Wipe out debt... it is now becoming a meme

[nadinbrzezinski]

and I think it is coming. The last time debt was forgiven in the extent Ezra Klein is hinting at... the calendar read 1944 or so... (it was part of the Bretton Woods Agreement)...

And there are valid reasons to wipe it out by the way... but that will lead to some inflation

[annabanana]

1. JUBILEE!

'bout time

[nadinbrzezinski]

9. Yep, they are starting to talk around the edges of it

[GSLevel9]

2. "some" inflation? lol... I think the inflation we've experienced over the last 3 years is enuff! nt

[nadinbrzezinski]

6. When you wipe debt there is inflation

no way around it.

[indurancevile]

20. huh?

[nadinbrzezinski]

28. It is one of the mechanisms to wipe it

inflation makes that debt go down in value.

[indurancevile]

32. that doesn't mean that "wiping" debt causes inflation. you've got it backwards.

getting rid of debt usually results in deflation.

but where there's inflation it will make existing debt worth less in real assets.

[muriel_volestrangler]

29. US inflation has averaged 1.04% over the past 3 years

See ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt : Jun 2008: 218.815; Jun 2011: 225.722

Probably the lowest inflation over 3 years in 50 years.

[GSLevel9]

35. misleading...

food and gasoline.

The 2 things most people buy DAILY or nearly DAILY.

gasoline INFLATION 100% in 3 years.

food INFLATION 4.7% just YTD...

[muriel_volestrangler]

36. That's the CPI-U; It includes food and gasoline (nt)

[Waiting For Everyman]

3. Ultimately, there is no other choice.

Because all of the debt that has been created (especially CDOs) can never be repaid. It's exponentially more than the value of all the goods that exist.

It would be better to go ahead and wipe it out sooner than later. It should've been done in 2008.

[no_hypocrisy]

4. You just made me think of this: They don't want the debt to go away.

The shtick works for them.

It's more than imposition on their rich donors NOT to raise taxes.

If they raise taxes, they also hasten the diminution of the debt, losing their leverage to where it's not a problem.

By doing spending cuts, they damage social programs, shrink the government, redistribute wealth (the other way around), and the debt will be unwieldy for many years.

[nadinbrzezinski]

7. Yeah but I will give you a personal example and

you go ahead and multiply by millions. We have a bathroom that needs fixing. It will take about 5K to fix it. Now unlike most people I could go ahead and pay cash for it right now... but I am holding to that cash due to a bad economy. Most folks, we are the exception, I admit it, have a LOT of debt, so they can't spend.

What I just described in my opinion is the saving paradox in effect.

http://en.wikipedia.org/wiki/Paradox_of_thrift

Since I am not circulating that money... and neither is my neighbor who is serving high debt... there is no demand created.

So the short version of this... no demand= no recovery.

[drm604]

5. Who's debt are they talking about forgiving?

This is the first I've heard of this. Do you have a link?

[nadinbrzezinski]

8. He is subbing for Martin Bashir

and he hinted at forgiving quite a bit of the housing market...

I know they were also talking about sovereign debt yesterday (state debt)...

So this is the leading edge of that. I think they have come to realize that no demand= no recovery, and debt is the real major break on this.

[drm604]

10. This was on TV?

Interesting idea. If they forgave sovereign debt, what happens to all of the bond holders? Didn't we just have a big fight over not defaulting on the debt?

I guess I don't understand.

[nadinbrzezinski]

12. They have forgiven partially sovereign debt

over the decades, in places like oh Argentina... and what happens is that the country that sees that, has a tad more inflation for a year or two. It also comes with that shit sandwich called austerity. They are talking about Europe at this point, Greece, Italy and Spain, some of Portugal.

Oh and those who have bonds in those countries... yep just got hosed.

[DearAbby]

11. Financial markets: State of emergency

<> This panic comes down to two things: one chronic, the other acute. The abiding worry, the one that has been eating away at markets ever since the stimulus measures of 2008-09, is that the western economy has run out of emergency fuel and still lacks momentum. The immediate worry is that Spain and Italy are now borrowing money at unsustainable rates and may be forced into the kind of slow-motion default on sovereign loans that is happening in Greece. These stock-market drops and interest-rate spikes are largely the repricing of investor risk – amplified by the fact that few people are trading heavily in August.

At the height of the banking crisis of 2008, policymakers had two priorities: first, prop up the banks; second, protect the real economies as far as possible from the impact of the crash. This time, the task is again twofold, only much bigger: first, prop up the European banks, and ensure emergency low-cost loans for Spain and Italy; second, another round of reflation. Yet this requires money and moreover statecraft of a kind that has gone awol from European politics. The single-currency club does have an emergency fund – but it won't be in place for years. In Jean-Claude Trichet it also has an intransigent central banker. The markets do not have time to wait around for either.

http://www.guardian.co.uk/business/2011/aug/04/financial-markets-state-of-emergency

This just isn't USA, it will affect the Global economy...think big

[nadinbrzezinski]

13. YEs this is global

why I said the last time any of this was seen was with the Bretton Woods agreement... Effectively it restarted the system almost from zero.

