Empire and Economics: The Long History of Debt Cancellation from Antiquity to Today

This panel discussion with Michael Hudson, Reverend Dr. Liz Theoharis, and New Testament expert Dr. Aliou Niang at the People’s Forum earlier this month. It’s a meaty Passover/Easer offering on the history of debt cancellation and as important, how that’s been central to important ancient records like the Dead Sea Scrolls and the Rosetta Stone, yet that information has curiously never been mentioned. It’s as if the idea of debt cancellation is worse than bestiality.

So far, I’ve listened to the first 30 minutes, in which Michael Hudson describes the findings of the scholars he’s worked with on the economics of ancient societies. Even though I’ve read a great deal of Hudson’s work over the last eight years or so, there were still bits that were new to me. Im looking forward to hearing what Drs. Theoharis and Niang say.

Dr. Hudson said he appreciated that there were NC readers who attended this talk in person.

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  1. none

    It looks like there are machine-generated closed captions. I haven’t looked at them yet: they tend to be full of errors, but better than nothing. I’d certainly much rather read a transcript than watch a 2 hour video. Any chance that the panel participants would permit that? If yes, maybe some of us NC readers could start with the machine captions and then clean it up in sections. I’ve also been wanting to read Prof. Hudson’s book, of course, but it’s on a long list.

    1. Yves Smith Post author


      I prefer transcripts too, but you could turn it on and listen while doing other stuff, like puttering around your kitchen.

      1. none

        I pulled the closed captions and they look pretty readable. Should I post them here? There’s around 100k of text. Main obvious problem is they don’t identify who is speaking.

    2. Jeremy Grimm

      My computer doesn’t lend itself to video or audio unless I sit at an uncomfortable chair with a clumsy headset. I much prefer listening to an mp3 played from my television [which I am loathe to connect to the Internet] or on my car audio system [also NOT tied to the Internet]. The version of Linux Mint I have on my computer included a program: VLC media player. I’ve often had success obtaining an MP3 version of talks and panel discussions using the convert/save capabilities of this program. [Note: to do this I go to youtube and start the video and capture the URL of the video as it is playing https://youtu.be/M4DkZ3CWFOk instead of youtube’s link to this URL. Youtube often blocks a convert/save if you use their link to the internal URL. Saving a full video by converting it to MP4 is only occasionally successful.]

      Both youtube and vimeo have been treating content like this panel discussion as their own property once it has been uploaded. I don’t believe that was the intent of those so generously sharing their discussion with the public.

      I regret not attending this panel discussion. The cost in time, money, and my dwindling energy was more than I felt I could afford right now. [I will have to help my daughter move soon, which will require travel to Brooklyn.]

      1. diptherio

        You can get youtube-dl for Linux. It’s a command line program that will capture mp4 or mp3 (or other formats) from youtube videos.

        1. Jeremy Grimm

          Thank you for the suggested program. I’ll look into it. However I believe the root problem is youtube’s and vimeo’s increasing tendency to treat whatever is uploaded as their proprietary content. Before long a new platform must be found for true sharing of video content which was offered freely and intended to be shared.

          1. none

            Its user interface is less slick than youtube’s but archive.org is exactly what you want for stuff like this.

    1. michael hudson

      I think Canon Peter Challen has sent it out for his Christian Campaign for Monetary Justice. He was able to view it in London without a problem.
      Here is what he wrote:
      Dear Associates of CCMJ,

      Michael Hudson makes available this highly significant “sermon” at Union Theological Seminary’s “Peoples’ Temple.”

      Michael’s research and application is fundamental to our acting together on the cry for a fundamental change to the infrastructure that governs the global [planetary] economy.

      Here is the link on youtube! https://www.youtube.com/watch?v=M4DkZ3CWFOk

      Action on this knowledge must follow and inform the present massive and expanding global movement challenging the very nature of governance we require for our part in the stewardship and trusteeship of all the life-supporting planetary energies we are understanding a little more fully every day.

      Commitment to pursuing this issue must be part of resurrection life

      May you have an inspiring Easter break.


    2. Yves Smith Post author

      Michael Hudson e-mailed later and said +150 people have watched it in the UK, so your problem sadly seems to be local. Have you tried another browser?

  2. Sound of the Suburbs

    How are you supposed to know debt is the problem if you use an economics that doesn’t consider debt?

    The FED never really stood a chance.

    They are trying to run the economy with an economics that doesn’t consider debt, neoclassical economics.


    Greenspan and Bernanke can’t see the problems building before 2008.

    No one can work out what caused 2008, and afterwards and they attribute it to a “black swan”.

    Janet Yellen is not going to be looking at that debt overhang after 2008 and so she can’t work out why inflation isn’t coming back.

    It’s called a balance sheet recession Janet, you know, like Japan since the 1990s.

