Jubilee: A Shout for Joy

If you’re living in the UK it’s a busy summer.

First we had the Queen’s Diamond Jubilee, then (for the English anyway) the dubious pleasure of cheering on the England football team in the Euros, and in a few weeks we’ll be hosting the London Olympics – all with the added fun and excitement of the traditional British rainy season in June and July!

It’s the first of these I want to ask you to briefly consider: the Jubilee.

Not another debate about the pros and cons of a constitutional monarchy, but the word Jubilee itself.

Originally it meant something very different to celebrating the length of a King’s or Queen’s reign. In the Old Testament it means a year in which debts are cancelled and slaves are freed – etymologically it’s often described as literally meaning shout for joy‘.

Releasing slaves and freeing people from debt, obligation and bondage, is a recurring theme in the Old Testament, which very clearly considered ongoing cycles of debt as a bad thing – something to be avoided wherever possible.

It also contained another piece of economic instruction – a prohibition against something called usury.

Usury is the charging of excessive interest on debt, though some interpretations consider the prohibition to be against the charging of any interest at all. The usual literal translation of usury is ‘a bite’ – relating to the painful process of being charged interest.

Usury is still prohibited under Jewish tradition and Islam – though Christianity largely seems to have stopped being concerned by it centuries ago.

Interesting stuff, but the real question is – what, if anything, does this mean for us today ?

The charging of interest is something so deeply embedded in our economies and culture, that we not only take it for granted, but generally fail to see it for what it is: a mechanism by which money flows from the poor, who need to borrow, to the rich, who can afford to lend.

The charging of interest, therefore, is a powerful driver of inequality – both between the rich and poor of our own societies, and also between rich and poor countries.

Another consequence of an interest based economy is that it requires the economy to continually grow in order to service it – a company borrowing it’s start-up costs at a rate of 7%, will have to grow by 7% the following year to repay the interest.

Needless to say infinite continual growth is simply not possible, due to real-world limits and constraints, and this endless need to deliver growth, many argue, exacerbates resource depletion, environmental degradation and aggressive competition for resources.

Unfortunately our entire banking system is based on the concepts of debt and interest.

If you were the first customer of a brand new bank and were to deposit £100 in the bank, you’d be given a debit card with the ability to withdraw £100 at any time. The bank would have your £100 and you would have a promise from the bank that you could withdraw it at some time in the future.

If you were the second customer of the bank and wanted to borrow some money, the bank might lend you £90 (keeping the required 10% fraction in reserve) and give you a debit card which grants you the ability to withdraw £90 at any time, on the basis that you would then pay it back (plus interest) at some point in the future.

The first customer has £100 available and the second customer has £90 available: £190 is now available to be spent in the real-economy. In effect the bank has created £90 from nothing.

With successive deposits and loans this original £100 of ‘real money’ (what economists call the monetary base or central bank money) can be transformed into several thousand pounds of ‘debt backed money’ (what economists call commercial bank money). Over 95% of the money supply in the UK economy has been created by commercial banks.

This process of money creation through lending and debt creation is referred to as fractional reserve banking,with banks effectively creating money by putting their customers into debt – financing today by endebting the future.

For many, this understanding goes against the grain and can be a little difficult to accept.

The economist John Kenneth Galbraith taught at Harvard for many years and served in the administrations of Franklin D. Roosevelt, Harry S. Truman, John F. Kennedy, and Lyndon B. Johnson, famously said: “The process by which money is created is so simple that the mind is repelled.”

Ninety percent of the world’s population owns just fifteen percent of the wealth.

Or to put it another way ten percent of the world’s population owns eighty five percent.

Perhaps it’s time to reconsider how we organise the world’s money.


If you’ve got a couple of hours to spare and want to learn the origins of the words tally and stock – not to mention how the Wizard of Oz was supposedly originally a protest against exploitative banking – watch Bill Still’s fascinating documentary on the left below.

