18 Apr

Should We Abolish Household Debts?

Posted By polity_admin_user

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In her latest book, Should We Abolish Household Debts? Johnna Montgomerie explores the many consequences of indebtedness within the economy and society. She puts forward a simple but informed set of pragmatic proposals for household debt cancellation that can help the renew the economy to make a better future possible. Based on her 15 years of experience in researching and writing on the phenomenon of the rising household debt in Anglo-American economies, the book gives somewhere to go for those interested in thinking alternative paths to end Austerity and building a better future.

The problems of the economy are plain to see in any newspaper. Austerity is the long afterlife of the 2008 financial crash, in which most people face Austerity policies and the banks enjoy ‘unconventional monetary policy’. The reality of the harm caused by austerity and the harsh reality of the zombie-like economy we are living in – it lacks vitality, growth, renewal, investment and diversification while dealing with the uncertainties of post-Brexit Britain.

Johnna Montgomerie’s book seeks to explain why by abolishing household debts we can end the on-going stagnation caused by the legacy of the financial crisis, before the next financial crash hits. Putting into simple words how the global financial system operates and presenting clear ideas that will stop debt repayments robbing the economy of its vitality. Endless servicing the mountain of debt built-up before 2008 (the same debts the lenders have long since been bailed out for) means remitting a growing portion of present-day income to pay debts that have fuelled past economic activity. ‘These payments are thousands of small pinpricks that bleed the economy’ and are one of the underlying causes of the entrenched economic malaise in Anglo-America.

A comprehensive package of debt cancellation measures that target key harmful debts will provide economic relief to people and generate an uplift of the economy. By hacking the existing monetary and regulatory framework that already uses debt write-down and write-off to deal with the 2008 crisis, but now directed at households. The method proposed by Montgomerie is to deliberately targets specific types of debt (rather than particular populations of debtors) to amplify the positive impact of debt cancellation across the economy and society. Housing debt, Student debt, Old debts (originated in the great debt boom between 1997-2007), ‘high-cost’ debts, non-performing loans or ‘discharged debts’ and fees, charges and penalties generated between 2008 and 2018.

Johnna Montgomerie is a Reader in International Political Economy at King’s College London. Her new book Should We Abolish Household Debts? is now available from Polity.