Steve Keen gave an interview on Hard Talk a few days ago in which he called for a "modern debt jubilee" where the government "gives money" to the citizenry who are required to use it to pay mortgage debt if they have any, and can spend it however they wish otherwise. He claims this is the way we can avoid the "grinding twenty years" and associated social unrest needed to unwind the current global mess. He doesn't give any numbers, just the concept and qualitative arguments for it.
I have a lot of respect for Austrian economics, what little I know of it. I wonder if a learned Austrian could comment on the wisdom or folly of Keen's proposal. I can imagine it would be politically very popular with voters.
His explanation of the plan starts at about 7 minutes into the above You Tube video.
Any kind of "debt forgiveness" would be a surefire way towards hyperinflation. The best way to get out of debt is to leave the system. Just learn the skills and leave society.
How does one 'leave society', exactly?
He said leave the "system" not society. How about Bitcoin or some version thereof? I don't think many of us owe any debt in anything other than fiat currencies. The hell with them all.
So Keen and his buddies I guess are what are called Modern Monetary Theorists (MMT). Closely related are Monetary Realists (MR), like Cullen Roche. They seem to think central banking can work, if carried out in the right manner. Government debt is not so much an issue of going bankrupt but of negatively influencing the wider economy. They critique the gold standard because it has been shown that when governments can't print, they fail (see Greece, etc.). My take is the Austrians are fond of gold standards because it will give the people more value for their money, but that alone will not mean that governments will not interfere and damage the economy anyway. Hence the Rothbardians say screw the government. I would not disagree, but that's always a big leap for most people, especially economists and bankers to make.
Another point from MR - that it would seem they argue that the actions between commercial banks and the Fed are entirely dictated by the Fed. That is to say commercial banks are mandated to buy what the Fed is selling (or presumably vice versa). So they can "control the whole yield curve". If this is all true, it seems to me the danger is in the unintended consequences. Yeah sure the USSR can control all prices and bank actions, but that doesn't mean the broader economy wil work. The MRs are just dreaming of the right combination of leaders that will intentionally or unintentionally control the economy the right way. If things work like the MRs think they work, I guess they predict a net deflationary environment.
See below:
http://pragcap.com/understanding-quantitative-easing
http://pragcap.com/debunking-ron-pauls-talking-points