FacebookTwitterGoogle+RedditEmail

Debt Serfdom in America

 

As of October 2015, American consumers owe $8.17 trillion in mortgages, $900 billion in credit cards, and $1.19 trillion in student loans. Home mortgages, credit cards, and student loans occupy the most of the consumer credit market.

The consumer credit market is the dream paradise of money merchants, known as moneylenders. Just as pharma companies sell drugs to make money by way of profit, money merchants sell money to make money by way of interest. Note again, money merchants sell money to make money. They sell money to millions of American consumers needing to buy houses, cars, or home appliances. They sell money to millions of American students becoming physicians, lawyers, managers, as well as to college students. Big operators set up banks, brokerage houses, and credit unions. Small operators run payday loans and pawnshops. The rich and the wretched, the lord and the tenant, teachers and students, men and women, all this and all that, except the privileged few, are obligated, in one form or the other, to money merchants.

Carrying debt has become a quintessential attribute of American life. And creditworthiness, the ability to borrow money, is the most valued personal asset an individual may garner. Credit monitoring companies gather information about an individual’s “bill payment history, loans, current debt, and other financial information.” Credit reports also inform money merchants where the individual works and lives and whether the individual has been “sued, arrested, or filed for bankruptcy.” Losing creditworthiness can have more severe consequences for an individual than losing liberty, even body limbs.

Interest rates ranging from 3% to 30% lie at the core of the credit market. After nullifying laws against usury, federal and state legislatures have rewarded money merchants with handsome legal names, such as creditors, mortgagees, card issuers, and secured parties. In turn, money merchants use various “credit products” to compose the ensemble of interest rates. They sell money for fixed periods with structured payments, such as a 30-years mortgage. They sell money as endlessly spinning Ixion wheels, known as credit cards. These credit spinning wheels could carry an interest rate over 30% for individuals with questionable credit. Occupying all nooks and crannies of American life, the money merchants have unbolted an ever-expanding credit juggernaut, much larger than equity markets. The Federal Reserve Board controls the interest-rate push button to modify the behavior of Pavlovian money merchants.

Credit products are sold as fantasies of power, comfort, and freedom. Owning a home has become the most heavily debt-infested American dream. Living modestly with a less ambitious spouse in a little prairie house (nondescript apartment) warmed with children’s love is old-fashioned foolery that might make sense in Bangladesh or Kenya. Not here, not in credit-driven America. Here, while the family is shattered beyond definition and while many children putrefy in unsafe homes, money merchants keep enticing Americans to dream big: Get it now and pay later. The virtues of mortgage have been sold hook, line, and sinker -making breathing difficult. Many people, by no means hypochondriacs alone, live in enormous homes but fear homelessness, an eventuality that can befall if you lose employment or medical bills pile up over and above a life-threatening illness.

Credit cards are designed with much deliberation as attractive nuisance – an object that attracts but hurts gullible trespassers – as consumers wander into spending money they do not have and might not have in the foreseeable future. Money merchants want you to pay as little as possible, ideally no more than the minimum payment due each month, so that the interest levied on a larger unpaid balance may generate more money for money merchants. Smartasses who pay off the entire monthly balance without giving a single penny in interest defy the objectives of the credit market. Money merchants want you to spend, hoard debt, and pay back on time but only a little. The credit card ensnarement remains open for one-way entry for the carefree, the underemployed, the young, and the desperate.

The federal government itself becomes the supreme money merchant when it comes to funding higher education. Student loans are available from the Federal Student Aid(FSA), “proud sponsor of the American mind,” a slogan the U.S. Department of Education has trademarked with propagandistic audacity and the FSA displays on its website. Student loans are not interest-free, even though the federal government has unlimited power to create interest-free money for students, as it does for money merchants.

Currently, the FSA charges 4.20% interest rate on undergraduate studies loans and 5.84% interest rate on graduate and professional studies (law, medicine) loans. With college and university tuitions climbing sharply, students are signing pricy debt notes to obtain higher education and thus mortgaging future wages for a significant part of life. Money merchants, whom law permits to create interest-free money and who take hard-earned money from depositors by paying marginal (0.02%) interest rate, also fund the American mind by charging interest rates much higher than does the FSA. The bankruptcy laws have been modified so that students cannot discharge their student loans.

