offs has been driven by Democratic presidential candidates. Elizabeth Warren says she’d cancel most of the $1.6 trillion in U.S. student loans. Bernie Sanders would go further -– erasing the whole lot, as well as $81 billion in medical debt.

But it’s coming from other directions too. In October, one of the Trump administration’s senior student-loan officials resigned, calling for wholesale write-offs and describing the American way of paying for higher education as “nuts.’’

Real-estate firm Zillow cites medical and college liabilities as major hurdles for would-be renters and home buyers. Moody’s Investors Service listed the headwinds from student debt -– less consumption and investment, more inequality -- and said forgiveness would boost the economy like a tax cut.

While the current debate centers on college costs, long-run numbers show how debt has spread through the economy. The U.S. relies on consumer spending for growth -– but it hasn’t been delivering significantly higher wages. Household borrowing has filled the gap, with low interest rates making it affordable.

And that’s not unique to America. Steadily growing debts of one kind or another are weighing on economies all over the world.

The idea that debt can grow faster than the ability to repay, until it unbalances a society, was well understood thousands of years ago, according to Michael Hudson, an economist and historian.



Last year Hudson published “And Forgive Them Their Debts,’’ a study of the ancient Near East where the tradition known as a “jubilee” -- wiping the debt-slate clean -- has its roots. He describes how the practice spread through civilizations including Sumer and Babylon, and came to play an important role in the Bible and Jewish law.

Rulers weren’t motivated by charity, Hudson says. They were being pragmatic -- trying to make sure that citizens could meet their own needs and contribute to public projects, instead of just laboring to pay creditors. And it worked, he says. “Societies that canceled the debts enjoyed stable growth for thousands of years.’’

Forgiveness was good for the economy, would be a modern way of putting it. In an October paper, Moody’s examined how that might apply if America writes off its student debts.

Moral Hazard?

There would likely be a “modest increase’’ in household spending and investment, and eventually higher rates of home-ownership and business-formation, it said. Buying up student loans would increase the government’s own debt -- but “only marginally,” since it already owns three-quarters of them. After that one-time hit, budget deficits each year would be slightly bigger because of the lost revenue from loan repayments, equal to 0.4% of GDP in 2018.

Critics usually raise two key problems with debt forgiveness. One is about fairness. The other is known as “moral hazard’’: Will write-offs today lead to more reckless borrowing tomorrow?

These questions “need to be carefully thought through” for student loans, says William Foster, a senior credit officer at Moody’s and the report’s lead author. “Who would benefit, who would miss out, what attempts at equal treatment there should be.’’ Any plan would also have to address “what the situation would be for the next generation of students with regard to accumulating debt,’’ he says.

Sanders and Warren plan to remove moral hazard by making state college tuition-free. But they’ve caught flak on the fairness question.

‘Bigger Debate’

A study by the Urban Institute said that wealthier households hold more student loans –- so writing them off would be regressive. Pete Buttigieg, another Democratic presidential contender, wants to direct financial support toward poorer students, saying there’s no reason to subsidize richer ones.

Link: https://finance.yahoo.com/news/5-000...6.html?soc_src
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Old 12-11-2019, 04:44 AM
 
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Jubilee. I learned a new word today.

Anyways, I wonder if I should stop paying my student loans and get in on the take? They’re about halfway gone.
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Old 12-11-2019, 05:10 AM
 
Location: Outside US
1,730 posts, read 707,205 times
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Quote:
Originally Posted by Thatsright19 View Post
Jubilee. I learned a new word today.

Anyways, I wonder if I should stop paying my student loans and get in on the take? They’re about halfway gone.
Yes, jubilee was a new one for me too.

Origin's in the Bible.

The second paragraph, I think you're joking.
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Old 12-11-2019, 06:22 AM
 
5,990 posts, read 3,216,694 times
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Oh something like this is coming but it isn't a Jubile and it's going to work the opposite way that you think.
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Old 12-11-2019, 06:44 AM
 
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I don't see the write off as a good thing. What happened to personal responsibility?
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Old 12-11-2019, 06:54 AM
 
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It was tried 5000 years ago yet somehow it didnt catch on.
This sounds like a sure fire way to get our current president reelected.
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Old 12-11-2019, 07:38 AM
 
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The details of the Democrat's plans are intentionally vague. If student loan and/or other debts are eliminated that means that the Federal government will have to pay off the debts. So where does the money come from? Berne talks about having "Wall Street" pay for the grandiose plans. I live near NYC and I can tell you Wall Street is merely a paved road. It is not paved with gold. Elizabeth talks about taking money from the top 0.1% or is it the top 1%? Her plan for universal healthcare starts by taking all that money and then much more leaving nothing to pay for debt elimination.

I think we can be certain that those who are responsible in managing money will be the ones taxed to subsidize those who were not.

Again, eliminating the debt means paying it off. It is not possible just to eliminate it without paying it off. Our financial institutions would go under taking down the entire economy.
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Old 12-11-2019, 09:43 AM
 
Location: Loudon, TN
6,458 posts, read 5,266,621 times
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And how would this jubilee be fair to the folks who have faithfully paid all their debts? Can they file a claim to be reimbursed for their debts which they've already paid?

If I had to sell my home to pay off my crushing medical debt, and then the Debt Fairy pays off your crushing medical debt and you get to keep your house and go on your merry way, but I'm on the street and now the government that pays the Debt Fairy is out of money, how is that a good thing for society?

I can see a need to restructure the plans to eliminate, or ameliorate, the interest rates and late payment fees, but to wipe out debts, regardless of individuals' ability to pay, and to ignore those who may or may not have needed such assistance but paid their bills anyway, is just a bit cuckoo. And completely unfair.
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Old 12-11-2019, 09:56 AM
 
Location: Wartrace,TN
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I am against this idea. A lot of this college debt was used as a "lifestyle enhancer" rather than direct schooling costs.
If college debt is forgiven that person should agree to forfeit their "degree"and their college would erase all record of attendance. They should be prohibited from mentioning any college experience on their resume or verbally to employers. The penalty for violating this would be full reinstatement of the debt PLUS back interest.
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Old 12-11-2019, 10:07 AM
 
2,980 posts, read 1,139,702 times
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Like "free" healthcare, it sounds like a good idea to those who are likely to benefit but won't get stuck paying for it. Somehow the write-offs will have to be made up- if the debts are written off without being paid, there will be devastating financial impacts for businesses. If they were somehow reimbursed through taxpayer funds, that comes out to about $5,000 per person in the US. If we increase corporate taxes, many large corporations will establish domiciles in countries with friendlier tax laws (already being done but could increase).

I also agree with others who say that it pretty much punishes people who were more careful about how much debt they accumulated and worked to pay it off.
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