After all, it was his attempt to bring back debt cancellations to Judea — epitomised by his ejection of the money lenders from the temple, an image of which is also the cover of the book — that sparked outrage amongst the Pharisees, leading to his crucifixion.
Hudson is not the first in recent years to point to the strong links between debt and morality. Scholars like David Graeber and Kenneth Dyson finds similar patterns. However, in …and forgive them their debts , Hudson goes further. This is a book that aims, and categorically succeeds, to be controversial. After all, the debtor is typically understood to have an advantage as she has more information on her ability and willingness to fulfil her obligations. Even strict Marxists and some contemporary progressives may be challenged by the notion that religion has not in fact been the opium of the people , but an avenue for their redemption and a bulwark for their freedom throughout history.
Nearly anyone with the necessary patience will benefit from reading this book. Alas, Hudson does not make the task an easy one. The book demands an encyclopedic knowledge of the history of the Bronze Age — though more realistically an actual encyclopedia — on the part of the reader, lest one gets lost in a maze of facts and terms that are as informative as they are obfuscating.
Nevertheless, the effort is well worth it. Please read our comments policy before commenting. His main research interests are international finance and geopolitics.
Find out more about his work here. Click here to cancel reply. Facebook Facebook. Find this book: The Rosetta stone is famous for providing insight into the Ancient Egyptian language.
The plebeians in Rome, like many Greeks, demanded the debts be cancelled. That demand was what prompted the call for democracy in Greece and in Rome. They needed political democracy with everybody able to vote and serve in the government in order to have a government that could cancel the debts and redistribute the land.
But the oligarchy resisted this policy, seeking to hold onto its creditor claims that kept the population at large in dependency and outright bondage. In the 7th and 6th centuries BC, most Greek cities were overthrown by leaders called tyrants.
They were basically reformers who overthrew the closed local aristocracies, cancelled the debts and redistributed land to the people. A similar radical restructuring occurred in Sparta.
Rome took over, and its oligarchy was intransigent. They killed the Gracchi, they ended up killing Caesar, they killed Catiline when having failed to become consul organized an army to fight for debt cancellation. By that time these debts were mainly tax arrears.
After that, there were no debt cancellations. That makes Western civilization very different from the Near East.
That means that again and again and again, debts are going to grow too big to be paid without forfeiting your land or forfeiting your liberty and falling into debt peonage, losing your means of support and going bankrupt.
Is society going to say that all debts have to be paid, without regard for the economic and social consequences? Almost 90 percent of American debts are owed to the richest 10 percent of the population. Or, are you going to restore equilibrium by wiping out this enormous overgrowth of debt.
You really should think of these debts as bad loans. But modern economic orthodoxy agrees with the Roman oligarchy: All debts have to be paid, even if that destroys society and ends up in feudalism.
There is a reluctance, a cognitive dissonance, to recognize that debts are too big to be paid without imposing austerity that makes economies look like recent Greece or Argentina. And is there a difference between public debt and private debt? In other words, does it behave in the same way? Private debt is created by what Steve calls endogenous banking. So the balance sheet remains in balance, as assets of the bank and debts of borrowers remain constant.
And then, of course, interest has to be paid to the creditors. Private debt is created for different reasons than public debt. Public banks would not lend for corporate takeover loans. They would not lend to corporate raiders, or for stock buybacks. They would not create junk mortgages way beyond the ability of borrowers to pay. Government debt would be extended presumably for spending for the public purpose — to increase economic growth and increase prosperity.
Private debt these days has become largely dysfunctional. So private debt has become corrosive and parasitic, while public debt is supposed to be handled well — except to the extent that the oligarchy has taken over the government. The aim has been to make housing more expensive, enabling the banks to collect on their mortgages and not go under. This credit keeps the debt overhead in place, thereby keeping the keep the financial system afloat instead of facing the reality that debt needs to be written down.
In that sense the financial overgrowth is largely fictitious wealth. So Trump said, in effect, that if companies has spent 92 and 95 percent of all of their income just to buy shares and pay out dividends instead of investing it, the government will create money and give it to them all over again, because his priority — is how well the stock market is doing.
Michael: Central banks work for their clients the commercial banks. Until in the United States the Treasury did almost everything that the Federal Reserve is doing today. It moved money around the country. It had 12 districts. It intervened in markets. It did what a central bank did. Their logic was that banking should only be regulated by the private sector, because only in that way could they turn the government from a democracy into an oligarchy.
So that they created a central bank that acted on behalf of bankers, not the economy as a Treasury is supposed to do. So basically, the development of central banks for the Western countries has been a disaster to the extent that they represent financial interests instead of representing the economy as a whole. Protecting financial interests means sustaining growth in their product, debt overhead, instead of protecting the economy from finance and its bad loans that create a burdensome overhead for families and business.
Martin: Right. I suppose that explains why they are focused on financial stability rather than the prosperity of real people. It means increasing austerity for the economy you cannot have financial stability and economic stability at the same time. If the growth of debt and finance is exponential and the economy is growing in an S curve, then the economy has to shrink at a deepening rate in order to maintain stable compound-interest growth and even higher stock-market prices.
The states and localities, New York City and New York state, have to pay unemployment insurance, and all the other costs associated with the coronavirus out of their own revenues, and yet they have to balance the budget.
Hudson : Yes. And already there is a discussion about how to do this for Third World countries that export raw materials, whose prices are collapsing because of the slowdown, and that are dependent on tourism. So this is a worldwide phenomenon. Will any lender ever lend another penny after this? Hudson : Of course. And the question is who should lose? Should it be the poorest people, should it be the wage earners? Should it be the small businesses, or should it be the banks?
Well, one way or another, it has to be either the banks, or else the government will simply create the money to reimburse the banks. But in terms of justice, the banks have made an enormous amount since They were bailed out in , their net worth and their stocks have soared in value. So, logically, the banks should lose something and bear some of the costs.
And the government can simply pay for the cost just as it pays for military expenditures, or for Social Security, or anything else. So this is going to be the political struggle or conflict that is unfolding in the next few months in the United States. Brancaccio : And I just learned this in preparation for talking with you today, professor, they did a version of a debt jubilee in the years that followed the Second World War in Germany? Hudson : Yes, that was the economic miracle.
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