From "$40 Trillion Debt? The Ancient Sumerians Wouldn’t Have Cared" (NYT gift link).
२३ ऑगस्ट, २०२६
"Ancient societies had another method to deal with debt. It was called an amargi — a blanket declaration of public debt cancellation."
"All public debts written off. Disappeared. It sounds laughable, I know. But, really, that’s just because the idea has been buried so deeply in history you’ve probably never heard of it. In the ancient world, it presented a pragmatic solution to an intractable problem. And now, faced with impossible-to-repay debts that are weighing down our economy, is the time to look at the amargi and the lessons it offers about how to think about finance...."
From "$40 Trillion Debt? The Ancient Sumerians Wouldn’t Have Cared" (NYT gift link).
The essay is by Paul Vigna, managing editor of American Banker and author of "The Almightier: How Money Became God, Greed Became Virtue, and Debt Became Sin" (commission earned).
From "$40 Trillion Debt? The Ancient Sumerians Wouldn’t Have Cared" (NYT gift link).
पोस्ट्स
७६ टिप्पण्या:
I better graduate from the learing center first.
If your bond can be cancelled, you have to be paid extra to hold that hand grenade. So the debt cost goes up, not down.
Say, that might work (not really).... IF we NEVER had to borrow money again.
Right up there with the Trillion Dollar coin nonsense. Mint 40 of them and the national debt is covered....
That’s also known as a default and bond holders would be wiped out. The good news is that there’d be no more deficit spending for 20-40 years because no one would lend the government any money.
The debt is in US dollars so can always be paid with the cost winding up as inflation. Expected inflation is in fact what sets the long term interest rates for treasuries, at the moment an expected inflation averaging 5%.
You know we’re living in a truly post-religion society when someone can confidently write “the idea has been buried so deeply in history you’ve probably never heard of it.” It’s right there, in no uncertain terms, in the best-selling and most-read and most-studied book of all time,
Deuteronomy 15:1: “At the end of every seven years you must cancel debts.”
I think SS savings are in Treasuries. Bye bye to Social Security!
How'd that work out for them. Unfortunately, we can't ask them.
Our current president’s lived experience is that crushing, bankruptcy-level debt is actually a stepping stone to greatness — a feature, not a bug. And if there’s one thing I’ve learned, it’s that you can’t quarrel with a person’s lived experience.
New York City in fact defaulted on its "full faith and credit" bonds in the 70s, the courts ruling that that didn't mean that it had to raise taxes to pay them. Instead it created Municipal Assistance Corporation and replace every maturing bond with a new bond, sort of like winning a new lottery ticket for your winning lottery ticket. So municipal debt just established that it's very risky and its cost went up.
US debt is in dollars that they can print, so taxes don't figure in and they'd be safe, in addition to being guaranteed by the Constitution.
"...Paul Vigna, managing editor of American Banker..."
Do any actual bankers subscribe to this magazine?
"...author of "The Almightier: How Money Became God, Greed Became Virtue, and Debt Became Sin""
I'm guessing "no."
If curious how Orthodox Jewish bankers now handle the seventh-year debt cancellation law, look up "pruzbul": Deuteronomy 15:1: “At the end of every seven years you must cancel debts.”
The NYT rediscovers the national debt. Must be a Republican president.
At 5% expected inflation, the value of the debt cuts in half every 70/5 = 14 years, as far as burden goes. The GDP however retains its value or rises. So it's self burden-reducing to pay by inflation.
"The Almightier: How Money Became God, Greed Became Virtue, and Debt Became Sin"
Debt and Guilt are the same word in German: Schuld. Nietzsche had things to say about this.
The real problem is much simpler. The US government has borrowed an amount of money that it can’t possibly pay back.
Which means they won’t. And the default mechanism will be inflation.
The Treasury buying bonds to reduce the interest rate on bonds, presumably with borrowed money seems like me using a credit card to pay another credit card. Someone needs to get a credit counsellor.
Scott Bessent’s running battle with the bond market is starting to look like his boss’s war in Iran — started by his own hand with a tangled set of objectives, an underestimated opponent and an implausible path to victory.
Bessent’s incompetence has actually made things worse because he’s further undermined faith in the dollar as well as US fiscal and monetary policy. If Trump wasn’t comatose and dreaming of Natalie he’d sack him.