    Jerome Powell is not looking at the debt overhang after 2008 and so thinks the US economy is fixed and raises interest rates. Raising interest rates with all that debt in the economy will soon cause a downturn and there is no way he will get anywhere near normalising rates.

    The FED don’t stand a chance until they start looking at private debt.

    Everyone else is using neoclassical economics as well, no wonder everything is going to hell in a hand cart.

    Western policymakers are expecting QE to fix things when it can’t enter the real economy due to a lack of borrowers.

    We saved the banks, but left all the debt in place. The banks are ready to lend, but there are few people who want to borrow.

    The repayments on all that debt destroy money causing the problem.


    Japanese has been like this for nearly thirty years; they actually understand the problem and know why QE is the wrong solution.

    Richard Koo explains:

    Richard Koo has no idea what Kuroda is doing and puts this down to him having no central banking experience.

    Understanding the problem is the first step in finding a solution that works.

    Policymakers didn’t understand the problem and used QE as the solution not realising it couldn’t enter the real economy due to a lack of borrowers.

    Japan’s solution lead to another problem, as a private debt problem became a public debt problem.

    The money supply ≈ public debt + private debt

    The “private debt” component was going down and the Japanese maintained the money supply with Government borrowing to keep debt deflation at bay, but they now have a public debt problem.

    Adair Turner has built on the Japanese experience and come to the conclusion that Government created money is the answer.


    The money supply ≈ public debt + private debt

    The number of terms in the equation doesn’t leave many options.

    1. Sound of the Suburbs

      The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression.

      No one realised the problems that were building up in the economy as they used an economics that doesn’t look at private debt, neoclassical economics.

      Neoclassical economics, as bad as it’s always been.

      1. Susan the other`

        Debt is a problem. Debt is also fictitious. Not an insurmountable problem. Just needs to be redefined, really. We got here by artificial means, by stimulating growth in the late industrial phase beyond the capacity of the currency to balance itself out – short of making everyone rich which means nobody is rich. It just means we have too much stuff and lotsa pollution. We can fix this. Prof. H. said something very interesting amidst a waterfall of interesting stuff – he said (more or less) we have been playing the economy like a zero sum game in which, by the luxury of unbalanced fiat, the rich get richer at the expense of the poor. The solution is pretty clear – the “sum” needs to be based on subsistence, not wealth. If everyone shares a modest existence, the world turns, the economy is balanced and we don’t have all these perversions. That’s the equivalent of bringing money back into the realm of the real. Instead of representing itself, it would once again represent reality, the world as it is in material terms. That would please Marx, no? He almost had it defined. It just took a polymath like prof. Hudson to dot the i’s.

        1. Larry Motuz

          Subsistence, yes. I like that thought.

          But properly defined through a hierarchy of bio-psycho-social needs that economic activity can help realize. So, not merely baseline biological and at least attempting to provide some equality of opportunity for their realization.

        2. Sound of the Suburbs

          How can banks grow GDP with bank credit?

          The UK:


          Before 1980 – banks lending into the right places that result in GDP growth (business and industry, creating new products and services in the economy)

          After 1980 – banks lending into the wrong places that don’t result in GDP growth (real estate and financial speculation)

          What happened in 1979?

          The UK eliminated corset controls on banking in 1979 and the banks invaded the mortgage market and this is where the problem starts.

          Let’s try thinking about what GDP is.

          In the 1930s, they pondered over where all that wealth had gone to in 1929 and realised inflating asset prices doesn’t create real wealth, they came up with the GDP measure to track real wealth creation in the economy.

          The transfer of existing assets, like stocks and real estate, doesn’t create real wealth and therefore does not add to GDP. The real wealth creation in the economy is measured by GDP.

          Inflated asset prices aren’t real wealth, and this can disappear almost over-night, as it did in 1929 and 2008.

          Banks need to lend into areas that grow GDP for debt and GDP to rise together.

          The UK seems to have known this in the past.

          As money comes out of nothing and is just numbers typed in at a keyboard we should be able to fix any financial crisis as long as the central banks do what they can do.

          1. Susan the other`

            Yes. This is why we are trapped still. It is why the Fed infused our financialized economy with enough money to keep itself rolling and why nobody stopped corporations from doing buybacks, because the only thing keeping us from a crash is keeping prices up. Even if they are totally artificial. The whole economy is based on financialized bookkeeping. I’m not as worried as I used to be. I now believe there is a way to switch over from fantasy economics to functional economics without too much disruption. If we follow Hudson’s good advice to write off the debts in a big debt-forgiveness move and at the same time write off the dysfunctional assets of the debt holders we’d be on the right track. But in order not to punish debt holders for doing what was the customary thing – invest in time (that’s another thread) – we need to also make them whole. Protect them as well from collapsing financially. I don’t see why all this cannot be done.

            1. Sound of the Suburbs

              We confused making money with creating wealth.

