Paul Cockshott wrote:
> Not totally. If an emergency law were passed to the effect that debts
> incurred prior to that date were no longer enforcable, many financial
> institutions would fail, the ones which would
> survive would be those that had significant non-debt assets. The banks
> do hold cash reserves, which are much smaller than their holdings of
> debt, but if all debts to the banks were
> cancelled one would also have to limit the liabilities of the banks to
> their customers to $x per customer, where x= Cash reserves in $/ N
> where N is the number of customers.
> This would effectively wipe out most of the money held by the
> bourgouisie since $x would be a comparatively modest sum of the order
> probably of $10,000. The aim would be to ensure
> that employees had sufficient cash in hand to be able to continue
> their normal expenditure. If the amount of the banks liablility was
> limited to somewhat over $x say $2x then the banks
> would be insolvent and the state might have to step in and provide a
> modest amount of additional capital, taking them over in the process.
>
> The resulting state owned banks would have cleared all the bad debt
> overhang, would have wiped out the cash of the bourgeoisie, and would
> at the same time be highly liquid, and
> in a far better position to extend credit than they now are.
That is an interesting argument. Perhaps it would be worthwhile to
revive the ancient demand of debt cancellation in the context of finance
as a public utility. Do you know of any systematic analysis of debt
cancellation in the modern context?
//Dave Z
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Received on Fri Jan 23 17:02:18 2009
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