The Enslaving Of A Nation Without Use Of Chains

The foregoing article is Part 2 of a 3-part series. Part 1 is titled “What’s The Difference Between Credit & Debt?” In the previous article, I attempted to sharpen the blurred line between credit and debt. The intended purpose of that article was to explain how credit and debt affects the average person. But now we’re going to be discussing how credit and debt affects an entire nation. This is a pretty complex topic to explain, so I’m gonna simplify it as much as I can. Before proceeding any further, I would highly recommend you read Part 1. That way, you’ll have a more thorough understanding of what is going to be discussed in the preceding contents of this article.

100511-debt-lgIn part 1, we explained that debt is money borrowed to purchase a depreciating asset, rendering repayment difficult and even impossible in some cases. With that in mind, let’s examine our nation’s most notorious debt instrument — the dollar itself. The fact that we even own dollars is a symbol of debt. That’s because The Federal Reserve, our nation’s central bank, loans money to us at interest. If The Fed loans the American government one dollar, its done so with interest attached. Not a problem so far, right? Here’s where it gets crazy. Where does the money to repay The Fed come from? They have to borrow money from The Fed again to repay that first dollar, additional money that is also lent with interest. When The Fed loans our government money, they do so by purchasing U.S. Treasuries, which is another form of I.O.U. In other words, these I.O.U’s will stack up, leaving us in a never-ending cycle of debt.

The government attempts to pay the interest by taxing the citizens and offering T-Bills to the public, but the problem is that they’re still paying the Fed back with the same money they lent. The money itself is a depreciating asset, because there is no physical commodity backing it, which makes money’s value really volatile. The more money the Fed prints to loan us, the less valuable the money becomes (supply/demand). So not only are we paying the Fed back with their own money, but because of the increased supply of money, we’re attempting to pay them back with cheaper money. And as this continues, the more indebted our nation becomes.

Another important thing to understand is that The Fed isn’t the only institution holding U.S. debt. In fact, of America’s $16 Trillion Dollar budget deficit, about 70% of that debt is held by the public, and 46% of that is held by foreign countries, with China owning an estimated 8%. How is the U.S. able to continue to borrow so heavily if people know how deep in debt we are? That’s because the U.S. dollar is the world’s reserve currency. Most of the world’s goods are quoted in U.S. dollars. Despite the dollar rapidly declining in value, the world still trust the dollar because of its spot as the reserve currency. There will come a time when the world loses faith in the dollar as the reserve currency and things will turn ugly quickly.

Now, what does this have to do with slavery? Let me explain through a history lesson.

Prior to the existence of money, people conducted business under the barter system. People also would use tools, crop seeds, animals, etc. as a medium of exchange. They would also loan those same items. Under this system, if a person were to default on their obligation to a lender, the person would be forced to work off what they owe through slavery. Since there was no monetary system in place to measure how much work the enslaved person would have to complete in order to satisfy their obligation, it wasn’t unusual for a person to spend decades working off their debt.

Basically, a person in debt is essentially a slave because the money they’re earning is earned for the purpose of paying off their debtor. The same thing goes for a nation. In our country, consumer debt is also very high. Statistics show that the average America saves 3% of their income. In recent years though, statistics have shown Americans’ saving rate to actually be in the negative — which means that people spent more than they earned and borrowed the rest.

Under a system such as this, your average person is working just to pay everyone else. Every time you bring home your paycheck, and you look at all of these deductions they’ve taken out before you even received your check. 35% has gone to taxes, social security has been deducted, FICA, etc. Then, you’ve got to pay bills. Imagine that! Working 40 hours a week only to have 90% of your earnings go to other people and hardly anything left for your own enjoyment and savings. That is slavery! Then we’re living in an inflationary environment and in which wages remain low. So, a person is damn near forced to borrow to make ends meet. As they borrow, they commit to paying back not only the principle, but the interest too. That person is likely to continually borrow to make ends meet every month, digging them even deeper into debt, making repayment extremely difficult. That’s slavery! (I’m speaking on behalf of financially responsible people, by the way. There are people who go deep into debt trying to live a lifestyle they simply can’t afford. For those types, their slavery is justified).

The citizen is enslaved by its debtors (government, banks, etc.) and the government is enslaved by its debtors (Federal Reserve, foreign nations). Debt is not the only form of slavery we face, taxes are also a form of slavery. Originally, taxes were unconstitutional until special interest groups fought to have that part of the constitution changed. Taxes were implemented for the purpose of paying for government services, but they’ve signed taxes into law, making them a mandatory expense all Americans must pay under threat of incarceration.

Conclusion: We live in a nation in which both your government and your average citizen spends more than they earn. The only way to keep money flowing in such an environment is to borrow. Who do we borrow from? Other nations who’s citizens save money. Credit is a drug which both American government and citizens  have become addicted to. Both fail to realize that a lender lends money with the intention of being repaid…with interest. Its going to be interesting to see just how things turn out when we receive that call our debt.

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One thought on “The Enslaving Of A Nation Without Use Of Chains

  1. Pingback: Avoiding The Traps Of A Debt-Ridden Society

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