SS is in treasuries because the government must instantly return to circulation every dollar it takes in, lest the money supply fall. The SS is just an expense paid out of current cash flow, after the mechanisms are ignored.
SS is trivially easy to save just by raising the retirement age for benefits to whatever value balances the number of recipients with the number of workers able to support them. You decrease the first and raise the second when you raise the retirement age, and there's always a point where it balances. They already did this once (65 to 67) without much backlash.
The rising life expectancy shouldn't mean only a longer vacation after working but also a longer working life to support it.
That is similar to the Biblical Jubilee year. In the 50th year (after 7 "weeks" of 7 years each) some debts were cancelled. Those who had sold themselves into servitude to cancel their debts were also freed. Some land that had been sold was also returned to its original owners.
For years, I've kept a good portion of cash in rotating T-Bills. I don't trust those bastards anymore, so I put it all into canned food in my pantry. That stuff holds it's value for decades.
1. US wouldn’t be able to issue debt for years thereafter. Who would buy it?
2. If federal debt could be issued, rates would be 25%.
3. Total destabilization of US economy.
4. I doubt the President could do this. Goldman Sachs would get an injunction in a NY minute. And Trump would never do this. Not a King. But President AOC would.
Author, “The options open to us are extremely unlikely or highly destructive: Grow our way out of it, raise taxes, inflate the debt away or wait for the economic fallout.”
Vivek Ramaswamy ran the numbers and 5% economic growth would turn the tables. But funny how this guy left out cutting of spending.
I guess we are going to ignore the heaping fraud and debt delivered to us by the corrupt dems.
Yes - the GOP spend, too - too much. But this debt was here before.
The triumph of Cloward-Piven.
That which cannot go on forever, will end.
If the Dems go for this idea, it will be the first thing in Leviticus they like.
TINSTAAFL- cancel the debt inflation crushes and the us dollar as reserve currency disappears. Oh and nobody will lend to us US anymore…
I've seen it referred to as a "Jubilee" in many blogs and online comment forums. Every 50 years, not 7. Voxday is a fan.
https://voxday.net/2021/07/17/the-student-debt-jubilee/
Am I a fan? I'm decidedly agnostic as to whether this is a good idea or a bad idea.
Much of the debt burden in the USA can be blamed directly on the fed. With a mandate, by law, to maintain astable dollar, yet targeting an inflation rate of 1%, which is exactly the opposite of stable. No matter the inflation rate- it saps savings and increases debt.
Oh- my house is now worth $750.000.00! The one I bought in 1970 for 50K! I'm going to borrow against the equity! No, it's not worth more. That's an illusion brought to you by inflation. I'm old enough to remember the 5¢ candy bar. My wife, 2 years younger, remembers the 7¢ candy bar. Now 200¢ ($2) at your local drugstore. Return 3 glass Coke bottles at 2¢ each, you got a candy bar and a penny change. Current bottle deposit 5¢. Gotta return more then 40 because there's that pesky sales tax on that $2 candy bar.
…bagoh20 has it correct- it’s really a failure of the educational system. Sure you can ‘loathe finance’ but you can’t escape its consequences. It’s like ‘I loathe gravity’….
Wealth tax >. infinite money printing. >. default.
Get ready, It's coming non-stop.
Always interesting how people who would likely talk til they're blue in the face about why Leviticus 18:22: and 20:13 are no longer applicable become Bible-thumping fundamentalists for other passages.
@ rhhardin: Having higher earners contribute more could absolutely be part of the solution. In fact, I would include that within what I mean by entitlement reform. The issue is broader than simply cutting benefits.
Social Security is mainly financed through payroll taxes, but the system still has a financing gap. Under current projections, the OASI trust fund is expected to be depleted in 2032, after which current revenues would cover only about 78% of scheduled benefits. There is also no automatic mechanism that simply transfers the shortfall to the Treasury.
At that point Congress has to decide how the burden is shared. That could mean higher payroll taxes, a broader taxable earnings base, changes to benefits or retirement rules, or more support from general revenues. Asking higher earners to contribute more is therefore one possible part of the reform, not something separate from it.
I would also include Medicare in the same discussion. Some parts are already supported substantially through general revenues, so the broader question is how the overall system of contributions, benefits and taxpayer support remains sustainable over time.
