Some people want to apply the concept of the Jubilee year to debts today. That is, every fifty years all debts become void. The debtor is relieved of all obligation to pay any of his remaining debts. The creditor or lender absorbs the lost.
Scripturally, the Jubilee year applied to land ownership and slavery. All land was returned to its original owners, and Hebrew slaves, but apparently not other slaves, were freed.
Before proceeding down this road, the advocates of the Jubilee year should be aware of its shortcomings. It provides debtors a great opportunity to cheat their creditors. Amazingly, no government has yet instituted the Jubilee concept. The greatest beneficiaries of the Jubilee release of debt would be governments.
Let us now examine some flaws in applying the Jubilee concept to debts.
1. Any owner of a savings account who failed to close out his savings account before the Jubilee year would lose his savings to the bank holding it. The same is true of owners of certificates of deposits. Saving accounts and certificates of deposits are debts that banks owe the depositors. The owners of savings accounts and certificates of deposits are creditors who have lent the use of their money to banks. Thus, the Jubilee year gives banks a great opportunity to take advantage of ignorant savers.
2. All paper moneys (bank notes, government notes, US notes, federal reserve notes, and silver and gold certificates) and their electronic equivalent (checking accounts) becomes void. As all forms of paper money are promises and obligations, they are debts. Relieving all obligations to fulfill the promise of the paper money would be a great benefit to the issuer. Thus, the Jubilee year is a windfall for governments and their central banks as they are the primary, if not the sole, issuers of paper money. Banks receive a windfall from money left in checking accounts.
3. The Jubilee year gives sharpers an opportunity to cheat the stupid and ignorant. The sharper convinces a person to give him a loan that does not come due until or after the Jubilee year. When the Jubilee year arrives, the sharper is relieved of his obligation to pay the loan. The suckered lender absorbs the loan. Swindlers benefit greatly from the Jubilee year.
4. Employers have a great opportunity to cheat their workers. If an employer fails to pay his employees just before the Jubilee year, he is relieved of having to pay them. When he fails to pay his employees, the employees have become creditors of their employer. The employer is now a debtor who owes his employees a debt of their salaries and wages. Thus, the Jubilee year creates a windfall for employers who want to cheat their employees. (This also raises another interesting question. Are employers obliged to pay their employees during the Jubilee year? Salaries and wages are debts paid for labor rendered.)
5. When the Jubilee year arrives, the unsophisticated, ignorant, and stupid who own corporate and government bonds, mortgages, commercial paper, and other debt instruments are left with losses. Their investments are now voided. In effect the owners of these debt instruments transfer their wealth to governments, corporations, and other borrowers. Thus, the Jubilee year benefits those whose have sufficient wealth or credit worthiness to be able to issue bonds, mortgages, and other debt instruments.
6. The Jubilee year would utterly destroy pension plans. Most investments of pension plans are in debt instruments. As these debt instruments become void in the Jubilee year, pension plans that held debt instruments would absorb the lose and would have to reduce payments to pensioners greatly.
7. Social security would cease to exist. The U.S. government has borrowed all the money in social security and has substituted debt instruments. With the Jubilee year, these debt instruments are voided.
Returning to the Jubilee concept to eliminate debt gives debtors another way to cheat creditors. In a modern-day society, the two largest debtor classes are governments and banks. Thus, they receive the greatest benefit from the Jubilee year.
What would happen in practices is that no bank or loan company would make a loan that would extend into or beyond the Jubilee year. Only the unsophisticated, stupid, and ignorant would make such loans. To relieve themselves of their obligation to honor their debts, governments will surely sell bonds that extend beyond the Jubilee year. Government bonds would be unloaded on the unsophisticated, stupid, and
If the Jubilee year is limited to land, i.e., every fifty years the land is returned to its original owners, it serves to transfer enormous wealth to European royal families. The royal family of Great Britain is the original owner of most of the land in the United States. The French, Spanish, and Russian royal families originally own most of the rest. Alternatively, various Indian tribes originally owned all the land, and the land must be returned to them every fifty years.
Advocates of applying the concept of the Jubilee year today need to explain why they want to destroy the economy and transfer so much wealth from workers, the common man, to the government, bankers, and the royal families of Europe.
The same issues are raised about forgiving (voiding) debt every seven years as some advocate. Limiting the term of a debt contract to seven years has merit. However, to apply this concept retroactively would cause an economic catastrophe.
Copyright © 2009 by Thomas Coley Allen.
More articles on economics.
More articles on economics.