The connection between elastic currency and abolition

The possibility of universal abolition of personal bondage—that is, the recognition that debt default should not bind the person into servitude—became thinkable only once elastic credit systems spread the burden of default across society rather than confining it to the bilateral relation between creditor and debtor.

Hard Constraint Systems (Full Reserve, Inelastic)

• In ancient and medieval economies, money was metallic. Credit was scarce, drawn directly from savings.
• If the debtor defaulted, the creditor’s loss was final and personal. With no elastic system to socialize the shock, the creditor had recourse to the body or property of the debtor.
• Debt-slavery or serfdom is the logical enforcement mechanism of an inelastic order: repayment must come either in specie or in labor.

Elastic Credit Systems (Fractional, Fiat, Banking)

• Once banks created money as credit, defaults no longer annihilated a finite commodity stock—they wrote down an entry on a balance sheet.
• The loss propagates system-wide:
  • The bank’s capital absorbs it.
  • If large enough, the state/central bank reflates to stabilize.
  • Inflation/slow erosion of currency spreads the cost over all holders of money.
• This creates a collective insurance pool, albeit hidden: individual bankruptcy does not mean personal bondage, but dilution of purchasing power borne by the whole society.

Why This Enables Abolition of Bondage

• If losses can be socialized via elasticity, creditors can be made whole (or partially whole) without enslaving debtors.
• Bankruptcy law emerges: debts can be discharged through courts, with society absorbing the residual loss through diminished credit quality or inflation.
• This makes the principle of universal personal freedom compatible with a credit system. Without elasticity, enforcement by bondage was the only mechanism ensuring repayment.

The Mechanism of “Paid by Society”

• In an elastic system without spiral collapse, debt overhangs are gradually diluted:
  • Credit contraction slows.
  • Defaults get absorbed through bank write-offs, higher spreads, or monetary expansion.
  • The money supply continues growing, though real purchasing power trends downward.
• This slow deflation of money’s value (or alternately inflation in price levels) redistributes the burden across the entire currency-holding population.
• Thus “universal abolition” becomes viable: society tacitly agrees to pay the price of discharged debts in weaker money, rather than in human bondage.

Structural Balance

• Inelastic systems: Protect the integrity of money, but enslave the debtor.
• Elastic systems: Free the debtor, but enslave the currency (gradual debasement shared by all).
• Jubilee principle (biblical): Periodically mandates debt forgiveness without bondage, even in inelastic systems—anticipating the function later achieved by fiat elasticity.

Theological-Civilizational Implication

The abolition of personal debt-bondage rests on the willingness of society to absorb default as collective burden. Elastic currency regimes provided the secular machinery to enact what jubilee law provided ritually: debt release without loss of personal liberty. The cost shifts from the debtor’s body to the body politic.

So the expectation of universal abolition—that no person should be enslaved for debt—could not emerge under rigid, full-reserve currency. It required the invention of elastic credit money, where defaults are “paid for” by all through gradual currency dilution, instead of by enslavement of the individual.