Debt and Usury - the solution.

All around the world central banks have been approaching and going below zero interest rates so many people are now aware of zero interest rate scenarios as reality.

This would have been considered absolutely incredulous by classical economists since a zero-interest rate situation essentially declares that there is no time value of money - a concept that underpins financial theories and markets.

If there is no time value for money then the money itself - if it has no inherent or intrinsic value then also comes into question - especially when money is all fiat (by decree) and able to be printed into existence without any constraints as is the situation currently.

While this is complete anathema to financialism - a zero interest rate is what moral codes like Christianity and Islam demand in order to avoid the pitfalls (like we see in the world) of one group of people living like parasites off the backs of others.

This "wealth" gap and inequality is at stupendous levels at present. Individuals who have so much of this monopoly money that they nor generations of their descendants couldn't spend it in their lifetimes.

So debate and conversation is beginning to revolve around debt forgiveness or jubilees in order to reboot the system and bring things back to reality.

Unfortunately not only would debt forgiveness cause massive disruption and disorder - it would still be tremendously unfair just like bailouts are at the essence unfair.

Bailouts and forgiveness of debts cause moral hazard - and set in concrete an injustice where the profits are privatised and the risk and losses are transferred to the public. The bailed out entities keep all the rewards without risk of loss.

If the forgiveness is extended to private citizens - think of the conservative and moral citizen who has kept their debt levels low to non-existent versus the one who has leveraged themselves up to their eyeballs.

The latter has say 40 or 50 investment properties which have been progressively leveraged into by artificial inflation of the property market - more and more debt leads to higher and higher book values.

Now how would debt forgiveness be fair in this situation?

If the debt is cancelled, the lending organisation nationalised and the properties are then liquidated by an independent audited entity for whatever the market price is following the jubilee - then there is a chance that there is a fair outcome.

On the other hand - a forgiveness where the bank or the "investor" keeps the properties following a cancellation leaves a very unfair situation against the conservative individual and is not what a jubilee or debt forgiveness should be done under.

The best situation would be to make interest rates - all interest rates everywhere, zero effective immediately. All payments would be for principal only and no further debt would be extended until an ability to service existing debt is demonstrated.

If the debt was still burdensome with a zero interest rate - then the only option is bankruptcy and liquidation.

This is the only way to attain a situation of true price discovery.

Humans are doomed as the saying goes to repeat history - over and over. The ancients knew that usury was untenable - it always leads to immense evil, oppression and hardship in the end.

People will always be divided into the hosts and the parasites when usury (interest rates above zero) is permitted.

Zero interest forever - willingly or unwillingly - is the answer.