Debt slavery

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Debt slavery or Indentured Servitude has historically referred to the practice of working without pay for a specific period of time in order to "repay" an accrued debt. It still exists in many parts of the world.

More recently, it seems to have become a 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.

Why the idea might be wrong[edit]

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.

Many eschew taking on even the most reasonable of mortgages for fear of being a "debt slave for 30 years", ironically being beholden to a landlord for 40, 50 or more years. Far-gone nuts don't realize that a bank[note 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.

Why the idea might be right[edit]

The above supposes a pure system which ignores many other factors. A good example would be purposefully misleading government programs or predatory loans, especially when those loans are marketed using professional strategies and specifically to vulnerable demographics. The arguments throughout this page very much "buy in" to the feeling of guilt that makes the machine work. It seems intuitive to think those who don't pay debts are to blame and should feel beholden to cough up their money. But if the system has been rigged so that the lender makes money regardless of whether the loan is paid and used predatory tactics to make a loan that they knew would the borrower would likely never pay off, the dishonest party is the lender. He is using a rigged system to create a "debt slave".

Debt based money[edit]

In 2014, the Bank of England released an article claiming that the "majority of money in the modern economy is created by commercial banks making loans".[1] This seems absurd because it is saying that credit and currency is practically the same thing[2] and that there is at least one unit of debt for each unit of currency without counting the compound interest.

Figures show that world debt is more than twice the amount of existing currency which makes it unrepayable[3] with world debt being at $250 trillion as of September 2018[4] or $50 trillion more than in 2015.[5]

This debt imposes an upwards transfer of wealth through hidden interest in prices that firms pass on to consumers.[6]

Firstly, in contrast to a widespread misconception, we must understand that as consumers we all pay interest even though we have not taken a loan at all. Loans are an important tool for investment and for overcoming temporary liquidity shortages in the economy. The state is not the only debtor in the economy but the largest debtor and the only one who pays interest by taking on new debts and ne­ver repays its debt. Private entrepreneurs repay their debts and calculate all arising expenses into the price for their produce including accruing interest. Therefore all consumer prices contain an interest share that may vary within a broad range between 10 to 70 per cent depending on the amount of capital employed for production. On average today’s consumer prices include an interest share of at least 40 per cent.

In the UK, the economist Steven Keen has found that economic policies under Margaret Thatcher have consisted in deregulating credit and finance with the result that private debt has gone up considerably since the 1980s.[7]

Ignorance and wishful thinking[edit]

This is often pushed by conspiracy theorists who seem to think that fractional reserve banking is a tool used by the elite to enslave the poor.[8] Many (for example, known conspiracy theorists the Bank of England[9]) seem to think that loans given out by the banks are just numbers on a spreadsheet and not real money.[10] 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.[11]

So, the only way to take it back is to topple them from "power" and owning everything is to stop their cash flow.[12] 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 desperate in perpetual debt, even after the original principal has been paid off many times over.[13]


The 25-point program of the infamous National Socialists mentions debt slavery.[14]

Abolition of unearned (work and labour) incomes. Breaking of debt (interest)-slavery. —point 11

With the Great Depression and reparations for the first world war, Germany was hopelessly broke.

The political party was popular to begin with because of a radical monetary policy similar to the Greenback by issuing treasury certificates to build infrastructure and reduce unemployment.[15]


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.

Nonetheless, the Old Testament does speak of jubilee year every 50 years where slaves would be emancipated and everyone would return to their land and family to live off of natural providence, which implies that debt obligations would be forgiven.[16]

Professor Michael Hudson goes so far as suggest that Christianity and Judaism were originally religious movements that were preoccupied with debt and that Jesus was a political dissident that paid the price for advocating the reinstatement of regular debt jubilees.[17]

Actual debt slavery[edit]

Notwithstanding the abuse of the term by cranks, there are situations that have in fact been described as "debt slavery" by reputable commentators.

Debt bondageWikipedia[note 2] and human trafficking are a real thing in a number of developing countries. A lender will often charge excessive amounts of interest on loans that can rarely be 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 NGOs 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 use of the term "debt slavery" by cranks might be purposeful so people can feel persecuted, but the above has little relation to people buying too much and being incredulous at being responsible for paying 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 who like to blow things dramatically out of proportion.

Conditions worsen[edit]

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) retirement 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.

See also[edit]


  1. Even a failed one bought out by another bank, in an effort to reduce losses
  2. Not the fun kind of bondage, unfortunately.