How to solve an economic crisis

It’s probably not a concept that the present Government, banks and lawmakers want to think about, but the fact is that Iceland’s economy has grown by leaps and bounds since the government there implemented widespread debt forgiveness for many of its citizens.

The initiative came about following protests by Icelanders in 2008-2009 who were angry at the country’s leaders and bankers for its fiscal and economic collapse. At one point, protestors gathered around the parliament building and pelted it with rocks.

In the ensuing months, Iceland banks have forgiven loans equalling 13% of the country’s annual gross domestic product, which has eased the debt burden for more than 25% of Iceland’s population, according to a February 2011 report published by the Icelandic Financial Services Association.