If you’ve only got 7 minutes to spend, the bank run scene from the fantastic It’s a Wonderful Life is there on the right for you :o


Photo from digitalworldmoney via Flickr

RELATED ARTICLES – More Equal than Others, The End of Growth and Keeping Out the Giraffes10 Ways to Have Enough Money and Stuff


  1. I’ve always found the idea of Jubilee inspiring, and I’m always on the lookout for economists who are prepared to recommend it in the real world. I think it is possible, and I think it’s actually necessary if we’re ever going to get past the growth imperative that you mention. Could we declare a jubilee, write off our debts and start again?

    And you certainly can draw inspiration from the Old Testament, it just might be things to avoid as well as things to do – like any philosophy or school of thought, you have to approach it with some discernment.

    • Gareth Richards says:

      Jeremy please be on the lookout for economists who look like they are talking sense rather than ones that support a particular pet project of yours.

      “Could we declare a jubilee, write off our debts and start again.”

      I think you know the answer to this question and it’s no.

      Finally you can draw inspiration for ethics from the old testament if you whish as you could Lord of the rings or Harry Potter. But you have to ask the question why would you draw inspiration from these fairy stories when there are far better books on the subject.

      I find the old testament asserts: Witches exist and that they need to be killed. This statement is almost laughable to us but has caused untold suffering throughout history. If this is the word of god, it was at best a sick joke at worst a display of his evil nature. How much better if the old testament had just said witches don’t exist. Nothing in Harry Potter or Lord of the rings comes close to this and I apologise to those book for comparing them to the old testament.

      • Hmmm

        I’m all for open honest debate, but I’m also keen to maintain a welcoming and friendly environment for comments, and I think this is both looking a little bit too pointedly personal (Gareth, your first para) and also at risk of drifting too far off topic.

        If we can leave it there chaps, and agree to disagree, hug and buy each other a drink – or at least take any further debate to another forum, that would be great – thanks guys.

        Apologies Jeremy for ‘pressing the button’ on this before you had the chance of reply – I know as a fellow blogger you’ll understand :o)

        Blog comment editing policy is always a ‘black art’ – balancing thoughtful on-topic dabate while fostering a supportive and encouraging environment for people to air their views without apprehension. If anyone has strong views either way, or even better, a good idea to maintain the balance please let me know.



  2. Gareth Richards says:

    Lets play the banking game with gold coins, person 1 gives the bank 100 gold coins, bank lends 90 gold coins to person 2. And now there are 190 gold coins!!??

    I don’t think so, someone needs to employ an accountant!

  3. Gareth Richards says:

    The Old Testament is a poor place to look for inspiration on ethics, killing children for disobedience and genocide are at various points sanctioned there. But it is an even poorer place to look for advice on economics.

    Not all banking is the rich exploiting the poor, Richard Branson for example has made his millions, or it it billions, by borrowing billions. It has been argued that because poor people are unable to borrow they are unable to get rich.

    As I’m short of time I’ll conclude, if you think you understand economics you probably don’t.

    • I thought that was quantum mechanics !

      I’m obviously not saying ALL debt is a bad thing – and certainly I agree that sometimes borrowing to invest can provide a pathway to prosperity, I’m a big supporter of http://www.kiva.com which advocates exactly that.

      Borrowing to meet daily living expenses (of governments) or to fuel increasing consumption (of Western individuals) is something else entirely, however.

      Perhaps we need to refine our concept of money and what it should do ?

      Economist Richard Douthwaite argued in favour of a four currency model – as a currency for trading between nations, within nations, as a store of wealth for savings and script note style local trading schemes.

      I’m not economically refined enough to have a view on the reasonableness of this idea, but it’s interesting to see this Government still aims to separate and insulate ‘real economy’ banking from speculative banking.

      You’re right there are no easy answers, as with most things, but I think it’s important we question the various embedded systems our civilisations employ and their underlying assumptions, and ask if they cannot be improved.

      A good place to start is usually ‘who are they benefiting’ ?

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