…and Forgive Them Their Debts
The Public Banking Institute (PBI), one of my favorite organizations – and to which I contribute – was formed in January 2011 as an educational nonprofit organization. Their mission is to implement public banking at all levels, including local, regional, state, and national, and to return control of money and credit to states and communities, independent from Wall Street’s private banking system. Public banking is in the residents’ best interests and uses their credit-generating ability for community needs such as infrastructure, clean energy, and affordable housing.
PBI published a fascinating interview with Investment Consultant Dr. Simon Radford, and Dr. Michael Hudson, Distinguished Research Professor of Economics at the University of Missouri. They talked about Hudson’s book, …and Forgive Them Their Debts, where he writes about an ancient civilization that forgave debt to revive its economy. In Babylonia, when a new king was crowned, the monarchy believed that forgiving debtors was necessary to keep a successful economy alive. Here is the link to this compelling article: michael-hudson.com/2019/02/heeding-the-lesson-of-the-ancients/.
Since 1980, Hudson has researched the history of debt. He recently became concerned that we’d pretty quickly forgotten the situation that engulfed us in the 2008 worldwide financial crisis. “I began to look through history…at how different societies handled their debt problem, and how they have forgiven the debts.”
Studying the Bronze Age, Hudson discovered that for thousands of years in Sumer, Babylonia, and the remaining Near East, new rulers forgave the debts. Instead of creating a crisis, it prevented a crisis from happening and preserved stability. “This history has been neglected,” he says. “Today, our leaders believe that stability [requires] everybody pay the debts that they promised to pay, regardless of their ability to do so.”
I was so moved by this idea of forgiving debt that I was inspired to do the same. A young client was eager to work with me last fall. She sent a downpayment for ongoing sessions with me, and was very enthusiastic about getting started. After our third session, it was clear she couldn’t afford to continue. Rather than letting her get into debt, we agreed to postpone future sessions until she could catch up. She was diligent in communicating with me each month while sending me small increments to pay off her balance. The holidays came and went and she was still struggling, feeling guilty that it was taking her so long to reach a zero balance. I continually assured her I wasn’t worried about her total amount due; just do what she could. She recently moved out-of-state and was working hard to reestablish her business, securing two more jobs to make ends meet.
In working with her money history, I knew she had a pattern of poor planning, overspending, and flying by the seat of her pants financially. This is the tendency with the Fool archetype, who also exhibits Innocent characteristics.
After reading the article about Hudson’s book on forgiving debt, I was inspired to call her immediately and tell her that she had a clean slate with me. Because she had kept good communication and proven her diligence all those months, it was my pleasure to honor her in this way. As she heard the news during our phone call, she cried. It was as if someone had told her she’d won the lottery. So I suggested that someday she pay it forward for someone else who was struggling with debt. Elated over the suggestion, she promised she would.
We were both happy to continue to work together again. Although her past debt was forgiven, we both agreed going forward that she would pay me a nominal fee per hour. This small exchange meant she wouldn’t feel like a charity case and I wouldn’t be contributing to her bad habits with money. Today she pays on time, every time. She has made more positive shifts around managing her money in a much shorter period than she had previously. At the end of every session, she expresses her gratitude. I can clearly see how the concept of forgiving debt preserves stability rather than creating chaos.
As Radford’s interview with Hudson revealed, “History, mathematics, and economic logic point in the same direction. It is only a clean slate that can restore economic vitality and stave off a new series of political battles between creditors and the tyrants who all claim to represent the people. Accusations of mismanagement should be [put] at the door of creditors, not debtors.” He believes that old paradigms led to the 2008 crash as creditors made loans without regard for debtors’ ability to pay.
If you’d like to know more about the benefits of Public Banking versus Private Banking, here’s a two-minute video: www.youtube.com/watch?v=lpho-eie-fw&feature=youtu.be