So I think we are actually fairly close on the substance. My point is mainly that the financing structure itself needs to be redesigned, including who pays, rather than treating the current system as financially settled simply because it is funded through payroll contributions.
The marxist in Soviet Russia cancelled the debt as soon as they got into power. That was barely a century ago, not ancient history. Modern marxist have been demanding cancellation of third world debt.
It’s not buried deep in history. Bankrupt kleptocracies still do it.
Argentina, for example. And just ask them how it worked out.
If debts are cancelled every 50 years how easy do you imagine it would be to borrow money in year 49?
If we lost reserve currency status, China would be the new super power.
“I am announcing the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY!” ~ Donald Trump
Seems to be working.
This is not my area of greatest expertise, but it is my understanding that particle physics has nothing to do with gravity and Newtonian laws. Perhaps in like ways, macro economics has nothing to do with household budgets. Anyway, that's my hope. I don't see how a forty trillion dollar debt load ends in peace and prosperity, but maybe it's because the human mind lacks sufficient imagination to understand infinity and forty trillion dollar debts......Well, in the long run we're all dead and I'm an old man. Civilizations and bond markets collapse at frequent intervals, but maybe I won't be around to see the end.
If you are worried, buy hard assets, because it’s within the government’s power to abrogate our debt, it’s called inflation, it’s why renting is only a good long term strategy for people who could afford to buy if they wanted.
Inflation is a wonderful thing. If you want to gin up some GDP growth, just underreport inflation.
If long term treasuries are demanding too much interest, because investors are pretty sure that the government is going to inflate away the debt? Just issue some short term debt and buy back long term debt to raise its price, which is the same as lowering interest rates.
Don’t worry, the stories of needing a wheelbarrow to carry the cash to go shopping are overblown, we all use credit cards now!
Stocks will go up even as standards of living drop; the magic of inflation.
This is just more globalist fake news. If money isn't real, neither is debt. Trump crushing China by losing the war with Iran is how we're going to grow the GDP like no ones ever seen. All goods and services will be too cheap to meter.
Cribbing ideas from defuct civilizations, eh? Sounds like a plan.
The next big political push is going to be extreme anti-capitalism in politics. (The Trump bashing just isn't getting the job done.) The biggest problem is that the elimination of capitalism is a classic case of throwing the baby out with the bathwater. Capitalism needs constant reforms to stay functional, but it still gets the job done. But instead of spending the time and effort to fix capitalism, the DSA candidates want to eliminate it. That's like demolishing the house down to avoid doing repairs. And what could possibly replace our current economic system? Even though capitalism has major problems, it's still the only economic system out there that has a proven record of actually improving people's lives. It's odd how imperfect people living in an imperfect world expect everything to work perfectly.
Washington would just run it up again. The roads would still suck, the education would still be a joke and Jason Arday types would still be on campus
“Treasury secretary Scott Bessent vowed to curb the budget deficit to 3 per cent of GDP by the end of Trump’s term.“
At this point I had to take a long pause to wipe away the tears of laughter from my eyes.
Higher taxation will just reduce growth, gaining nothing but losing a lot more than money.
This guy says he is a banker so I assume he already knows what would happen. The U.S. would have to offer much higher interest rates to borrow in the future. With inadequate credit, it would eventually print more money to fund government operations, raising inflation. With interest rates already sky high, the fed would struggle to raise rates further to tame inflation. Private lending (car loans, home mortgages, business loans) would become prohibitively expensive. Banks would go under as borrowers stopped paying. Unemployment would skyrocket. The economy would spiral into deeper and deeper stagflation. Of course continued 40 million deficits are only moderately less worse.
…worth a reminder on snake oil tax experts- the giveaway is when they sell you on the fact will raise 57.43 billion dollarsZ All that accuracy is because someone that had to take some finance on college did made some assumptions about if the tax was in place last year. It’s called static scoring and fails to recognize people will choose - or be forced- to change their behavior as a result of the tax, so you’ll never see that number they used to sell the tax…also, most important- who government targets to pay a tax and who ultimately bears the economic burden of the tax are always different people. Yah tax the rich but the people you claim to be helping are harmed the most…
We certainly spend far too much, but it's really what we spend it on that's the problem. If all this spending was on investment, infrastructure and increasing productivity it would be creating huge growth. Instead that mostly comes from private capital, because that's why it's spent. Government spending is hugely wasteful because it's spent to get elected, mostly going to nonproductive people doing nothing of value, often not even purchasing valuable products from the American economy. It goes to drugs, sloth, foreign products and wasted years in schools that do nothing to make more useful and productive people. Government waste of resources is really the problem. If we eliminated much of that, we wouldn't be able to spend what we spend now if we wanted to.