The US was one of the few nations that did not have whole swaths of sovereign debt wiped out... in 1944, one reason we still have AAA rating (for now)

And yes this is global.

[DearAbby]

23. They are trying to hold on as long as possible

doing what insane people do, the same thing over and over expecting a different result. Eventually the debt will have to be dealt with or the entire thing crashes. Do it now and save it, or wait till it crashes to start over. What would cause the least pain?

[nadinbrzezinski]

26. Why the talk is interesting

we are starting to see the same kind of talk we did during the depression. I mean DC is channeling hoover, but on the edges people are starting to channel FDR

[HysteryDiagnosis]

14. The people collecting the interest on the debt will not allow it. n/t

[w4rma]

18. They will try. They will lose, one way or another. (nt)

[DearAbby]

25. Everthing crashes, what good is Interest? n/t

[dtexdem]

15. But the last time the U.S. had its debt wiped out was ... never.

It has always made good. And that is something the teabaggers did and continue to threaten.

[nadinbrzezinski]

17. At this point he was talking of household debts

translation housing debt.

But we are seeing more and more also on sovereign debt. This is starting. Selling this short term, will get a few POWERFUL people, hosed.

[drm604]

21. I don't understand how this would work.

Are they talking about forgiving mortgages? People get free houses? So those who currently rent lose out? Talk about class wars.

[nadinbrzezinski]

24. Actually from the way Ezra Klein was putting it

yes, forgiving mortgages... probably ones that are so far down underwater it is not even funny.

And the last time anybody talked about this the calendar read 1933 or so.

The talk, this is just my opinion, is starting to sound like the crap that went on before the bank holiday of the Great Depression... but this is just on the outer edges of it. IMO, it would only be done if they realize that structurally they have no choice or face a structural depression.

Of course talk is one thing... we have that little thing called congress. Run the laugh track now.

[drm604]

34. Okay,

so maybe what could happen is that those who are underwater could get everything over the current market value forgiven. That would make some sense.

[woo me with science]

16. No, no, no. Debt is at the core of their strategy.

Government debt, war debt, personal debt. Debt is how they profit. This entire system is run by private banks that make billions off our debt.

No way debt is going away. It is the heart of the beast.

[nadinbrzezinski]

19. Well the problem is that they also need demand

and without demand this economy wil not come out of any gutter.

There are POLITICAL reasons for that debt... it keeps people down.

[woo me with science]

22. Yes, there are also political reasons for debt, but my larger point is that

debt is the foundation of the economic system they are building. This system is run by private banks who profit from debt - war debt, personal debt, government debt. They will not wipe debt out, because it is the way the system gets fed. On the contrary, they are finding ever-expanding ways to increase our debt, in every area of our lives. They have now mandated a for-profit health care system that drives consumers of it into debt. College loans are being restructured so that colleges - institutions that used to represent a way out of poverty for people - are now debt factories. You can go on and on. Our very society is being restructured so that our lives are spent working like mice in a wheel to pay off debt that is becoming increasingly unavoidable as a way of life.

Our ability to buy is much less significant in this entire equation than our need to work and produce for them, at longer hours and for less pay. That is the dirty little secret. They are no longer as dependent on us in the area of demand, because the world has opened up. This is all about globalization.

[nadinbrzezinski]

27. The last time that was done was 1929

and we both know where that ended. I have the feeling that some folks are starting to realize this is highly unsustainable. We are talking of more debt, than the global GDP...

[woo me with science]

30. It is frightening, for sure....

where we are headed. I don't question your numbers. I question their mindset.

Call me cynical, but we are dealing with extremely powerful, wealthy banks and Tea Party/Third Way types who are beholden to them. I think they would drive up interest rates, drive people into poverty, foreclose, and cut off our access to our own money before they would erase our debt. And they may very well anticipate an uprising in response... but I suspect they would believe they can prevail. They have the power, the money, and at least the outlines of a police state in place.

Yes, it sounds conspiracy theor-ish. But look at what is happening in the Middle East. Al Gore may be talking about a peaceful "American Spring" because of concerns about the potential for a not-so-peaceful one.

[nadinbrzezinski]

31. The mindset was not different than 1929

I suspect than when it happens... it will be sudden... and mostly shocking.

That is why this talk on the tv screen matters. It is telling these people, whoohoo! them are shoals that way. That say monsters lie.

[indurancevile]

33. everyone will owe their soul to the company store. the company store can do that cause

it's a monopoly.

i think the dirty secret is that the same handful of people/families basically own the world through a series of front companies, front men, etc.