ARE MOST AMERICANS DEBT SLAVES?

 (IS THIS A TRICK QUESTION?)

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Dear Readers,

The following article could possibly be one of the most important you will ever read. I don’t say such things lightly but the piece by Barry Ritholtz asks this question and then offers historical solutions which the general public must become aware of. 

And yes, this proposition is dangerous as those of us who have been watching these things can attest.

So first, and last, commentary by my friend Northerntruthseeker.

With the pending total collapse of the once mighty United States of America, everyone is finally beginning to seriously ask the question: "What Happened?", and sadly these questions are coming years too late to save that once great nation from total bankruptcy, and economic ruin.

One serious question that most people in the United States should be asking themselves is: "Are Most Americans Debt Slaves?", and to help answer this question, I want to turn to a great article that comes from the blog website: "The Big Picture" at www.ritholtz.com that contains an interview with a debt expert, David Graeber, which touches that important question along with other related themes.  I do have some additional comments to follow:

ARE MOST AMERICANS DEBT SLAVES?

By Barry Ritholtz

THE BIG PICTURE

August 29, 2011

“The first recorded word for ‘freedom’ in any human language is the Sumerian amargi, a word for debt-freedom … if Aristotle were around today he’d probably conclude that most Americans were, for all intents and purposes, slaves”

I’ve previously noted that top economists say will have a never-ending depression unless we repudiate the mountains of bad debt choking the world, that repudiating bad debt is moral, legal, empowering and popular.

I’ve pointed out that debt always grows exponentially, while the real economy can only grow in an “s-curve”, and so periodic debt jubilees are needed. And that we have forgotten what the ancient Sumerians and Babylonians, the early Jews and Christians, the Founding Fathers and even Napoleon Bonaparte knew about money and debt.

And I’ve reported that the money of individuals, businesses, cities, states and entire nations is disappearing into the abyss of debt, and that – by choosing the pretend creditors over the little guy ~ the government is dooming both to failure.

Today, NakedCapitalism has a great interview with professor of social anthropology ~ and debt expert ~ David Graeber, touching on many of these themes.

Here are must-read excerpts from the interview:

Interviewer (Journalist Philip Pilkington): Most economists claim that money was invented to replace the barter system. But you’ve found something quite different, am I correct?

David Graeber: Yes there’s a standard story we’re all taught, a ‘once upon a time’ ~ it’s a fairy tale.

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Rather than the standard story ~ first there’s barter, then money, then finally credit comes out of that ~ if anything it’s precisely the other way around.

Credit and debt comes first, then coinage emerges thousands of years later and then, when you do find “I’ll give you twenty chickens for that cow” type of barter systems, it’s usually when there used to be cash markets, but for some reason ~ as in Russia, for example, in 1998 ~ the currency collapses or disappears.

This was the great social evil of antiquity ~ families would have to start pawning off their flocks, fields and before long, their wives and children would be taken off into debt peonage.

Often people would start abandoning the cities entirely, joining semi-nomadic bands, threatening to come back in force and overturn the existing order entirely.

Rulers would regularly conclude the only way to prevent complete social breakdown was to declare a clean slate or ‘washing of the tablets,’ they’d cancel all consumer debt and just start over.

In fact, the first recorded word for ‘freedom’ in any human language is the Sumerian amargi, a word for debt-freedom, and by extension freedom more generally, which literally means ‘return to mother,’ since when they declared a clean slate, all the debt peons would get to go home.

Taxes are also key to creating the first markets that operate on cash, since coinage seems to be invented or at least widely popularized to pay soldiers ~ more or less simultaneously in China, India, and the Mediterranean, where governments find the easiest way to provision the troops is to issue them standard-issue bits of gold or silver and then demand everyone else in the kingdom give them one of those coins back again. Thus we find that the language of debt and the language of morality start to merge.

In Sanskrit, Hebrew, Aramaic, ‘debt,’ ‘guilt,’ and ‘sin’ are actually the same word.

Much of the language of the great religious movements ~ reckoning, redemption, karmic accounting and the like ~ are drawn from the language of ancient finance.

But that language is always found wanting and inadequate and twisted around into something completely different.

It’s as if the great prophets and religious teachers had no choice but to start with that kind of language because it’s the language that existed at the time, but they only adopted it so as to turn it into its opposite: as a way of saying debts are not sacred, but forgiveness of debt, or the ability to wipe out debt, or to realize that debts aren’t real ~ these are the acts that are truly sacred.

