A Debt Jubilee of Biblical Proportions Is Coming Soon… What You Need To Know
Four thousand years ago, the rulers of ancient Babylon discovered a technique to stave off violent revolts.
In ancient times, there was a tendency for people to become hopelessly in debt to their creditors. Eventually, they would rise up and cause instability that could threaten the entire ruling system.
The rulers of the ancient world recognized this dynamic.
Their solution was to enact widespread debt cancellation—a debt jubilee.
Debt jubilees acted as a societal pressure release valve when there were no other options.
The practice spread in the ancient world and became codified in different civilizations.
For example, the Book of Leviticus recognizes debt jubilees as the end of a 49-year biblical cycle—seven cycles of seven years.
I think this ancient practice will make a big comeback soon as debt reaches unbearable levels today.
In fact, the debt jubilees have already started… and the investment consequences will be profound.
It’s important to note that debt jubilees do not magically create new wealth. They simply redistribute it.
Debt jubilees are government decrees that amount to a massive wealth transfer with big winners and losers.
President Biden’s recent student loan forgiveness is the first stage of a modern debt jubilee of biblical proportions.
It was unprecedented. Unilateral executive action of this size has never occurred during a time of peace. Moreover, Congress, not the president, is supposed to make spending decisions of this magnitude.
It is estimated that the immediate and deferred costs of the student loan forgiveness to be at least $590 billion.
Biden’s student loan debt jubilee went too far for even Obama’s former chief economic advisor, Jason Furman, who described it as:
“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.”
Aside from the inflationary effects—which I’ll get to in a moment—the student loan jubilee also set a precedent that I think will be impossible to reverse.
Consider how the people who behaved prudently feel.
These people took different career paths to avoid student loans, cut back on their spending so they could afford college without borrowing, or paid off their student debt.
These people are probably feeling like suckers now.
Not only do they not get any debt relief, but they will have to foot the bill in one way or another to pay for those who had their student loans forgiven.
I imagine these people will be angry and probably have considerable car, mortgage, a
Article from LewRockwell