The year of jubilee

In the Old Testament the Jews used to observe something called the Year of Jubilee. Every 49 years all the people's debts would be forgiven and their land returned to them. The idea was to keep them from enslaving their own people via huge crushing debt. As I watched how pitiful the stimulus debate played out, I kept hearkening back to this idea of paying off our debts and how it would help spur our economy. I wondered if it was possible for the federal government to pay off the public's credit card debt thus freeing them to spend more money on goods and services, catch up on their mortgage or to buy a new car. I checked and found out that the total amount of U. S. credit card debt is $971 billion which is in the same ball park as what the stimulus plan just cost us.

I know that many people will say that the idea of paying off everyone’s credit cards only helps those who have made bad financial decisions. My reply is that we are a country of second chances but just as importantly it makes economic sense. What would help the working poor and middle class more than freeing up several hundred dollars a month to spend how they please? Families could do what they wish with their money that was once tied up in debt. Some would save it, some would invest it, and many would spend it. The money would flood into the economy directly rather than through some government programs that may or may not create jobs. On top of that, the banks would get a shot of cash to help keep them solvent and allow them to make new credit available.

One added advantage is that it would also help reassure the public and improve the overall mood regarding the economy. Currently, the main drag on the economy is the fear and uncertainty that many people are experiencing. Even those with jobs and money to spend are reigning in their consumption until they are confident that we are headed in the right direction. This lack of spending just adds to the recession and thus leads to more economic anxiety. It’s a vicious cycle and something that the recent stimulus plan failed to address. Eliminating their credit card debt would be a psychological game changer as much as an economic boost.

I realize my plan may never happen and obviously the idea has to be fleshed out. Some checks and balances would need to be in place to deter people from simply running up huge debt again. Maybe there would be a cap on how much each individual gets paid off or a requirement to go without credit cards for certain time period. Regardless of details, the Year of Jubilee makes more sense than the typical big government spending that just passed under the guise of stimulus.