Debt jubilee fails.

However, debt jubilee has some serious difficulties. Relieving debt distress among banks and corporations costs taxpayers billions of dollars. Relieving debt distress among mortgage holders could cost the same. It is difficult to see why a young person on a low income who is struggling to pay their rent should, through their taxes, pay off the million-dollar mortgage of a business tycoon. It is also hard to see why homeowners who limit their borrowing to what they can sensibly afford should receive less from the government than people who mortgage themselves to the hilt in the expectation that house prices will always rise. Debt jubilee could be very unfair to people who are too poor to have debts or too responsible to over-borrow.

There is a second problem with debt jubilee. For every debtor, there is a creditor; and creditors are savers. Writing off debts therefore means writing down the value of savings. But working hard and building up savings is widely regarded as virtuous. Imposing losses on people who have saved, to write off the debts of those who have not, would be very unfair. Somehow, a debt jubilee would have to avoid hurting savers.