How did this happen?

Well, remember I said that the big question in the origins of money is how a sense of obligation ~ an ‘I owe you one’ ~ turns into something that can be precisely quantified?

The answer seems to be: 

when there is a potential for violence.

If you give someone a pig and they give you a few chickens back you might think they’re a cheapskate, and mock them, but you’re unlikely to come up with a mathematical formula for exactly how cheap you think they are.

If someone pokes out your eye in a fight, or kills your brother, that’s when you start saying,

“traditional compensation is exactly twenty-seven heifers of the finest quality and if they’re not of the finest quality, this means war!”

Money, in the sense of exact equivalents, seems to emerge from situations like that, but also, war and plunder, the disposal of loot, slavery.

In early Medieval Ireland, for example, slave-girls were the highest denomination of currency. And you could specify the exact value of everything in a typical house even though very few of those items were available for sale anywhere because they were used to pay fines or damages if someone broke them.

But once you understand that taxes and money largely begin with war it becomes easier to see what really happened.

After all, every Mafiosi understands this.

If you want to take a relation of violent extortion, sheer power, and turn it into something moral, and most of all, make it seem like the victims are to blame, you turn it into a relation of debt.

“You owe me, but I’ll cut you a break for now…”

Most human beings in history have probably been told this by their debtors.

The crucial thing is: what possible reply can you make but, “wait a minute, who owes what to who here?”

And of course for thousands of years, that’s what the victims have said, but the moment you do, you are using the rulers’ language, you’re admitting that debt and morality really are the same thing.

That’s the situation the religious thinkers were stuck with, so they started with the language of debt, and then they tried to turn it around and make it into something else.

PP: You’d be forgiven for thinking this was all very Nietzschean. In his ‘On the Genealogy of Morals’ the German philosopher Friedrich Nietzsche famously argued that all morality was founded upon the extraction of debt under the threat of violence. The sense of obligation instilled in the debtor was, for Nietzsche, the origin of civilization itself.

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DG: If however you ditch the whole myth of barter, and start with a community where people do have prior moral relations, and then ask, how do those moral relations come to be framed as ‘debts’ ~ that is, as something precisely quantified, impersonal, and therefore, transferrable – well, that’s an entirely different question. In that case, yes, you do have to start with the role of violence.

What do people who don’t use money actually do when things change hands?

Anthropologists had documented an endless variety of such economic systems, but hadn’t really worked out common principles. What Mauss noticed was that in almost all of them, everyone pretended as if they were just giving one another gifts and then they fervently denied they expected anything back. But in actual fact everyone understood there were implicit rules and recipients would feel compelled to make some sort of return.

What fascinated Mauss was that this seemed to be universally true, even today.

If I take a free-market economist out to dinner he’ll feel like he should return the favor and take me out to dinner later.

He might even think that he is something of chump if he doesn’t and this even if his theory tells him he just got something for nothing and should be happy about it.

Why is that?

What is this force that compels me to want to return a gift?

This is an important argument, and it shows there is always a certain morality underlying what we call economic life.

Money has, for most of its history, been a strange hybrid entity that takes on aspects of both commodity (object) and credit (social relation.)

What I think I’ve managed to add to that is the historical realization that while money has always been both, it swings back and forth ~ there are periods where credit is primary, and everyone adopts more or less

Chartalist theories of money and others where cash tends to predominate and commodity theories of money instead come to the fore.

We tend to forget that in, say, the Middle Ages, from France to China, Chartalism was just common sense: money was just a social convention; in practice, it was whatever the king was willing to accept in taxes.

The last time we saw a broad shift from commodity money to credit money it wasn’t a very pretty sight.

To name a few we had the fall of the Roman Empire, the Kali Age in India and the breakdown of the Han dynasty… There was a lot of death, catastrophe and mayhem.

The final outcome was in many ways profoundly libratory for the bulk of those who lived through it ~ chattel slavery, for example, was largely eliminated from the great civilizations.

This was a remarkable historical achievement.

The decline of cities

actually meant most people worked far less.

But still, one does rather hope the dislocation

won’t be quite so epic in its scale this time around.

Especially since the actual means of destruction

are so much greater this time around.

In the past, periods dominated by virtual credit money have also been periods where there have been social protections for debtors.

Once you recognize that money is just a social construct, a credit, an IOU, then first of all what is to stop people from generating it endlessly?

And how do you prevent the poor from falling into debt traps and becoming effectively enslaved to the rich?

