The call for a debt jubilee


“Hudson says that – in every country and throughout history – debt always grows exponentially, while the economy always grows as an S-curve.

Moreover, Hudson says that the ancient Sumerians and Babylonians knew that debts had to be periodically forgiven, because the amount of debts will alwayssurpass the size of the real economy.

For example, Hudson noted in 2004:

Mesopotamian economic thought c. 2000 BC rested on a more realistic mathematical foundation than does today’s orthodoxy. At least the Babylonians appear to have recognized that over time the debt overhead became more and more intrusive as it tended to exceed the ability to pay, culminating in a concentration of property ownership in the hands of creditors.


Babylonians recognized that while debts grew exponentially, the rest of the economy (what today is called the “real” economy) grows less rapidly. Today’s economists have not come to terms with this problem with such clarity. Instead of a conceptual view that calls for a strong ruler or state to maintain equity and to restore economic balance when it is disturbed, today’s general equilibrium models reflect the play of supply and demand in debt-free economies that do not tend to polarize or to generate other structural problems.

And Hudson wrote last year:

Every economist who has looked at the mathematics of compound interest has pointed out that in the end, debts cannot be paid. Every rate of interest can be viewed in terms of the time that it takes for a debt to double. At 5%, a debt doubles in 14½ years; at 7 percent, in 10 years; at 10 percent, in 7 years. As early as 2000 BC in Babylonia, scribal accountants were trained to calculate how loans principal doubled in five years at the then-current equivalent of 20% annually (1/60th per month for 60 months). “How long does it take a debt to multiply 64 times?” a student exercise asked. The answer is, 30 years – 6 doubling times.

No economy ever has been able to keep on doubling on a steady basis. Debts grow by purely mathematical principles, but “real” economies taper off in S-curves. This too was known in Babylonia, whose economic models calculated the growth of herds, which normally taper off. A major reason why national economic growth slows in today’s economies is that more and more income must be paid to carry the debt burden that mounts up. By leaving less revenue available for direct investment in capital formation and to fuel rising living standards, interest payments end up plunging economies into recession. For the past century or so, it usually has taken 18 years for the typical real estate cycle to run its course.

Hudson calls for a debt jubilee, and points out that periodic debt jubilees were a normal part of the Sumerian, Babylonian and ancient Jewish and Christian cultures. Economist Steve Keen and economic writer Ambrose Evans-Pritchard also call for a debt jubilee.

If a debt jubilee is not voluntarily granted, people may very well repudiate their debts.”

1 Comment The call for a debt jubilee

  1. AvatarMarc

    Hi Michel,

    A debt jubilee is a necessity for dealing with exponential debt, somehow or other the system needs to be compensated. But in the 21st century, why not simply convert to stability and stay there.

    The question is if the wealth gotten through exponential debt was legitimate or not. In the case that it isn’t, a debt jubilee relieves the debtor but does not restore what was taken ilegitimately.

    Money is not a thing it is a record as it was before it was associated as an object of value itself. As a record it certainly makes little sense that balances should mutltiply on their own, only when money itself was considered as a scarce commodity did the rationale for loss of utility of the money begin to be used, although still spuriously, to justify the growth of balances over time.

    Nehemia (5:10, 5:11)suggested not only jubilee but restoration!

    I think that debtors are also responsible for allowing the situation to reach the proportions it has. Freedom is something you defend every day not just time to time. Therefore I believe that the best solution is simply:

    1) Switch to a Passive BIBO stable money design
    2) Pay the debt off in stable money
    3) Maintain a free market so that those who have lost their wealth can earn it back.

    No one losses and everyone pays their dues for this reckless practice.


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