The Key to a Sustainable Economy is 5,000 Old

The comments below are an edited and abridged synopsis of an article by Ellen Brown

We are reaching the point in the business cycle known as peak debt, when debts have compounded to the point that their cumulative total cannot be paid. Student debt, credit card debt, auto loans, business debt and sovereign debt are all higher than they have ever been.

The Key to a Sustainable Economy is 5,000 Old | BullionBuzz
Little planet. Aerial view of Hong Kong Downtown. Financial district and business centers in smart city in Asia. Top view. Panorama of skyscraper and high-rise buildings.

Mainstream economic models leave this problem to the invisible hand of the market, assuming trends will self-correct over time. But the market does so at the expense of the debtors, who become progressively poorer as the rich become richer. Borrowers go bankrupt and banks foreclose on collateral, taking away their homes and livelihoods. The houses are bought by the rich and rented back to the debtors. When the banks go bankrupt, the government bails them out. Thus, the market corrects, but not without government intervention. That intervention comes at the end of the cycle to rescue the creditors, whose ability to buy politicians gives them the upper hand. According to free-market supporters, this is a natural cycle, which dates back to the birth of modern economics in ancient Greece and Rome.

Those classical societies are not where our financial system began. Rather, it devolved from a more functional, sophisticated, egalitarian credit system that was sustained for two millennia in ancient Mesopotamia (now parts of Iraq, Turkey, Kuwait and Iran). Money, banking, accounting and modern business enterprise originated not with gold and private trade, but in the public sector of Sumer’s palaces and temples in the third century B.C. Because it involved credit issued by the local government rather than private loans of gold, bad debts could be periodically forgiven rather than compounding until they took the whole system down, a critical feature that allowed for its remarkable longevity.

Up for discussion: the true roots of money and banking, and how to pull off a modern debt jubilee.

Leave a Reply

Your email address will not be published.