That’s why you had Mesopotamian clean slates, Biblical Jubilees, Medieval laws against usury in both Christianity and Islam and so on and so forth.

Since antiquity the worst-case scenario that everyone felt would lead to total social breakdown was a major debt crisis; ordinary people would become so indebted to the top one or two percent of the population that they would start selling family members into slavery, or eventually, even themselves.

Well, what happened this time around?

Instead of creating some sort of overarching institution to protect debtors, they create these grandiose, world-scale institutions like the IMF or S&P to protect creditors. They essentially declare (in defiance of all traditional economic logic) that no debtor should ever be allowed to default.

Needless to say the result is catastrophic.

We are experiencing something that to me, at least, looks exactly like what the ancients were most afraid of: a population of debtors skating at the edge of disaster.

And, I might add, if Aristotle were around today, I very much doubt he would think that the distinction between renting yourself or members of your family out to work and selling yourself or members of your family to work was more than a legal nicety.

He’d probably conclude that most Americans were, for all intents and purposes, slaves.

PP: You mention that the IMF and S&P are institutions that are mainly geared toward extracting debts for creditors. This seems to have become the case in the European monetary union too. What do you make of the situation in Europe at the moment?

DG: Well, I think this is a prime example of why existing arrangements are clearly untenable.

Obviously the ‘whole debt’ cannot be paid. But even when some French banks offered voluntary write-downs for Greece, the others insisted they would treat it as if it were a default anyway.

The UK takes the even weirder position that this is true even of debts the government owes to banks that have been nationalized ~ that is, technically, that they owe to themselves!

If that means that disabled pensioners are no longer able to use public transit or youth centers have to be closed down, well that’s simply the ‘reality of the situation,’ as they put it.

These ‘realities’ are being increasingly revealed to simply be ones of power. Clearly any pretence that markets maintain themselves, that debts always have to be honored, went by the boards in 2008.

That’s one of the reasons I think you see the beginnings of a reaction in a remarkably similar form to what we saw during the heyday of the ‘Third World debt crisis’ ~ what got called, rather weirdly, the ‘anti-globalization movement’.

This movement called for genuine democracy and actually tried to practice forms of direct, horizontal democracy. In the face of this there was the insidious alliance between financial elites and global bureaucrats (whether the IMF, World Bank, WTO, now EU, or what-have-you).

When thousands of people begin assembling in squares in Greece and Spain calling for real democracy what they are effectively saying is: “Look, in 2008 you let the cat out of the bag. 

If money really is just a social construct now, a promise, a set of IOUs and even trillions of debts can be made to vanish if sufficiently powerful players demand it then, if democracy is to mean anything, it means that everyone gets to weigh in on the process of how these promises are made and renegotiated.”

I find this extraordinarily hopeful.

Eventually, there will have to be recognition that in a phase of virtual money, safeguards have to be put in place ~ and not just ones to protect creditors. 

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How many disasters it will take to get there?

I can’t say.

NTS Notes:  As the title of my article states... I had to ask if asking the question if most Americans are debt slaves was a trick question, because the answer is so obvious!

The fact is that most people in America, as well as Canada and much of Europe, living their lives totally oblivious of the fact that they are slaves to criminal bankers and the Jewish elite that wants to control the world.    It does not matter that they have physical shackles on their arms and legs like the slaves of ancient times... They are slaves due to debt owed to these criminals!

I have stated many times the most obvious solution to ending this enslavement to criminal debt Usury is obvious... .End the debt!    National governments need only to pass laws that takes the issuance of currency out the hands of these criminals, and puts it back into the hands of the government which can issue money totally debt free.   The problem is that the same criminals that own the criminal private banks that issue the criminal money also control the nations' governments!

Yes, readers, if you live in any nation that has criminal privately owned central banking, then you too are debt slaves!

THE COLLEGE CONSPIRACY

Today my daughter, after ten years of university, is defending her thesis for her Masters in Sciences and Computers. It has been a long ten years during which she has worked, tutored, studied, won bursaries and grants, and also chalked up a hefty loan.  We have seen the costs of her education rise over the years at an alarming rate. Fortunately she is in a field that, should she move to the Silicon Valley or thereabouts, she could be very well paid ~ but still dependent upon outside sources for a job.  That she can think rationally, logically, solve problems, and is a fast thinker on her feet has very little to do with her formal education and much to do with the “programming” I put into her as a young child.  She was raised to be a non conformist in a conforming world, much like her Momma.

