13 June 2017

Loan Waivers and Farmers/Agriculture

The financial system is the circulatory system of the economy – supplying money to whoever needs it. It may be a farmer who wants to buy a tractor. It may be a factory owner who wants to buy a machine. And this financial system stands on a critical foundation – which is the obligation of the borrower to repay his loan. As long as borrowers repay their loans, lenders will lend – and the financial system will work smoothly and the economy will also work smoothly.

Now what happens when loans are waived? Then borrowers no longer have to repay their loans. And if borrowers stop repaying, then lenders will stop lending. That is, the financial system will grind to a halt. People who need money for economic activities will no longer get it. The farmer can no longer buy his tractor. The factory owner can no longer buy his machine. That is, the whole economy itself will grind to a halt.

The 'economy' doesn't mean CEOs sitting in the top-floor of a skyscraper or stockbrokers shouting on the floor of the stock exchange. It means farmers growing grains and vegetables on their farms (agriculture). It means you and me working in offices and factories (industry and services) for a salary – and using that money to buy those grains and vegetables in the market. This system is essential for our survival. But we take it for granted. We think it will run properly all the time without any problems – no matter what we do. Nothing is further from the truth. This economic system stands on some invisible foundations. And one of those foundations is the sacred obligation of a borrower to repay his loan. Loan waivers directly strike at this foundation – and puts the whole economic system at risk.

Farmers are in trouble and they need help. But loan waiver is the worst way of doing it. Because loan waivers damage the economic system and farmers – who are the most vulnerable people in the economy – will be the worst sufferers. If we care so much about farmers, we must simply give money to ALL farmers – regardless of whether they have repayed their loan or not, or (even further) regardless of whether they have taken a loan or not. This will help farmers without destroying the financial system and the economic system.

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