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4everlost (96.55)

Let's just start over...

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4

May 29, 2009 – Comments (10) | RELATED TICKERS: YHOO , ME , FREE

I’ve just started thinking this through and want to get the idea out for comment, feedback and input.  The concept: Let’s just start over on Monday.  Here is how it would work:

1)    You get to keep whatever assets you have right now.
2)    All debt is wiped away.

I’m talking worldwide, big, small, personal, corporate and gubmental.   If every gubment forgave every other gubment of their debt what would happen?  The Chinese have trillions owed to them, but if they had no debt to pay would they really need it back?  The US gubment wouldn’t need to tax anyone because they wouldn’t have any bills to pay.  Businesses of all sizes would wipe their balance sheets of both the A/R and A/P.  Individuals that are wealthy wouldn’t get any money they were owed and wouldn’t owe anyone anything.  If I woke up on Monday and had no debt and nobody owed me a dime it would change everything.  But what about the banks and credit card companies that rely on debt to make money?  They need the money back plus interest so they can pay their creditors; in this scenario they don’t have any more creditors so they don’t need the money.  Health care service providers would forgive all the money they are owed while their creditors forgive them.  Farmers wouldn’t owe on their farmland, equipment, fertilizer, feed, etc. and nobody would owe them for their produce or meat or whatever.   There are endless examples.  I guess bondholders would be wiped out of their principal, though they wouldn’t need it because they don’t owe anyone anything.  What if pension plans have huge bond holdings, you ask?  They don’t need it because they don’t owe any one in the plan anything.  And the pensioners don’t need the payments from the plan because they don’t need them anymore.  

This making more and more sense to me now.  How ‘bout it, on Monday we just start over.

10 Comments – Post Your Own

#1) On May 29, 2009 at 12:07 PM, MustBNuts (86.45) wrote:

I'm giving you a rec but I need to know what happens to the poorest of the poor, those with no income?

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#2) On May 29, 2009 at 12:09 PM, chk999 (100.00) wrote:

I think global thermonuclear war would actually be less damaging in the long run than this proposal. My guess is that you are a net debtor, not a net lender.

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#3) On May 29, 2009 at 12:09 PM, bridgeboy0 (99.97) wrote:

The US would certainly still need to tax people unless you don't think services like police, fire, etc are necessary.

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#4) On May 29, 2009 at 12:12 PM, GNUBEE (68.08) wrote:

Just let me know so I can leverage everything I have to buy more assets, before amnesty kicks in.

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#5) On May 29, 2009 at 12:16 PM, outoffocus (23.72) wrote:

Well. I think in the end we would end up with a barter system rather than a monetary system.  Most of people lent real cash, rather through buying bonds or simply having a savings account or CD in a bank, to governments, businesses, and people.  If all debt was forgiven, it would essentally wipe out 90% of monetary assets, making cash worthless. It would also put the majority of assets into the hands of people who didnt work for the.  Its bad enough that my cash and tax money is going to people and businesses that live 10 times better than I do.  If I found out that all my savings were worth nothing because the debt that backed those savings were worthless, I would probably end up starving.  And what about the people who are living in the house that my savings lent them?  Will they let me stay in their home? Of course not.

Like many other KISS ideas, it sounds like good intentions at first, until you consider downside of implementation.  However, I do believe that we should forgive at least a portion of the total outstanding debt simple because, as Alstry and others have pointed out, there simply isnt enough money in the world to pay all outstanding debt. 

Also, I believe that most derivatives based on debt should be cancelled. Period. Technically they arent even real assets. They are twice removed from the real asset and shouldn't allowed, let alone honored.   Thats like me buying a Powerball ticket and then buying an anti-Powerball ticket for the same amount as the jackpot, betting that I wont win the jackpot.  Then when I don't win, expecting the seller of the anti-powerball ticket to pay me the jackpot in full. It makes no sense.  Cancel the derivatives.

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#6) On May 29, 2009 at 12:27 PM, 4everlost (96.55) wrote:

Hey, lighten up, can ya'?  It's Friday after all.  Happy hour starts in ~4 hours.

Like I said, it's a concept (a satirical one).  On Monday you would have the same job, income assets that you have today but debts would be wiped out.

 

MustBNuts : they wouldn't need money 'cause they don't owe nobuddy

chk999 : It sure seems as if you took this post much more seriously than I thought most CAPS readers would.  FWIW a mortgage on my house is my only debt.  I've lived there 12 years and have $400K+ in equity.

bridgeboy0 : The police, fire, army, etc. wouldn't need it 'cause they don't owe nobuddy.

GNUBEE ; Ah, there we go.  You see, there is no warning so you can't leverage up.  We start over on Monday, this Monday!

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#7) On May 29, 2009 at 12:46 PM, h2ound08 (< 20) wrote:

as radical as this idea sounds, it actually did used to happen...as i recall from my days as a classics major, there was what was known as a "jubilee year" that would come around every 8 (?...i believe) years where all debt was wiped out and everyone started out with a clean slate.  granted this was thousands of years ago, and they didnt have to worry about zombie banks, govts with countless trillions, etc.  perfect friday post, with an actual factual basis in classical history.  rec from me.

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#8) On May 29, 2009 at 12:53 PM, AllStarPortfolio (59.48) wrote:

http://en.wikipedia.org/wiki/Jubilee_(Christian)

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#9) On May 29, 2009 at 1:35 PM, FleaBagger (99.16) wrote:

If you're being even remotely serious, why would China give up their claim to all our money, when they owe nobody much of anything. We have a national debt; they have a national sovereign wealth fund - the opposite of national debt. They wouldn't go for it. They'd invade our allies and perhaps our mainland before letting anything like that happen.

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#10) On May 29, 2009 at 1:57 PM, chk999 (100.00) wrote:

My apologies, I thought this was serious. 

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