George Monbiot on Steve Keen and writing off debt

The money would have achieved far more had it simply been given to the public. But, as Angela Merkel and Nicolas Sarkozy demonstrated over the weekend, governments have learnt nothing from this failure, and seek only to repeat it.Instead, Keen says, the key to averting or curtailing a second Great Depression is to reduce the levels of private debt, through a unilateral write-off, or jubilee. The irresponsible loans the banks made should not be honoured. This will mean taking many banks into receivership. Otherwise private debt will sort itself out by traditional means: mass bankruptcy, which will generate an even greater crisis.
These are short-term measures. I would like to see them leading to a radical reappraisal of our economic aims and moves to develop a steady-state economy, of the kind proposed by Herman Daly and Tim Jackson. Governments and central bankers now have an unprecedented opportunity to learn from the catastrophic mistakes they've made. It is an opportunity they seem determined not to take.
• A fully referenced version of this article can be found on George Monbiot's website


From the Guardian Weekly 10.21.11