Despite all of the immense hardships and tragedies that accompanied COVID-19, financial relief programs in the US have been exceedingly helpful at keeping many Americans in their homes with food on the table. Mortgage and eviction moratoriums have meant that homeowners and renters alike were able to take a break from paying for housing for the better part of 2020 and 2021. Now that those moratoriums are ending, there's a rising sense of panic.
Admittedly, some Americans say they misspent at least some of their stimulus payments rather than applying the financial aid to their credit card debt or putting it into savings for later use. Now, as reality hits and the stimulus payments have stopped, struggling debtors are holding out hope for a debt jubilee.
It has been said that debt has been the quiet winner of the COVID crisis, with the losers then obviously being debtors and lenders alike. The hard truth of the matter is that a great many of those who are now staring down a debt mountain were already facing financial difficulties before the pandemic
What is a debt jubilee?
Dating all the way back to ancient Syria and Babylonia, the concept of a debt jubilee involves a large scale clearance or annulment of debt from public record. Historically, the erasure of debt across an entire large sector or nation occurred when an economic depression was looming.
Is a debt jubilee possible in the US?
While there have been modern-day examples of large-scale relief (post-2008 recession, Iceland wrote off substantial amounts of mortgage debt), and large-scale relief and aid has already occurred in the US in response to the COVID pandemic of 2019-2021, many fear the effects of total debt forgiveness. Creditor collapse and destructive results for the government are just two of the concerns.
It has been suggested that if the US government is able to finance trillions in quantitative easing, it's reasonable to assume that it could also absorb the costs of writing off substantial amounts of "bad debt," along with accruals, late charges, penalties, and student loans on the whole.
For most Americans, the ultimate goal of a debt jubilee would be to restore the ability to pay their bills, to make good on their taxes, and to have some disposable income. It hasn't happened yet, but the idea also hasn't been completely written off.
Sound off in the comments. What do you think the US should do about the crippling debt facing many Americans today due to the coronavirus pandemic?