Higher education in many countries is free or almost free. Germany provides tuition-free higher education, as does Denmark and Sweden. India, which will be producing most college graduates in the world in the near future, heavily subsidizes college and university studies. The International Covenant on Economic, Social and Cultural Rights, which President Jimmy Carter signed in 1977, but which the Senate refuses even to consider for ratification, obligates signatory states to provide higher education “by every appropriate means, and in particular by the progressive introduction of free education.” The United States, under the influence of money merchants, is moving in the opposite direction of the Covenant making it difficult for Americans to dream of becoming doctors, engineers, lawyers, and even plain college graduates without signing a promissory note of debt serfdom.

More articles by:

Liaquat Ali Khan is the founder of Legal Scholar Academy, a firm dedicated to the protection of civil rights and human liberties. Send your comments and question to legal. scholar. academy[at] gmail.com

December 19, 2018
Carl Boggs
Russophobia and the Specter of War
Jonathan Cook
American Public’s Backing for One-State Solution Falls on Deaf Ears
Daniel Warner
1968: The Year That Will Not Go Away
Arshad Khan
Developing Country Issues at COP24 … and a Bit of Good News for Solar Power and Carbon Capture
Kenneth Surin
Trump’s African Pivot: Another Swipe at China
Patrick Bond
South Africa Searches for a Financial Parachute, Now That a $170 Billion Foreign Debt Cliff Looms
Tom Clifford
Trade for Hostages? Trump’s New Approach to China
Binoy Kampmark
May Days in Britain
John Feffer
Globalists Really Are Ruining Your Life
John O'Kane
Drops and the Dropped: Diversity and the Midterm Elections
December 18, 2018
Charles Pierson
Where No Corn Has Grown Before: Better Living Through Climate Change?
Evaggelos Vallianatos
The Waters of American Democracy
Patrick Cockburn
Will Anger in Washington Over the Murder of Khashoggi End the War in Yemen?
George Ochenski
Trump is on the Ropes, But the Pillage of Natural Resources Continues
Farzana Versey
Tribals, Missionaries and Hindutva
Robert Hunziker
Is COP24 One More Big Bust?
David Macaray
The Truth About Nursing Homes
Nino Pagliccia
Have the Russian Military Aircrafts in Venezuela Breached the Door to “America’s Backyard”?
Paul Edwards
Make America Grate Again
David Rosnick
The Impact of OPEC on Climate Change
Binoy Kampmark
The Kosovo Blunder: Moving Towards a Standing Army
Andrew Stewart
Shine a Light for Immigration Rights in Providence
December 17, 2018
Susan Abulhawa
Marc Lamont Hill’s Detractors are the True Anti-Semites
Jake Palmer
Viktor Orban, Trump and the Populist Battle Over Public Space
Martha Rosenberg
Big Pharma Fights Proposal to Keep It From Looting Medicare
David Rosen
December 17th: International Day to End Violence against Sex Workers
Binoy Kampmark
The Case that Dare Not Speak Its Name: the Conviction of Cardinal Pell
Dave Lindorff
Making Trump and Other Climate Criminals Pay
Bill Martin
Seeing Yellow
Julian Vigo
The World Google Controls and Surveillance Capitalism
ANIS SHIVANI
What is Neoliberalism?
James Haught
Evangelicals Vote, “Nones” Falter
Vacy Vlanza
The Australian Prime Minister’s Rapture for Jerusalem
Martin Billheimer
Late Year’s Hits for the Hanging Sock
Weekend Edition
December 14, 2018
Friday - Sunday
Andrew Levine
A Tale of Two Cities
Peter Linebaugh
The Significance of The Common Wind
Bruce E. Levine
The Ketamine Chorus: NYT Trumpets New Anti-Suicide Drug
Jeffrey St. Clair
Roaming Charges: Fathers and Sons, Bushes and Bin Ladens
Kathy Deacon
Coffee, Social Stratification and the Retail Sector in a Small Maritime Village
Nick Pemberton
Praise For America’s Second Leading Intellectual
Robert Hunziker
The Yellow Vest Insurgency – What’s Next?
Nick Alexandrov
George H. W. Bush: Another Eulogy
Patrick Cockburn
The Yemeni Dead: Six Times Higher Than Previously Reported
Brian Cloughley
Principles and Morality Versus Cash and Profit? No Contest
Michael F. Duggan
Climate Change and the Limits of Reason
FacebookTwitterGoogle+RedditEmail