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.
"Well, if you're gonna sin you might as well be original" -- Mike "The Cool-Person"
"Yeah, well, that’s just, like, your opinion, man" -- The Dude
The only time debt is not a subtle form of slavery is when the debt is self-liquidating--i.e., the borrowed funds create cash flows at least as great as are necessary to service the underlying debt.
The concept of fueling consumption through increasing one's level of debt is a truly perverse and diseased pattern of thought that reflects the triumph of modern advertising over people's generally strong desire for some measure of personal freedom.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
MediumTex wrote:
The concept of fueling consumption through increasing one's level of debt is a truly perverse and diseased pattern of thought that reflects the triumph of modern advertising over people's generally strong desire for some measure of personal freedom.
You are one articulate dude, MT.
"All men's miseries derive from not being able to sit in a quiet room alone."
Gold has always been used to pay debts, but Gold itself doesn't have any liabilities associated with it. Perhaps Gold isn't actually money. Gold is ownership.
Last edited by Gumby on Sun Aug 28, 2011 9:08 am, edited 1 time in total.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
MediumTex wrote:
The only time debt is not a subtle form of slavery is when the debt is self-liquidating--i.e., the borrowed funds create cash flows at least as great as are necessary to service the underlying debt.
Your whole post is excellent, but this part is particularly important. There's nothing wrong with taking on debt in order to make a capital investment that you believe will get you a greater cash flow later on. If this is not what you at least think you are doing, then you are making some future "you" poorer. Very short-term thinking.
Lone Wolf wrote:...If this is not what you at least think you are doing, then you are making some future "you" poorer.
So when did all that change? I know I was raised to save for purchases, instead of borrowing. I guess I should read the book! It does make me curious how and when people where tricked into thinking that it's A-OK to let the "future you" take care of paying the bills so the "current you" can perform his/her patriotic duty to consume...
"Well, if you're gonna sin you might as well be original" -- Mike "The Cool-Person"
"Yeah, well, that’s just, like, your opinion, man" -- The Dude
Lone Wolf wrote:...If this is not what you at least think you are doing, then you are making some future "you" poorer.
So when did all that change? I know I was raised to save for purchases, instead of borrowing. I guess I should read the book! It does make me curious how and when people where tricked into thinking that it's A-OK to let the "future you" take care of paying the bills so the "current you" can perform his/her patriotic duty to consume...
It starts with a basically delusional set of beliefs about what the future you is going to be able to earn.
This delusional set of beliefs was carefully constructed by the advertising and banking industries.
There was a period of perhaps 10-15 years where these delusional beliefs were validated by reality for some people (maybe 1985-1998 or so), but these beliefs are pure fantasy for most people most of the time, especially since about 2001.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
MediumTex wrote:
The only time debt is not a subtle form of slavery is when the debt is self-liquidating--i.e., the borrowed funds create cash flows at least as great as are necessary to service the underlying debt.
MT - Even self-liquidating debt can be burdensome. My spouse and I are debt free personally,even house, w/ all assets in spouse's name. I do have some commercial property debt = to 65% LTV (marked to market of course) and have plenty of cash flow for debt service. With 7-8 years remaining I can't wait to get this chain off my neck. Just sending in the Tax returns and Financials annually to the bankers makes me nauseous. As in-store marketing goes, I did sign up for a Home depot card the other day just to save 20% on a huge purchase; even though we paid it off online before the statement came, I still had to put up with all their crap and aggressive emails. I would rather live below the radar as much as possible.