              Private equity firms and activist shareholders make lots of money, but rarely create any real wealth.

              Money comes out of nothing and is just numbers typed in at a keyboard.


              Bank loans create money and bank repayments destroy money and this is where 97% of the money supply comes from.

              Money and debt are like matter and anti-matter they come out of nothing and go back into nothing.

              We now know how you create money, how do you create wealth?

              In the 1930s, they pondered over where all that wealth had gone to in 1929 and realised inflating asset prices doesn’t create real wealth, they came up with the GDP measure to track real wealth creation in the economy.

              The transfer of existing assets, like stocks and real estate, doesn’t create real wealth and therefore does not add to GDP. The real wealth creation in the economy is measured by GDP.

              Inflated asset prices aren’t real wealth, and this can disappear almost over-night, as it did in 1929 and 2008.

              We have forgotten where the real wealth creation in the economy occurs; it’s producing new products and services in the economy, not inflating asset prices.

              We have confused making money with creating wealth and these are two different things.

              If you just create money without creating wealth you get hyper-inflation. There is far too much money and hardly anything to buy with it; wheelbarrows of money are required to buy anything. Money has no intrinsic value; its value comes from what it can buy.

              Alan Greenspan tells Paul Ryan the Government can create all the money it wants and there is no need to save for pensions.


              What matters is whether the goods and services are there for them to buy with that money.

              For a nation, money is just numbers typed in at a keyboard and the last thing you want is too much of the stuff as it won’t be worth anything. The real value in an economy does not lie in money.

              Does taking over a company, asset stripping it and loading it up with debt add to GDP?

              It doesn’t.

    2. Harry

      Totally agree.

      Of course, those of a cynical bent will conclude that this is a government of the bondholders by the bondholders. Which, as Upton Sinclair could have told you, makes it very hard to get the authorities to understand the nature of the problem.

  3. Pension Guy

    I bought a copy of Prof. Hudson’s book and have made it through the time of Hammurabi. It’s a really fascinating work, and I commend it to the NC commentariat. On the very last pages of the book, he critiques Prof. William Goetzmann, the finance professor who interprets the clean slate edict of Rim Sin of Larsa as creating the “great crash of 1788.” Here’s a longer form critique of Goetzmann’s book. https://michael-hudson.com/2016/07/financially-approved-financed-history/ As we think about the dramatic increase in student debt, that just might be a target for a modern clean slate debt relief. The ancient Mesopotamians used debt relief, in part, because they needed corvee labor and a citizenry able to join the military. A clean slate today might be coupled with some form of national service. . ..

    1. Jeremy Grimm

      Your idea to couple a clean slate with some form of national service is particularly scary at a time when the US is so devoted to forever wars and longing to increase their size and numbers. We haven’t built many pyramids lately. So instead of debtors prison or transportation to the colonies we can modernize a new and improved system: live under crushing debt or become cannon fodder. What a deal!

      1. Cal2

        Domestic National Service” would be fine. How about the WPA projects that we still use today?, post offices, national park facilities, roads etc.
        Of course, some people claim that was a means to toughen up American youth with poor physical health and prepare them for fighting in Europe in the war FDR wanted.

        Think of the job skills that our poor youth could learn? Plumbers, skilled construction workers, welders and carpenters made good money and could again with
        *real immigration reform*, i.e. real border enforcement, that would stop hammering working wages down in the private sector.

        Instead of training our own young people for something useful, needed and vital to our infrastructure, we instead import low wage laborers from Latin America.

  4. Steven Greenberg

    Apparently you must view this on YouTube.

    If you want to understand what the 2020 election is all about, watch this video. If two hours seems to be too much for you, watch the first half hour at the very least.

    If you are trying to decide which Presidential candidate to support, think about how that candidate’s policies and understanding of the way the world works compares to the policies and understanding of what you learn from this video.

  5. leondarrell

    “The needs of nature are few, and easily satisfied, but the needs of vain ideals extend to infinity—AND BEYOND!!” – Epictetus, as quoted by Buzz Lightyear.

  6. RobinD

    Wow, I don’t think I’ve ever learned so much in such a short space of time! I ordered his book immediately. Thank you for posting the video!

  7. Jonathan Holland Becnel

    Watch Doc Hudson obliterate Western Civilizations False Idols.

    Still in shock that Catalines the good guy and Draco the Tyrant actually fits in my morals!

    I feel like this is the sort of religion an Atheist can get behind!


    Its like ive been searching for the answer to the mystery and loNbehold its smack dab in front of our face.

  8. juliania

    I would also like to thank Dr. Niang. I loved his analysis of the parable of the talents, also his people’s understanding of the sacred aspect of their rice-growing and the importance of the concept of mutuality.

    Thank you, Yves, and to Dr. Hudson and other participants. Very well worth watching.

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