The Ratchet
Once the idea of a Jubilee begins to circulate, it will begin to influence the behavior of three different groups:
- Some debtors will look at a Jubilee as an opportunity to get things for free. They will attempt to borrow money in the hope that they will never have to pay it back.
- Some lenders will look at the potential of a Jubilee as an added risk. As a consequence, lenders will be more hesitant to extend debt and will try to protect themselves against Jubilee risk.
- Finally, the big money interests that manage most of the wealth in the country will look at Jubilee and the rest of Free Money as a warning to stay away from any form of asset that will pay back in Federal Reserve Notes, specifically US Government Treasury bills.
These three dynamics combine into one result: suddenly, lending money will look a lot more risky, so interest rates will rise. The higher interest rates go, the more attractive Jubilee gets (because repaying your debts gets more and more expensive). And as Jubilee gets more attractive, more lenders will start to worry about getting paid back – and they will raise interest rates even higher.
It is precisely by playing with the self-interest of the existing system that we will be able to overcome it. We do not know how quickly this process will play out. This depends on the spread and perceived legitimacy of the ideas of the Emancipation party. But we believe that with as few as 4 million members (less than a third of the current Tea Party) we can drive the system to an “inflection point” and render do-able what might otherwise be impossible