Steve Keen and more than just a Debt Jubilee

more than just debt cancellationSlowly it’s dawning on the economic doom and gloom commentators that something different is around the corner…. Here is a discussion which recognizes that Steve Keen’s proposal is more than just a “debt” jubilee. In fact, it’s a proposal for a REAL jubilee. Jubilee was more than just debt cancellation. It’s returning and taking back what has been stolen from you. It’s about JUBILATION, not DEPRESSION.
What else? Steve Keen. And the debt jubilee. – from Automatic Earth, Nov. 28, 2011

There’s a BBC Hardtalk video that many people have commented on. In it, Professor Keen talks a bout a plan to let the government hand out money to citizens, which they can use to first pay off their debts, and apply to other purchases once the debt is paid. Sort of a debt jubilee, but sort of different.

In what I have read so far, and I’ll be the first to concede that no matter how much I read, I’m sure to miss things too, the focus is on the jubilee idea. But what I took away from it is something else.

On the BBC page where the video is located , there’s this text, which -curiously- is not part of the conversation itself:

Economist Steve Keen is one of the few economists to have predicted the global financial crisis and now he says we are already in a Great Depression.

He says the way to escape it is to bankrupt the banks, nationalise the financial system and pay off people’s debt.

He admits what he is advocating is radical but says it is time governments gave money to debtors to pay down debt instead of to creditors such as banks who have held onto it.

Ilargi: He’s not talking about a “simple” debt jubilee; Keen propagates nothing short of a revolution. The money he wants to hand out will be government issued money, which carries no interest. He wants to bankrupt the banks (and get rid of the Fed, presumably), and let money be issued by governments. No more money issued as debt. It’s a miracle the BBC had him on in the first place…

Now, for starters, I don’t really see how the somewhat romanticized biblical notion of a debt jubilee could be applied to our globalized financial system (I intend to talk a bit more about that soon, need to catch up on my Bible first…). Is Obama supposed to tell Americans, and their banks and other companies, that they won’t have to honor their obligations to foreign creditors (yeah, Iceland comes to mind, but then, that’s not even the size of Cleveland)? Or is the UN going to declare a planetary jubilee? It makes little sense to me.

Keen’s plan does make sense, but it would wipe out the entire global banking system. Which may be a good idea, and much better than what we have today, but it would not be taken lightly or gently by those invested in that system. Who just happen to be the richest and most powerful people on the planet.

Yes, in theory it could be done. And it would solve a lot of the trouble that has become inevitable in the present system. But then again, that present system has all the political power needed to maintain the status quo, and then some. All the power brokers need to do for now is to make sure you’re wrung and squeezed through the austerity wringer, and they’ll be fine.

Here’s my problem with this line of reasoning: the entire global banking system is already wiped out. Those who have invested in that system are NOT the richest and most powerful people on the planet. Maybe you want to believe the illusion a little longer, but the sytsem is already finished. The status quo is not fine and never will be. The light at the end of the tunnel is a train. Called it the Jubilee Line, its on the track and approaching fast at collision speed. And it will solve a lot of the trouble that has become inevitable in the present system.