…yes, bagoh20 correct. The optimal tax rate is one that maximizes gdp…
"Government waste of resources is really the problem."
That, and the demand for it.
Our Treasury Secretary was George Soros’s lieutenant in charge of the project to short the British Pound, but I am sure that he doesn’t talk to his old boss anymore except about grandkids, like Hillary said that time.
I anticipate the DSA taking the next logical step: If we cancel prices (making everything free), then no one needs to borrow money and there would be no debt to cancel. QED!
The argument for flat taxes (i.e. everybody pays the same percentage, no deductions) is that the poor have a stake in not raising taxes, which is a structural reform introducing financial stability. Otherwise a poor coalition votes in taxes on the rich (see billionaire's tax today) and the system collapses.
The poor want to distribute the seed corn held by the farmer who has more corn than he can eat, and allow everybody to eat it today. It's the same with money. The rich have more money than they can spend on themselves and so invest it. The investment buys power equipment for ditch diggers, who in turn get a huge wage increase., etc. That's trickle-down, not dimes falling from the pockets of the rich.
Did I mention that SS is an insurance program? It insures you against outliving your savings. Why would you need that? Because saving for the longest possible life is beyond almost everybody, but they can easily save for an average life. The short-lived pay for the long-lived, just as people whose houses don't burn down pay for people whose houses burn down. Your 401k can't do that.
I hope the Jubilee year in Leviticus got some mention in the article.
I am of the belief that it's doesn't matter because it will never be called in.
And this is why Sumer has remained an economic powerhouse to this day.
William: "I don't see how a forty trillion dollar debt load ends in peace and prosperity, but maybe it's because the human mind lacks sufficient imagination to understand infinity and forty trillion dollar debts......"
It's not easy to imagine--or comprehend. But most people couldn't comprehend 10 trillion dollar debt loads in 2008.
Yet here we are.
Rejahm--I agree with your comment about SS being an insurance program (except that if an insurer used the same sort of accounting that SS does the principals would be in prison).
I don't understand why 401 K plans can't do the same--people who die early have funded their retirement and can pass on wealth to their families; 401K investments continue to grow over time (unlike SS) and provide income to support people through their entire life.
The big lies are: a) telling people that they can rely on SS to fund their retirement, and b) 401 K's are just a way to make big money for Wall St. (401Ks are a way to allow ordinary people to share in the wealth that government spending and printing provides to Wall St.)
Why's government debt rated A whatever?!
@boatbuilder and Rejahm ....
Are SS funds in Bonds accruing interest? Can they be?
When you die, your 401k goes to your family. That means that it can afford to pay less to you while you live, because you're not putting the residual at risk. SS can take that risk and spread it over all participants and pay the long-livers with the money from the short-livers. That's the way insurance works.
SS funds are a fake accounting gimmick. It's just a way to put SS taxes collected instantly back into the economy lest the money supply fall. SS is paid out of current revenues.
…it was rhhardin that referred to SS as an insurance program. He can explain himself but I would agree there are elements of SS program that resemble insurers, primarily being any surplus of taxes collected and not needed immediately for payout are to be invested in specific Treasuries. I know this used to occur and there was a large surplus. In insurance this time carry is how a large part of revenue…
From Grok
In your scenario the income path starts at $1 million and rises to $100 million. Without specific year-by-year figures, indexing factors, career length, or exact growth pattern, a precise number cannot be calculated. A rough order-of-magnitude estimate, however, is straightforward: if the average of the highest 35 indexed years were even a few million dollars annually, the resulting AIME would be in the hundreds of thousands of dollars per month, and the PIA (benefit at full retirement age) would be on the order of tens or hundreds of thousands of dollars per month (driven almost entirely by the 15% marginal rate). Delaying to age 70 would increase it further via delayed retirement credits.
