Debt Jubilee
The only responsible path to deleveraging private debt — making both debtors and creditors whole, and benefitting the debt-free, as well, all without inflation.
$72,200
Average American private debt
For 18 years, private debt as a share of GDP has been even higher than at any time during the Great Depression — holding back individuals, families, businesses and the entire economy.
Private debt (what individuals, families and businesses owe to banks) is a far greater problem than even Public Debt. It holds back individuals, families and businesses; it has led to a stagnant economy since 2008, because private aggregate demand of people and businesses is very low. For 18 years, private debt as a share of GDP is even higher than at any time during the Great Depression!
Youth cannot afford to buy property or marry.
Families struggle to buy even groceries.
Businesses cannot get started or expand.
Hospital bills sink a person's prospects.
There are many reasons for this high debt but the biggest factor is the very nature of our financial system (and nearly all past and present systems), which invariably eventually leads to crushing private debt. Depression and world war led to the deleveraging (big reduction) of private debt by 1950. Healthy and strong aggregate demand returned. The US economy took off.
The history of financial crises since 1819 (see Recommended Reading below) shows that, absent depression or massive war or both, there is only one way we can responsibly and relatively easily deleverage now — institute a debt jubilee in such a way that (a) both debtors and creditors are made whole, (b) the debt-free are treated equally and (c) inflation does not result. I am campaigning for a debt jubilee of this very type.
Learn how it starts with every adult receiving $92,400, debts dramatically reduced across the economy, wages rising and economic growth of the 1950s level returning.
It's not magic. It's an adjustment to the banking system that economists indicate can be undertaken right now but not again for a very long time.
Recommended Reading
A Brief History of Doom: Two Hundred Years of Financial Crises, by Richard Vague, University of Pennsylvania Press, 2019.
Debt Jubilee in a Nutshell
The proposed Debt Jubilee is not inflationary; moreover, it immensely benefits debtors, creditors and the debt-free alike. It is not inflationary because, for one thing, the elimination of debt does not increase the money supply a single penny. $92,400 goes out to every adult 21 years of age or older, regardless of financial circumstances. This amount must be used immediately to reduce private debt, which means that each tranche of $92,400 disappears along with the retirement of the corresponding debt.
The Jubilee immensely benefits Main Street and the "real economy" because it frees up individuals and businesses as they have not been in decades. Banks (creditors) are better off, too — they receive government-backed "Jubilee Bonds" in place of far more risky private-sector financing. And the debt-free are rewarded, increasing their wealth, too. The net effect is extraordinary: real economic growth takes off, government revenues increase, and the taxpayers' overall burden diminishes.
Some call this proposal a Modern Debt Jubilee. Versions of it were practiced in ancient times. Several governors of the newly independent 13 American states, from 1781 to 1788, apparently practiced something like it, too. Also, debt forgiveness or restructuring, which is but one component of the proposed Jubilee, has been commonplace between banks and borrowers throughout history.
Go Deeper
Five Stories: How It Works
See the Debt Jubilee in action through five real-world scenarios — a family mired in debt, a debt-free retiree, a struggling business, a nervous bank, and the U.S. taxpayer.
Rally Behind This Campaign
The Debt Jubilee is front and center in Dr. Joe's campaign. Help bring bold economic reform to Delaware and the nation.