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Debt Forgiveness: The Only Solution?
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Debt Forgiveness: The Only Solution?
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Steve Keen considers the following as important:
This could be interesting, too:
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| Debt Forgiveness: The Only Solution? |
Pulse-evolution differentiates integrated metastability here-now-forever in actual holography-quantization is how we live but barely re-cognise, ie look,listen, hear and see what happens around us, how effectively events are superimposed according to temporal thermodynamical superposition in real-time floating coherence-cohesion processes and phenomena..
Time to catch up on some reality that every body knows by default existence, but has not put effective coordination-identification of practical Intuition into policies for the Common Good.
No thing holds still except nothing, the point self-defining infinitesimal positioning. (Headache stuff we're still trying to understand)
Uh what?
How should debt forgiveness work?
In order to forgive debt, the creditors must waive the claim.
The claim is represented by money on the bank accounts of the citizens and companies.
When the gov wants to organize debt forgiveness, it must tax money out of the economy, which means, it must tax much more, than it spends.
You have a loan from a bank. You spend it. There is loan on the asset side of their BS, and on your liability side. Both get expunged. Equal reserves can be added to the bank BS. A debt to the gov is simpler: reduce the asset loan and the net worth of the gov. Gov can go inf negative NW without any issues
@@shaahin6818 the loan from the bank is my asset and the liability of the bank. My credit contract is my liability and the asset of the bank.
So my balance is still zero and the same applies to the bank.
When I spend the loan, nothing changes for the bank. But my loan is now the asset of the receiver of the money, which means, that I owe to him.
I owe to him to accept the money and sell to him too. Otherwise the money would be worthless.
So the only one, who can forgive my debt is the one, who has the money from my loan on his bank account. He does it by returning the money to me without expecting me to sell something to him. Then I pay back my debt.
The bank cannot forgive my debt because it is then the bank, which must accept the money and sell for it. Since it cannot, the bank becomes insolvent. But practically it is the same, because the one, who has my money, does lose it this way too, because he loses the access to the bank account when our bank becomes insolvent.
Another way is replacing the bank by the gov. The gov buys my credit contract and repays this way my loan with cash.
Now I owe to the gov and the gov to the bank via the cash and the bank to the one, who still has the money on the bank account. But the net debtor is still me. I owe to the man I did pay. We added only one intermediate into the chain of debt.
But the gov can now return the credit contract to me and forgive my debt. But this way the gov becomes the net debtor and must sell for the money. But the gov does not sell anything.
So it must find a debtor to replace me otherwise the money loses its value. It does it by demanding a tax.
But this is not debt forgiveness, if it turns you into a debtor instead of me.
The only way for the gov to forgive my debt is to tax the man, who got my money and use the money to get the cash back from the bank.
The consequence of negative NW of the gov by making debt forgiveness is inflation. You just encourage to reduce the supply. Because this is the job of debtors: to create the supply for the money they inject into the economy. This is also why the gov demands a tax before it spends new money: it creates a demand for the money and with it the requirement to create the supply too.