Debt Slavery

There’s an interesting thing about money.

Money isn’t wealth. It’s debt.

I think I’ve covered this before, but it bears mentioning again. I won’t go through the whole exercise of explaining how fractional reserve banking loans money into existence. But the simple form is this: every dollar bill is ultimately backed by the Federal Reserve, which has loaned money into existence in the form of Treasury Bonds, and that gets expanded by approximately a factor of ten by the fractional reserve banking system. Treasury Bonds have to be paid back to the buyers with interest, and that obligation is backed by the “full faith and credit of the United States.”

That dollar bill you hold in your hand is a piece of paper that obligates you to do some kind of work to make that dollar bill worth $1.03, because in the end, the Federal Reserve has to pay back its bondholders everything they paid for the bond, plus about three percent in interest. Everyone in the US has that obligation: “full faith and credit,” and all that.

The ironic thing is that the rich — the people who have the most money — actually hold the most debt. Because money is debt.

The fundamentally unjust thing is that the rich — who hold the most debt, in the form of money — can compel the rest of us to pay off that debt, so that they can accumulate more debt, in the form of more money. They do this by forcing us to work to increase the size of “the economy” — to spur “economic growth.”

Our peculiar form of currency-creation, combined with the capitalism that allows private individuals to accumulate and control this massive debt-obligation and pass the support of it off to others, was an interesting short-term exercise in exploiting the New World. Capitalism is older than fractional reserve banking — the former dates back to the 14th century (or earlier) in Europe, while reserve banking didn’t develop until the 17th century. They didn’t get the huge instabilities worked out of the banking system until the 20th century: arguably, they still haven’t.

But the process worked very well to get the trees cut down, and the gold mined, and the oil pumped, and the desert farms watered, and the railroads built, and the indigenous people exterminated. That’s pretty much what it was intended to do. It succeeded brilliantly.

The problem now is that banking and capitalism are one trick dogs, and they’ll keep doing that same trick, over and over, until they die of the effort.

We are rapidly approaching that point.

In looking at the state of the US and the world, it’s important to realize where the “wonders of our modern civilization” actually come from. They’ve come from mortgaging our future.

We are all indentured servants — slaves — to this mortgage.

The problem with the conservative mindset — and I do mean true conservatives, not this political sideshow that calls itself “conservatism” — is that it’s stuck with trying to conserve a system that can no longer continue doing what it has been doing.

We need a complete overhaul of our entire economic system. As in complete.

The way this usually happens, of course, is through failure. As in complete failure. Societal collapse. Because people are stubborn, and cannot move through major changes gracefully.

I would like to see a more graceful shift to some future that must and will come, and I don’t think such a graceful shift is entirely impossible. But my money is on failure, followed by building from the rubble, over the course of many centuries. That’s the normal historical model. People are simply that stubborn.

I wrote some time ago about four major tsunamis that are going to hit the US within the next century: first, political, then economic, then energy, then climate change.

We’re living through the first wave of the political tsunami, embodied in that person masquerading as President in the White House right now, and the enormous damage he is doing to the structure and resilience of our system of government. There’s been an enormous backlash in the mid-term election, and I’m hopeful that it will spur much deeper change than anyone anticipates. Whether it will be enough is an open question. If it isn’t enough to break through into a new vision for the country, then we’re likely to see increasingly violent thrashing between Left and Right, Blue and Red, until the thing breaks apart entirely.

The remaining three Ghosts of Christmas to inevitably visit in the dark night of this century are economic failures (note the use of the plural), peak oil, and climate change, I think in that order. We’ll stop burning oil before 2100 — it will simply be too expensive for common people to burn. We won’t start seeing catastrophic climate change before the end of this century.

Like it or not, things will change.

Through all this, people will survive — of that, I’m reasonably certain, though I should note that our species does have a finite lifetime, as (indeed) does the entire taxonomic class of mammals. Modern humans are about 200,000 years old, give or take. We might have another few hundred thousand years left. Though there are runaway climate scenarios that could result in an entirely mammal-toxic atmosphere.

But people a century from now will certainly be living with very different cultural norms than we have now, because what we are currently doing has already stopped working.

And the debt slaves are growing restless. Can you not hear the drums?

8 comments on “Debt Slavery

  1. cathytea says:

    My list places climate crisis first and primary. It forces the change that people seem unwilling or even unable to make.


    • Themon the Bard says:

      I agree that it’s the most important.

      My ordering is based on when they hit, not how hard. Politics are very unstable, in any time or place, as are economic systems. Governments fail, then get replaced. Economies fail, then get replaced. I was expecting political chaos to come first, followed by escalating economic crises. We already passed peak oil, and we’re on the flat plateau right now, where cheap oil is being bolstered more by marketing strategies (currently, Saudi’s refusal to limit production) than anything else. At some point within the next century, we’ll stop burning oil, not because it’s the right thing to do, but because the price will rise too high, and we’ll go into the demand-reduction spiral of the production curve. It will drop fast; renewables are already on the edge of being competitive, and once gasoline prices start rising, people will switch over within a decade.

      Major climate change consequences are about a century-plus out. Unfortunately, unlike politics and economics, it doesn’t respond quickly to corrections. It will continue to punish us for our past sins for many centuries. Or millennia. We don’t really know. Right now, we’re getting wildfires in forests, lower rainfall, fewer good harvests. Plants and wildlife are starting to migrate toward the poles. People? Meh. “It will get better,” they say. It’s not until the end of the century that we start losing our port cities to ocean level rise. It will be my great-grandchildren facing these changes: I’ll be gone, my children will be gone, my grandchildren will be old.

      Liked by 1 person

      • cathytea says:

        I see. I guess (being a native of Northern California, and having been concerned about the ecological impacts of climate crisis since the late 1970s), I’ve been considering that the impacts are being felt pretty extremely now, and that most of our economic/political turmoil (on a global scale) have been caused by those pressures–but it’s all so interconnected that your perspective is simultaneously accurate in my view–and objectively, is likely even more accurate than mine! I start to freak out when I notice changes in bird, plant, and insect populations and behavior (and they’ve been so evident in the Southwest desert where I currently live), and I get so upset when I read about coral and I consider fates of polar bears and whales… well, to me, it’s already an immediate crisis which we should’ve addressed 45 years ago, if not earlier. We could begin losing our port cities in the next five to ten years–or at least face tremendous costs in trying to dam the ocean. We’ve already lost a stable jet stream.

        At any rate, I’m in agreement, even if the way I consider cause-effect and timing colors the shades differently. It’s always good to read posts like this! I hope more people pick up the topic!

        Liked by 1 person

        • Themon the Bard says:

          Fully agreed. We are already seeing the signs of catastrophic ecological failure. But you have to be paying attention, and not stuffing your fingers in your ears and singing, “La, la, la, I have strong opinions on the matter.”

          We’ll probably start trying to dam the oceans during this century. From what I’ve read, sometime in the next century, we’ll be abandoning that effort, and the cities, particularly as our current response is looking to be “far too little, far too late.”

          I really HATE being such a downer about this. And I’d love to be wrong.

          Liked by 1 person

        • cathytea says:

          Me, too. Sometimes, I hesitate to even talk about it, because it is so bad–already. And I know how paralyzing despair can be–but it needs to be talked about now, not to get us used to how things will be, but to motivate and mobilize. It is too late, but it’s not too late to make it less worse than it might be.

          Liked by 1 person

    • Themon the Bard says:

      There: updated the post to make that clearer. Thanks for your comment!


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