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Folks, we've been here before. In America, after the War of 1812, business slackened, jobs were lost, bank loans declined, exports dropped off, and about $4 million in gold was sent to France for the Louisiana Purchase. As the amount of money in circulation in the U.S. declined, prices fell for all goods and commodities. Farmers who had no trouble paying for their land when crop prices were high, now struggled as prices plummeted. This monetary contraction was referred to as the "Panic of 1819" and the resultant depression lasted for five years.
An interesting feature of the "Panic of 1819" was the response from President James Monroe. In his annual message before Congress in November 1820, Monroe suggested that the people who bought land when prices were high, should be forgiven some of their debt now that prices had fallen. It might be advisable to extend to them, "a reasonable indulgence." Legislation soon followed that forgave purchasers 25 37 ½% of their total cost, extended loan repayment periods, and often reduced their loans to 0% interest. "Senator Thomas, in his opening speech for the bill, warned that unless relief were granted, all public land sold on credit would be forfeited to the government. He emphasized that the 'capacity of the community to purchase' had been greatly diminished, compared to the capacity at the time the land was obtained.
Kinda sounds like what happened in our current real estate market. Banks handed out easy money like water, real estate prices were bid up, and then the economy collapsed, with debtors left holding very expensive bags and often, with no way to pay them off. As a homeowner, I wonder if our leaders or lenders would consider such a "reasonable indulgence" today. It seems as though our elected representatives are now more concerned about giving an "UN-reasonable indulgence" to a few wealthy bankers than extending "a reasonable indulgence" to the millions of taxpaying homeowners who now face exactly the same economic circumstances as Americans in 1819.
Big Money bankers, through their manipulations of money and credit, control the rise and fall of real estate prices. These bankers actively create these boom and bust periods over and over again so that they can profit from them. I get annoyed when I hear Big Money apologists blame the average homeowner for this boom/bust cycle. We, the little guys, are once again, the victims of their intrigues. It makes sense for us to bail US out, not for us to bail THEM out. The victim is paying the perpetrator. It would be like catching somebody robbing your home and when you get to court, the judge who was appointed to his position by the thief - decides that the thief didn't get enough money from you and orders you to pay him some more a lot more. And yeah, it is EXACTLY like that. With this understanding, Madison's "reasonable indulgence" makes perfect sense both then and now.