We can raise the SS tax to maximum self employment rate and save SS. UNTIL the first $500,000 monthly check is issued. How dare the rich receive such an amount.
keep in mind this whole conversation revolves around the concept of SS as replacement income in retirement but the original intent was as a welfare type fund so the thirty six months between the time you stopped working and the time you died was not lived in poverty. Ill conceived and poorly designed from the beginning it will soon fail to meet any obligation…
Sorry about the name confusion, rejahm and rhardin.
As regards canceling the debt in the Torah, we are explicitly instructed to lend money and explicitly told woe to he who refuses because the jubilee year is coming. The Torah, recognized the reality that people will be hesitant to lend money if it is not in fact a loan, but a gift. The Rabbi’s came up with the mechanism to allow loans to be paid back even past the jubilee year. Otherwise, the financial system related to loans would have collapsed.
It’s not like we are so smart, and these ancient people were stupid. If there were a rule today that said all the money you lend does not need to be paid back. You will be hesitant to lend it unless there is some mechanism to ensure that you are in fact paid back. Otherwise, you will simply not lend money.
This is simply reality, and all financially competent societies will recognize this and act appropriately. Financially incompetent societies, of course will not recognize reality and will fail as we see in socialism every time it has ever been tried.
"Capitalism needs constant reforms to stay functional, but it still gets the job done."
Not a criticism, but I'm curious about what problems you see caused by capitalism, and what sort of constant reforms are needed.
You all have seen and heard by now, that the federal debt topped $40T this week. The Treasury Secretary was asked about it on CNBC:
“There's nothing magic about the $40T number, and we can grow our way out of that.” ~ Scott Bessent on CNBC
He's right. There is nothing magic about $40T other than it is an incomprehensible amount of money. But that last bit about being able to grow our way out of it?
Ordinarily, yes, growth can cure many, many economic ills if an economy is growing faster than its debt is piling up. So the facts do seem relevant here. In the second quarter, the US economy grew at an annualized rate of 1.5%.
Secretary Bessent and the US government are borrowing for 10 years at 4.7%, for 30 years at 5.3%. That math simply doesn't math.
Gee, it’s a good thing that the Constitution doesn’t allow the government to impair the obligation of contract. It doesn’t authorize a tax on wealth, either, not that “progressives” care about such trivial things.
"not that “progressives” care about such trivial things."
Progressives' interest in the Constitution extends about as far as they can use it to get around whatever's in it.
"Ancient societies [note the plural] had another method ... It was called an amargi [note one word from one specific language]"
I detest this sort of Just So Stories™ writing that supposes the entire "ancient world" was uniform.
Don’t worry, President DNC is on deck with a new $10 trillion Green New Deal scam, student debt forgiveness and Medicare/Medicaid for all. All this before importing millions of new illegals and re-inflating Democrat NGOs and learning centers. Fiscal sanity is right around the corner!
Many Americans do not seem to realize how systematically the Trump administration is eroding privileges that the U.S. has accumulated over the past seventy years. Advantages that many regard as unquestionable facts and almost as laws of nature. The dominance of the dollar being one of them.
We'll pay our debt with a declining standard of living. Any deadbeat could tell you.
Old Age, Survivors, and Disability Insurance.
If curious how Orthodox Jewish bankers now handle the seventh-year debt cancellation law, look up "pruzbul"
I'm a supporter of Israel and a friend to the Jewish people, but I will say this: no other religion on Earth has ever come up with so many loopholes and exceptions and pedantic, convoluted fictions to escape the dictates of its most holy scriptures. We even have the adjective "talmudic" in the English language as testimony to their success at getting the best of the Almighty and pulling the wool over His eyes.
The dominance of the dollar being one of them.
That complaint would carry more weight if not for the fact that every other developed nation is in the same boat, with some in much graver peril.
I'm planning a trip to Japan in a few months, and if the yen is as far down the toilet then as it is now, we are going to be living high on the hog. I can get more than twice as many yen per dollar as in 2012.
Why is wanting to keep as much of your hard-earned money, greed? My TDS brother hates the rich, but is really envious of their wealth so they must pay more taxes and probably shouldn't be allowed to exist. Meanwhile, he cheats on his taxes (allegedly), has never turned down a raise or promotion at his job, ridicules the religious, and blames the deficit on "tax cuts for the rich".
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