Some thoughts after attending a workshop at CCC about rethinking economics with David Graeber's Debt as a guideline.
Debt cancellations have been common in ancient societies. Sumerian and Babylonian rulers regularly proclaimed debt cancellations, and their societies existed for hundreds of years. The Rosetta Stone, famous for its bilingual property that allowed historians to decipher Egyptian hieroglyphs, actually decrees a debt relief for the Egyptian people. These ancient debt cancellations mainly served to keep people out of indentured servitude to their private creditors such that they could be drafted as soldiers for the army or fulfill other public duties. But they also functioned as a "limit to the greed of private citizens".
More recently, post-war Germany was relieved of debts in the 1953 London Debt Agreement, which significantly helped to spur Germany's development.
I heard people in the discussions argue that creditors would become hesitant to extend loans in an environment which regularly decrees debt reliefs. But the historic existence of our previous examples directly contradicts this.
Currently, we as citizens are taught austerity with respect to debts. But commercial banks don't operate on the same moral framework. The money they lend out is not their own. They make money by arbitraging between the central bank and us. Their profits grow linearly with the extended amount of credit, while they outsource the monetary risks to public institutions.1
Is it high time for another blanket debt relief?
See Talking to my daughter about the economy by Yanis Varoufakis