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Thursday 1 September 2022

Debt Forgiveness Can't Work?

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One of the largest obstacles to debt forgiveness, in my opinion, is the way normal citizens recoil from the idea. They think it's theft, or unfair, or for many, the just think that it is unworkable. Many think it was only possible in an ancient godly nation like Israel. This is a false assumption for two reasons: 

Firstly, Israel was an obstinate, disobedient and rebellious people who did not correctly apply much of God's law for most of their history. As God says, he has to redeem and refine them, "Because I know that you are obstinate, and your neck is an iron sinew and your forehead brass..." (Isa. 48:4). They had periods of greatness, under Moses, Joshua, Caleb, David and others. But the overall history of the people of Israel was disobedience to God's word. Even the generation under Moses was judged in the wilderness. We have no record of Israel or Judah celebrating a Jubilee, and this is one of the reasons God judged them. The prophets consistently condemned the powerful for gobbling up the land and possessions of the people (Isa. 5, Amos 2:6-11). So, the assumption that you need a nation like Israel to practice Jubilee is wrong.  

Secondly, the ancient and wicked pagan nations of Sumer, Akkad, Assyria and Babylon, among many more did practice regular, sustained and powerful debt forgiveness in periods of their history. In fact, the economist Michael Hudson demonstrates in his book ...and forgive them their debts that it was when these societies and others went away from debt forgiveness, that they began to decline. His basic thesis is that debt forgiveness is the only way to correct ever increasing debt, and he proves this historically. 

The closest we get to a Jubilee being celebrated in the Old Testament is when Cyrus the Great let the captives go free back to their lands (he did this for more than just Jews), along with wealth and resources to rebuild their collapsed nations. Jubilee freed people from debt bondage and physical bondage, as in slavery. These ideas overlapped in the ancient world, because the reason most people became slaves was to pay off debts. Nebuchadnezzar enslaved the Israelites because they refused to pay him the tribute he was owed, so they were in literal debt bondage, as a nation. Cyrus set them free from this:

"1 In the first year of Cyrus king of Persia, that the word of the Lord by the mouth of Jeremiah might be fulfilled, the Lord stirred up the spirit of Cyrus king of Persia, so that he made a proclamation throughout all his kingdom and also put it in writing:

2 “Thus says Cyrus king of Persia: The Lord, the God of heaven, has given me all the kingdoms of the earth, and he has charged me to build him a house at Jerusalem, which is in Judah. 3 Whoever is among you of all his people, may his God be with him, and let him go up to Jerusalem, which is in Judah, and rebuild the house of the Lord, the God of Israel—he is the God who is in Jerusalem. 4 And let each survivor, in whatever place he sojourns, be assisted by the men of his place with silver and gold, with goods and with beasts, besides freewill offerings for the house of God that is in Jerusalem" (Ezra 1:1-4). 

This is a remarkable event. So, the idea that it cannot work unless you have a Christian nation is historically and biblically rejected, and in fact is proven wrong by modern history. 

Many people are not aware that just after World War 2 Germany had many of its debt forgiven so that it could rebuild successfully and help be a bulwark against communist Germany and the USSR. As the website Debt Justice shows:

"On 27 February 1953, an agreement was signed in London which resulted in the cancellation of half of Germany’s (then West Germany’s) debt: 15 billion out of a total of 30 billion Deutschmarks.*

Those cancelling the debt included the United States, the UK and France, along with Greece, Spain and Pakistan – countries which are major debtors today. The agreement also included private individuals and companies. In the years following 1953 other countries signed up to cancel German debts, including Egypt, Argentina, Belgian Congo (today the Democratic Republic of Congo), Cambodia, Cameroon, New Guinea, and the Federation of Rhodesia and Nyasaland (today Malawi, Zambia and Zimbabwe). (1)

The German debt came from two periods: before and after World War II. Roughly half of it was from loans Germany had taken out in the 1920s and early 1930s, before the Nazis came to power, which were used to meet payments ordered by the Treaty of Versailles in 1919. They were a legacy of the huge reparations forced on the country after defeat in World War I. The other half of the debt originated from reconstruction following the end of World War II.

By 1952, Germany’s foreign-owed debt was around 25% of national income. This is relatively low compared to debtor countries today: Spain, Greece, Ireland and Portugal’s debts to foreign lenders are all over 80% of GDP. But West Germany had to undertake huge reconstruction following the war, and foreign currency with which to pay foreign-owed debts was scarce. The German delegation at the conference convincingly argued that its debt payments would rise sharply in the near future, and that this would significantly hinder reconstruction. Following the debt cancellation, West Germany experienced an ‘economic miracle’ with large-scale reconstruction, and high rates of growth in income and exports. This stability contributed to peace and prosperity in western Europe.

