Today will answer why we can’t just forgive all the debt being the fiat currency is not tied to the gold standard, so why can it not just be wiped clean?
But first, I’ll fill you in on something called debt jubilees, which was commonplace in the olden days. This practice, which is common in Jewish communities, involves returning to Leviticus every so often. In the past, every seven sabbaths (approximately 49 years), the land would be returned to its original owners, all enslaved people and captives would be released, and all debts would be canceled. This is the inspiration for the jubilee of debts.
We can see by the numbers that the U.S. federal government has too much debt, 31,043,425,700,000 and counting, which causes all these problems because the U.S. is also the issuer of the global reserve currency. So these treasuries, this debt is the global reserve asset. This is the central place where countries store their trade surpluses, and when you look at the percentage of GDP, we can see how high it has gotten over the past few years, especially with the pandemic response. So for the 2010s, it was around 100, which is pretty bad but now it has gone up to 120 percent. So this is debt as a percentage of GDP. This is important because the real economy, its GDP, is used to pay off this debt theoretically and to service debt. So the government owes too much relative to the size of the real economy, which is used to service debt in the form of paying taxes that are then used to pay interest income on the debt.
https://www.usdebtclock.org/#Now let us think about how the debt jubilee would work in modern-day America, where we erase all the debt and start at zero.
Let’s pretend that Grandpa Dave is 75 years old and has invested the vast majority of his retirement savings in safe, secure government bonds, either via an Individual Retirement Account (IRA) in the United States or a Registered Retirement Savings Plan (RRSP) in Canada. In addition, Grampa Dave has a pension plan from his employer of 100,000, the majority of which is invested in treasuries and a bond portfolio worth $200,000. Finally, let’s imagine Grandpa Dave worked hard for 55 years and put in a lot of time away from his family to save up enough money for retirement, and that he now has most of his net worth in treasuries, the government debt.
If you anticipate needing the money within the next one to five years, allocating to conservative bonds makes the most sense. Now you will know why Grandpa Dave invested so much money in U.S. treasuries. Of course, U.S. treasuries may fluctuate significantly, particularly as they did this year, but if you keep them to maturity, you will get your original investment back in full. The assumption, at least, is that. Investing in equities or Bitcoin may not make sense for Grandpa Dave now that he’s 75. This means that he has a disproportionately large share of U.S. treasuries.
In this section, we take a look at what this debt jubilee might mean for Grandpa Dave if the United States or any other nation decided to write off half of their debt. If you held any of the canceled debts, you would not get any repayment or interest. One of the main issues with debt jubilee is that it essentially turns one individual or government’s obligation into another person’s or government’s asset. The Treasury notes and bonds are the government’s primary method of borrowing funds. Some of these treasuries were acquired using money from Grandpa Dave’s pension. In addition, this government has issued federal bonds to cover any potential liabilities. Thus, the government has an outstanding debt to its citizens, but these bonds constitute an asset for Grampa Dave.
Keep in mind that this is Grandpa Bob’s money earned through his hard labor, and he is entitled to it. Grampa Dave urgently needs this sum to cover his immediate medical, housing, and food expenses. He put in 55 years of hard effort, sacrificing his youth and health, to amass this fortune. It would be debt relief for the federal government to cancel those bonds, but it would actually amount to stealing from Grandpa. Those bonds are his asset.
Many pensioners and the elderly stand to lose a lot of money if U.S. treasuries, government debt, or any debt or sovereign debt throughout the globe is canceled. We can expect to see these folks on the street unless someone in his family, a charity, or a government program can help him replace his lost wealth and income. In doing so, you have effectively produced a new demographic of poor retirees. Since grandpa and grandmother can’t work anymore, the government will have to start providing for a whole new class of the impoverished. The pensioners will vote out the politicians who can’t discharge this debt unless the government desires a social crisis.
Who would want to acquire the debt now, particularly knowing it may be canceled or forgiven at any point when the government would have to take on additional debt anyhow to maintain these elderly people who have just been rendered poor by the debt jubilee?
Because even if you took all the money from the wealthiest individuals in the country, it would only buy us 6 or 12 months. The only true playbook is for the central bank to come in and issue new money and purchase the bonds.