Bronze-level articleDebt slavery

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Debt slavery seems to be a popular term bandied about by cranks and conspiracy theorists, especially on personal finance websites, since the credit crunch of 2008. It comes from the peculiar idea that everyone is enslaved by evil debt holders (rich people, banks, corporations, the Rothschilds, etc.) and if people all stop paying their debts to financial institutions that were run up during the housing boom the economy will reset, everyone will have jobs again, and everyone will be absolved of their debts while keeping all the stuff they bought.

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[edit] Why the idea is wrong

Most ardent cranks realize that it's better to pay off your debt and not get more (it's always good not to have excessive debt). It isn't just the rich who have money in the bank, as banks often pool many depositors' funds to loan out to people who need it. It is part of the benefits of fractional reserve banking. Not paying that back would cause the bank to fail, wiping out everyone's funds or making everyone pay more (via taxes) to bail everyone out.

Far-gone nuts don't realize the bank[1] can seize the asset (and other assets for liquidation), or garnish wages, to recoup as near to 100% their loans as they can get...or they think that if too many people do it only good things can happen from bank failures, no money to cover deposits, and sudden staggering deflation.

[edit] Ignorance and Wishful Thinking

This is often pushed by conspiracy theorists that seem to think that fractional reserve banking is a tool used by the elite to enslave the poor.[2] Many (for example, known conspiracy theorists the Bank of England[3] seem to think that loans given out by the banks are just numbers on a spreadsheet and not real money.[4] Largely because these people don't understand the concepts well enough to pass a basic course involving these subjects at the local community college, and think the education to do so is also some sort of conspiratorial indoctrination.[5]

So, the only way to take it back is to topple them from "power" and owning everything is to stop their cash flow.[6] This just happens to be the way they can keep their money, and the object they desired enough to take out the debt in the first place. Funny how it can work like that.

This is not to say that there aren't real abuses by lenders which keep the poor and the desparate in perpetual debt, even after the original principal has been paid off many times over [7].

[edit] Religion

Debt slavery cranks will sometimes work a good deal of religion into their conspiracy theories, invoking the Bible's restrictions on usury. Some of the more moonbatty types will advocate the abolition of international finance so that we may return to the way things were before the rise of the banksters.

[edit] Third World dictators

Coincidentally, debt slavery on a macro level has been a major government concern in many corrupt third world nations since World War II.[8] This is where the ruling dictatorship takes out massive loans from the World Bank, deposits them into their bank accounts, then pleads poverty and debt tyranny by the wealthy nations that provided funds expecting them to be paid back.[9]

[edit] Debt Bondage

Debt bondage and human trafficking are a real thing[10] in a number of developing countries. A lender will often charge excessive amounts of interest on loans that can be rarely paid back without bankruptcy law or credit security. It can in many cases be transferred to the family of the debtor, including children, which can affect generations. Bonded labor is especially a problem in India where many NGO's have worked to eradicate it.

Similar results may occur by other routes. For example, workers in remote and poorly supplied locations may have basic daily needs (housing, food, clothing, etc.) provided by their employers, with the associated costs deducted from their pay — or else may have no option but to fill those needs by buying from the "company store" at inflated prices. If those accumulated costs (or deductions) become large enough to overwhelm employees' nominal income, then a different type of genuine debt bondage exists.

The terms might be purposefully similar in name so people can feel persecuted, but it has little relation to people buying too much and being incredulous at being responsible for it. Garnishing wages or selling the asset (such as a home) is a great deal different than actual enslavement. Except for people with little connection to reality and like to blow things dramatically out of proportion.

[edit] Conditions worsen

If anything has happened in the years from 2008 through 2010, it has shown that if people stop paying their debts things get much worse. The market plummets (where all the 401(k)/403(b) accounts are), banking institutions would have lost everyone's money if not guaranteed by the government, businesses fail as credit becomes more expensive hemorrhaging jobs, and more people lose their homes as rates adjust upwards.

Safe to say, time and time again as people tell their stories, the only people who seem to be really persistent on this are ones that owe incredible amounts of money and are incredulous that they would actually have to pay it back.

[edit] See also

[edit] Footnotes

  1. Even a failed one bought out by another bank, in an effort to reduce losses
  2. The Economic Collapse Blog - Debt is The Number One Tool Of Financial Enslavement
  3. [1])
  4. Money As Debt II – How Modern Banking Has Enslaved Us All – The Money Conspiracy Exposed - Warning, contains annoying video ads and long convoluted rambling
  5. Amazon - Brainwashed: How Universities Indoctrinate America's Youth
  6. The Economic Collapse Blog - Megabanks: The Banking Oligarchy That Controls Assets Equivalent To 60 Percent Of America’s GNP
  7. [2]
  8. Google Books - Hoodwinked: An Economic Hit Man Reveals
  9. Yasser Arafat - The Thief of Palestine
  10. [http://en.wikipedia.org/wiki/Debt_bondage Wiki - Debt Bondage
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