So it is odd that I stumbled across the film COLLEGE CONSPIRACY at the same time as she is standing in front of her peers and professors sweating her pretty self to bits and answering questions that I would not even understand. I always told my girls, I have high standards for you but I don’t care if you are plumbers or marry a plumber so long as you are happy and fulfilled in life. (I also added to go for taller men than short too, but that is another story!)

This is an excellent film.  Because visuals are not so important as what is said, I paid little attention to them and did other things as I listened. It is worth the time, especially if you have young kids and are planning a future for them.  Please do watch.

The movie debunks many myths, including the belief that Americans with college degrees earn $1 million more in lifetime income compared to high school graduates without a college degree.

From the time an American child reaches the 6th grade, they’re taught that the key to success in life is to do well in high school so that they can get accepted to the best possible college. The better grades they get in high school, the better college they will have an opportunity to get into. 

They are taught that if they get into a great college and get their college degree, any type of job they desire in the field of their choice will be there waiting for them. 

After getting their dream job they will be able to buy any car and house they desire, start their own family and live the American dream.

Most Americans today have an expectation of future economic success, simply by obtaining a college degree. The entire purpose of elementary school is to prepare students for high school. And the entire purpose of high school is to prepare students for college. In fact, the U.S. now has hundreds of college preparatory high schools that, at a cost of $25,000 per year, are suppose to increase students’ chances of getting into a top tier college. Students are taught to believe that if they don’t get into college, they will be on a path to nowhere and will have no chance of building a successful career.

Government regulations like “no child left behind” have left grade and high schools in shambles. Instead of teachers having the freedom to think outside the box and use creative techniques to prepare their students for the real world, they are taught to be narrow-minded and teach worthless information that will never help their students have successful careers. 

Today, there are no high schools left in America that teach students the knowledge necessary to start their own business, invent their own products, or even how to use the internet and other free resources to become educated about things without attending college.

The most important basic fact that most Americans don’t understand about 4-year colleges is that most Americans spend 6 years attending them before graduating. With U.S. tuition inflation for private colleges averaging 5.15% over the past half a decade, assuming this same rate of tuition inflation continues, a college with tuition of $30,000 today will have tuition of $38,563 in the sixth year a student attends it.

Statistics show that student loan debt has now surpassed credit card debt in the U.S., with many of those loans unable to be paid back, proving this scam is yet another system of debt enslavement set up by the banking elite.

In College Conspiracy, NIA analyzes the total cost to attend college by factoring in not just rapidly rising tuition expenses, but also the interest payments on student loans, and the lost income that college students would have earned if they worked at an average entry-level job that doesn’t require a college degree.

The college-industrial complex has created not only myths, but outright hoaxes, in order to scam American students into becoming indentured servants for life. 

Appearing also in this film is Gerald Celente who, in his usual sharp witty down-to-earth fashion, sheds more common sense upon the situation in five minutes than you will hear elsewhere in your lifetime. 

My girl just called me. It went like a dream and now, after all these years, she is going home to sleep like a baby after worrying so much about the whole process. And now, she gets on with her life.

GETTING TO CRAZY: "THE AMERICAN PEOPLE ARE SOLD"

What Paul Krugman, author of course does not mention is the fact that this brink is exactly what is wanted by the Elite and is brought about by debt to the voracious beasts of Wall Street. This is a banker created crisis, the result of their consistent money grabs, and war war war policies FOR ISRAEL. So we owe the Zionist bankers for fighting THEIR wars around the world, most notably the Middle East. Yes I simplify the situation but it cannot really be disputed. The same people are responsible for the shuffling of labour to the Far East resulting in shortage of tax income from both businesses and paid workers shopping in their own communities. "Keeping it real".

As a result, the American government elected officials, two sides of the very same coin, squabble as if the placing of blame will fix things. This is not so different from what is or has been going on in Greece only the people are too asleep to understand what is being done to them. Hell I imagine few Americans even know what the IMF is, let alone its demands. Instead they get told it is China or someone/thing else that created their problems. 

I am waiting to hear that China is a Muslim country and fully responsible for the problems of the West!

There aren’t many positive aspects to the looming possibility of a U.S. debt default. But there has been, I have to admit, an element of comic relief ~ of the black-humor variety ~ in the spectacle of so many people who have been in denial suddenly waking up and smelling the crazy. 

