Debt, money, sin

The word for ‘debt’ in German – to owe money – is ‘Schuld’, and it also means ‘sin’ in this language. This dual meaning also existed in Akkadian in Babylon. In fact, it’s a Babylonian sovereign, Hammurabi, who in 1792 BC was the first to set up a veritable system of debt-renouncement that entailed the timely erasure of all sums owed to the government and notable public figures at the time. The “Code of Hammurabi” that one can admire at the Louvre stipulates that the debtor is not obliged to pay his debts if there is a poor harvest, stormy weather or drought and that he can then perfectly legally “wipe his slate clean and not pay rent for the current year”. Historians have counted no less than 2,400 instances of debt erasure between 2400 and 1400 BC, which gave rise to public festivals during which the tablets used to register debts were destroyed as part of a symbolic act. The Old Testament mentions the wiping of debts several times, and the Jewish faith teaches that the year following 7 cycles of Sabbatical years – also called the “Jubilee year” – (so every 49 years) shall be the year when people are liberated from servitudes and debts. One of Jesus’s first sermons, recounted as per Saint Luke in the Gospel (Luke 4: 16-21), announces the upcoming Jubilee year and the resetting of all counters to zero. This “good news” – the meaning of the word “Gospel” – wasn’t to everyone’s liking since it put Jesus at odds with the almighty creditors of the time, the Pharisees.

While Judeo-Christian tradition puts as much onus on the creditor as it does the debtor, who both have debts to settle with God, our modern world places undue stigma on the ill-disciplined debtor and payment default is routinely showcased as the result of calamitous management. While the wiping of debt was a blessed and beneficial act for all civilisations appearing in the Bible, this same debt has today become sacred! Some two thousand years later, global debt has reached 240 trillion dollars whereas global GDP is at a mere 70 trillion dollars. In such an environment where these massive debts are causing endemic and secular stagnation, interest rates are of course condemned to never be brought up again, which actively contributes to the formation of potentially devastating speculative bubbles. Europe, however, is very familiar with the concept of debt erasure – and owes a lot to it!

After the First World War, the launch of the gold standard was accompanied by the substantial and definitive wiping of debts for many nations that were then able to reinvigorate their economies. The economist Carmen Reinhart estimates that the wiping of Western economies’ debts at the time reached an average of 19% of their GDP, and 50% for France! After the Second World War, the London Debt Agreement of 1953 did away with all of Germany’s external debts, and the country had a true jubilee since the period between 1947 and 1953 saw the erasure of its debts that had come to 280% of its GDP. So, no German economic miracle without those debts being deleted! Nowadays, everyone is pleading for a new jubilee – whose details are of course still to be defined – because the amount of debt worldwide is making any chance of a recovery considerably less likely, especially following the financial crisis. The wiping of certain debts would bring confidence back, restore consumption, recover economies and would finally pull the West out of its seemingly permanent, no-end-in-sight crisis.

Jesus sided with the Temple. Was he crucified for his economic views as well – for the threat he posed to creditors? On the cross, his very last word was “tetelestai”, meaning “everything is complete”. Strangely enough, ‘tetelestai’ was also the term written by creditors on slates to mark the settling of debts. Tetelestai, Jesus’s last word, also meant “debt settled”, or “Paid in Full”…