Creditors to West Germany were keen to stabilise the country’s politics and economics, so that it could be a ‘bulwark against communism’. This unique political reasoning led to creditors adopting a much more enlightened approach to dealing with a country’s debt, which has unfortunately not been repeated in debt crises of the last thirty years – in Latin America and Africa (1980s and 1990s), East Asia (mid-1990s), Russia and Argentina (turn of the millennium) and Europe today. Through these crises, Germany has been a creditor, as can be seen most starkly in the current European debt crisis."

I encourage you to read the whole article. The plan included four parts: 

- Restrictions on repayments. Their remaining debt was only paid from trade surplus. 

- Private and public creditors were involved in the plan, creating a level playing field.

- The plan included all debts owed, including individual, company and government debts. 

- Creditors agreed to work with Germany if they could not pay rather than punish them. 

Debt Justice then goes on to advocate for such debt forgiveness for modern indebted nations today, like Greece and others. Where could such an idea come from? Well, as they say:

"Inspired by the ancient idea of jubilee, a time when debts were cancelled, slaves were freed and land was redistributed, Jubilee Debt Campaign is calling for a new debt jubilee in response to today’s global economic crisis. Such a jubilee would provide a framework for tackling today’s debt and banking crisis in Europe, as well as the continuing burden of unjust debt in the global South."

This organization is inspired by the Biblical idea of Jubilee. One of the fascinating facts about Jubilee is that, as we noted, it was not actually commonly practiced by the Israelites. Only two figures* in the Bible call a Jubilee, and they are both called Messiah, Cyrus and Jesus. 

We read in Isaiah 44:28 - 45:3 - 

"28 who says of Cyrus, ‘He is my shepherd,
    and he shall fulfill all my purpose’;
saying of Jerusalem, ‘She shall be built,’
    and of the temple, ‘Your foundation shall be laid.’”

45:1 Thus says the Lord to his anointed, to Cyrus,
    whose right hand I have grasped,
to subdue nations before him
    and to loose the belts of kings,
to open doors before him
    that gates may not be closed:
2 “I will go before you
    and level the exalted places,
I will break in pieces the doors of bronze
    and cut through the bars of iron,
3 I will give you the treasures of darkness
    and the hoards in secret places,
that you may know that it is I, the Lord,
    the God of Israel, who call you by your name."

Cyrus was God's Messiah for the Jews who were stuck in bondage in Babylon. And through Cyrus, they were set free, they experienced liberty and freedom from slavery. They were restored back to their nation and given self-determination again. 

It's not an accident that Jesus builds his ministry on the same ideas. We read in Luke 4:16:19:

"16 And he came to Nazareth, where he had been brought up. And as was his custom, he went to the synagogue on the Sabbath day, and he stood up to read. 17 And the scroll of the prophet Isaiah was given to him. He unrolled the scroll and found the place where it was written,

18 “The Spirit of the Lord is upon me,
    because he has anointed me
    to proclaim good news to the poor.
He has sent me to proclaim liberty to the captives
    and recovering of sight to the blind,
    to set at liberty those who are oppressed,
19 to proclaim the year of the Lord's favor.”

What Cyrus did for the Jews in setting them free from Babylon, Jesus does for all who believe in him by setting them free from captivity to sin, death and the devil. It is not an accident that the only two figures in the Bible to call an actual Jubilee are called Messiah, because Cyrus, in the particular way, was a foreshadow of the true Messiah we all need. 

Debt forgiveness is intrinsic to the Bible's theology, both financially, and spiritually, both are built into the fabric of God's law and grace. 

This is why I celebrate Biden's student debt forgiveness plan. Not because he is good, he is not. Not because the plan is perfect, it is not. But because it shows the needle can be moved on debt forgiveness. And the modern West needs both financial debt forgiveness and spiritual debt forgiveness. The financial bondage we are in is only surpassed by the spiritual bondage to sin that people are in. Biden's move shows that even the leaders we consider to be the most anti-righteous can be moved, for whatever reason, to the right kinds of policies and that is why I celebrate. 

Debt forgiveness can work, it has worked in the past, it does not require Christian nations or even Christian leaders, and it is needed otherwise the West will go the way of many other ancient civilisations that were crushed under the weight of debt. We live in remarkable times.

List of references:

- Debt Justice: "How Europe cancelled Germany's debt in 1953",  

* Nehemiah comes close to a Jubilee in Nehemiah 5, by cancelling interest and returning to people their property taken to pay that interest. Zedekiah called a fake Jubilee in Jeremiah 34, which they took back. 34:17 notes, “Therefore, thus says the Lord: You have not obeyed me by proclaiming liberty, every one to his brother and to his neighbor; behold, I proclaim to you liberty to the sword, to pestilence, and to famine, declares the Lord. I will make you a horror to all the kingdoms of the earth." Faking it does not count in God's eyes. In fact, it made him even more angry at Zedekiah.  

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