Debt is not immoral

European prevalent ideology is that debt is  evil and should be banned. This has to do with German culture shaped by history and traditions. In German, schuld means debt but is also used for fault or guilt. Max Weber wrote about absolute ethics and the ethics of conviction which neglects the consequences for the others. 

Debt is not necessarily bad. It's part of the functioning of an economy. Debts are normally contracted for consumption or investment, but not to repay other debts. The problem is that financiers' interests prevail over the economic interests of entire nations. Financial  orthodoxy is shaping economic policy as the only moral response to the crisis. In fact, Germany  is still defiant to any kind of debt. But this has dramatic consequences for people and businesses which continue suffering from austerity. Mass unemployment, high SMEs mortality, suicides, diseases...  Wise men would admit that this is immoral but they would also argue that we have surrendered to financial markets. 

Debt is not only a European problem. In the US, the total debt amounts to 15 trillion dollars almost equal to its GDP.  In his last book ('End this Depression'), P. Krugman argues that in the past, the US had even a much higher debt during the second World War; Great Britain had high debt levels for almost a century. Japan has a government debt higher than its GDP but does not have any financing problems with yields on bonds at only 0,9%! This shows that there are no thresholds to debt sustainability as claimed by austerity hawks. Furthermore, in times of depression, austerity policies are not a remedy to the crisis, but worsen recession, as tax revenues fall, so that with budget cuts debt continues to increase instead of decreasing. 

It is time to bring this debt ideology to an end. Robert Skidelsky, pledges for debt forgiveness as Keynes suggested for Germany after World War I the same principle can be applied to the eurozone and relieve much of the tension. We should not forget that banks caused the crisis and now want to be saved with tax payers money and the pain imposed to citizens. He writes: "Philosophically, the debt-forgiveness approach rests on the belief that creditors share culpability for defaults with debtors, since they made the bad loans in the first place. As long as the borrower has not misled the lender at the time of taking the loan, the lender bears at least some responsibility for the transaction" . Keynes had a prophetic word in 1923 that our political leaders should meditate carefully: “The absolutists of contract…are the real parents of revolution.”