First, the philosopher:
Societies in a credit based world tend to favor rules that protect the debtor - the risk is always there of 1-2% of the population going mad and making debt peons out of everybody else. This is the great social evil everybody was afraid of throughout history — people would fall so deeply in debt they'd sell their wives, their children and themselves into slavery. The American situation isn't that different, we just rent ourselves out instead of selling ourselves into slavery - the ancient Greeks would not have noticed that much of a difference. So they set up some mechanism to make sure things didn't go crazy and everything broke down and one of these mechanisms was jubilee. The Mesopotamians used to do this, they'd say "ok, all debts are canceled, all the debt peons go home.". In the Bible it was a fixed rule, every 7 years and every 49 years. And nothing bad happened, the economy kept right on growing.
Then the economist:
While we delever, investment by American corporations will be timid, and economic growth will be faltering at best. The stimulus imparted by government deficits will attenuate the downturn—and the much larger scale of government spending now than in the 1930s explains why this far greater deleveraging process has not led to as severe a Depression—but deficits alone will not be enough. If America is to avoid two “lost decades”, the level of private debt has to be reduced by deliberate cancellation, as well as by the slow processes of deleveraging and bankruptcy.
In ancient times, this was done by a Jubilee, but the securitization of debt since the 1980s has complicated this enormously. Whereas only the moneylenders lost under an ancient Jubilee, debt cancellation today would bankrupt many pension funds, municipalities and the like who purchased securitized debt instruments from banks. I have therefore proposed that a “Modern Debt Jubilee” should take the form of “Quantitative Easing for the Public”: monetary injections by the Federal Reserve not into the reserve accounts of banks, but into the bank accounts of the public—but on condition that its first function must be to pay debts down. This would reduce debt directly, but not advantage debtors over savers, and would reduce the profitability of the financial sector while not affecting its solvency.
Instead of giving newly created money to bond traders, central banks could distribute it directly to the public. Technically such cash handouts could be described as tax rebates or citizens’ dividends, and they would contribute to government deficits in national accounting. But these accounting deficits would not increase national debt burdens, since they would be financed by issuing new money, at zero cost to government or to future generations, instead of selling interest-bearing government bonds.This is all that's left for capitalism. But those in power will not do it because, as we Marxists well know (and Marxists are nothing more than the critics of capitalism), they are not capitalists. What exists is socialism for the rich, and their idea of capitalism (neoliberalism) for the rest.
Giving away free money may sound too good to be true or wildly irresponsible, but it is exactly what the Fed and the BoE have been doing for bond traders and bankers since 2009. Directing QE to the general public would not only be much fairer but also more effective.
Suppose the new money created since 2009, instead of propping up bond prices, had simply been added to the bank accounts of all U.S. and British households. In the U.S., $2 trillion of QE could have financed a cash windfall of $6,500 for every man, woman and child, or $26,000 for a family of four. Britain’s QE of £375 billion is worth £6,000 per head or £24,000 per family. Even if only half the new money created were distributed in this way, these sums would be easily large enough to transform economic conditions, whether the people receiving these windfalls decided to spend them on extra consumption or save them and reduce debts.