A debt jubilee may be coming. In the simplest form of a jubilee, all debts are erased. While that may sound like a fictional event, jubilees have happened when a community’s debts become large enough to threaten the economy. That can seem like a great idea to those in debt, it also impacts savings and retirements. A UN conference (UNCTAD) has suggested such a scenario. The global economy may be out of crisis, generally; but there are underlying trends that suggest another economic crisis is about to occur. The global economy isn’t in crisis, but it is growing far more slowly than cash infusion and low interest rates would suggest. Without the cash infusion and low interest rates, the global economy may enter deflation. It may already be there, even with supports. Because cash infusions and low borrowing rates to financial institutions haven’t generated growth but instead have encouraged wealth accumulation, UNCTAD has suggested a debt jubilee, particularly to help developing nations. The subprime mortgage crisis of 2008 happened because of $2T. The debt level in emerging nations is now over $25T, more than twelve times higher. Without a systemic change in debt, such high levels could initiate yet another collapse, possibly a much larger one than last time.
(Click on the graph for the link.)