During his press conference July 15, 2011, on the debt ceiling debate, President Obama dropped a whopper. According to him, 80 percent of American’s are “sold” on his debt deal. Truth is, this is not so. 80% of the American people do not even realize what is happening while they struggle to survive ~ debt slaves to the eyeballs and back. I will mark the true parts of the following blather from Mr. Obama as he covers up for his Wall Street and Banking friends and puppet masters.

“The bottom line is that this is not an issue of salesmanship to the American people, THE AMERICAN PEOPLE ARE SOLD. THE AMERICAN PEOPLE ARE SOLD, I just want to repeat this. … You have 80% of the American people who support a balanced approach. 80% of the American people support an approach that includes revenues and includes cuts. So, THE NOTION THAT SOMEHOW THE AMERICAN PEOPLE AREN’T SOLD IS NOT THE PROBLEM. The problem is members of Congress are dug in ideologically into various positions because they boxed themselves in with previous statements. And, so this is not a matter of the American people knowing what the right thing to do is, IT’S A MATTER OF CONGRESS DOING THE RIGHT THING AND REFLECTING THE WILL OF THE AMERICAN PEOPLE. AND IF WE DO THAT, WE WILL HAVE SOLVED THIS PROBLEM.”

 

New York Times

By Paul Krugman

July 14, 2011

A number of commentators seem shocked at how unreasonable Republicans are being. “Has the G.O.P. gone insane?” they ask.

Why, yes, it has. But this isn’t something that just happened; it’s the culmination of a process that has been going on for decades. Anyone surprised by the extremism and irresponsibility now on display either hasn’t been paying attention, or has been deliberately turning a blind eye.

And may I say to those suddenly agonizing over the mental health of one of our two major parties: People like you bear some responsibility for that party’s current state.

Let’s talk for a minute about what Republican leaders are rejecting.

President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. 

These are extraordinary concessions. As The Times’s Nate Silver points out, the president has offered deals that are far to the right of what the average American voter prefers ~ in fact, if anything, they’re a bit to the right of what the average Republican voter prefers!

Yet Republicans are saying no. Indeed, they’re threatening to force a U.S. default, and create an economic crisis, unless they get a completely one-sided deal. And this was entirely predictable.

First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency ~ any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office.

As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals.

Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy.

Beyond that, voodoo economics has taken over the G.O.P. 

Please enlarge

Supply-side voodoo ~ which claims that tax cuts pay for themselves and/or that any rise in taxes would lead to economic collapse ~ has been a powerful force within the G.O.P. ever since Ronald Reagan embraced the concept of the Laffer curve. But the voodoo used to be contained. Reagan himself enacted significant tax increases, offsetting to a considerable extent his initial cuts.

And even the administration of former President George W. Bush refrained from making extravagant claims about tax-cut magic, at least in part for fear that making such claims would raise questions about the administration’s seriousness.

Recently, however, all restraint has vanished ~ indeed, it has been driven out of the party. Last year Mitch McConnell, the Senate minority leader, asserted that the Bush tax cuts actually increased revenue ~ a claim completely at odds with the evidence ~ and also declared that this was “the view of virtually every Republican on that subject.”

And it’s true: even Mr. Romney, widely regarded as the most sensible of the contenders for the 2012 presidential nomination, has endorsed the view that tax cuts can actually reduce the deficit.

Which brings me to the culpability of those who are only now facing up to the G.O.P.’s craziness.

Here’s the point: those within the G.O.P. who had misgivings about the embrace of tax-cut fanaticism might have made a stronger stand if there had been any indication that such fanaticism came with a price, if outsiders had been willing to condemn those who took irresponsible positions.

But there has been no such price. Mr. Bush squandered the surplus of the late Clinton years, yet prominent pundits pretend that the two parties share equal blame for our debt problems. Paul Ryan, the chairman of the House Budget Committee, proposed a supposed deficit-reduction plan that included huge tax cuts for corporations and the wealthy, and then received an award for fiscal responsibility.

So there has been no pressure on the G.O.P. to show any kind of responsibility, or even rationality ~ and sure enough, it has gone off the deep end. If you’re surprised, that means that you were part of the problem.

RELATED:

Behind Battle Over Debt, a War Over Government (July 15, 2011)

‘Decision Time’ on Budget, Obama Tells Leaders (July 15, 2011)

David Brooks: Death and Budgets (July 15, 2011)

Timothy Egan: Anarchists and Tasseled Loafers (July 15, 2011)

Editorial: The Debt Alarm Is Heard (July 15, 2011)