Debt Slavery AD 2013
Monday, 7/15/2013 22:36
Interest rates up, youth unemployment up, debt slavery worsening...
In the ANCIENT WORLD, when people got themselves into debt, they were often forced to sell their daughters into prostitution and their sons into slavery,
writes Bill Bonner in his Daily Reckoning.
More about that in a minute...
First, a quick look at the financial markets. Looks like gold might have put in a bottom. We guessed it would be around $1100 per ounce. It may have come closer to $1200 per ounce.
We'll have to wait to see. But the
gold price is probably reacting to recent comments from the Fed. Turns out America's central bank has no intention of tightening up on the credit markets anytime soon. The Fed will keep manning the stimulus pumps for as long as it takes to bring the economy back to 'normal' growth...or until the whole thing blows up, whichever comes first.
But the recent decline in bond prices, and the rise in yields it caused, means credit markets are tightening. That has implications of a darker kind. It is one thing for the feds to correct their own policy mistakes...it is another for the market to force a correction upon them.
But let us return to the ancient world...and try to learn something about how a debt crisis can be resolved. Sometimes, the weight of debt broke up families. Sometimes, families fought back.
Writes anthropologist David Graeber in his book
Debt: The First 5,000 Years:
"For thousands of years, the struggle between rich and poor has largely taken the form of conflicts between creditors and debtors – of arguments about the rights and wrongs of interest payment, debt peonage, amnesty, repossession, restitution, the sequestering of sheep, the seizing of vineyards and selling of debtors' children into slavery. By the same token, for the last 5,000 years, with remarkable regularity, popular insurrections have begun the same way: with ritual destruction of debt records – tablets, papyri, ledgers, whatever form they might have taken in any particular time and place."
Pity the children. They often paid for their parents' mistakes. Of course, the parents paid too. They suffered the dishonour and humiliation of having their children taken away and put to someone else's service.
What has changed? Today, the US lumbers into the future with total debt equal to about 350% of GDP. In Britain and Japan, the total is over 500%. Debt, remember, is the homage that the future pays to the past. It has to be carried, serviced...and paid. It has to be reckoned with...one way or another.
And the cost of carrying debt is going up! Over the last six weeks, interest rates have moved up by about 15% – an astounding increase for the sluggish debt market. How long will it be before long-term borrowing rates are back to 'normal'?
At 5% interest, a debt that measures 3.5 times your revenue will cost about one-sixth of your income. Before taxes. After tax, you will have to work about one day a week to keep up with it (to say nothing of paying it off!).
That's a heavy burden. It is especially disagreeable when someone else ran up the debt. Then you are a debt slave. That is the situation of young people today. They must face their parents' debt. Even serfs in the Dark Ages had it better. They had to work only one day out of 10 for their lords and masters.
As it stands, young people in the US, Europe and Japan are expected to work their whole lives to pay for things their parents and grandparents consumed decades earlier.
But wait...it's worse than that.
Because the unpaid burden of past consumption reduces the ability of the next generation to earn money. A friend sends this email message:
"Just watched an article on CNN regarding European youth unemployment. Unemployed between the ages of 16 and 25:
- Greece 62%
- Spain 56%
- Portugal 50%
- Britain 24%
"They are calling it a lost generation. This is the point I have been trying to make at our meetings. When you hear of the US with 7.5 or 8%, it doesn't sound horrible until you look into the numbers."In the US, the same youth category runs from 20% up to 50%, depending on education and ethnicity. Don't know what it is in Brazil, but I'm sure it is a serious problem. Until this is righted with a multitude of fixes, it appears to me the youth will continue to revolt and rightly so."Just imagine, four years of college, 23 years old and a bleak future! Who wouldn't be in a foul mood?"
Let's see. Deny a young person work and you deny him a career. Deny him a career and you deny him a way to support a family. Deny him a family life, and who knows what happens?
In the US and Europe, marriage rates have never been lower. The
Huffington Post reports:
"We looked at how many adults are currently married – among people over 18, how many of them have a spouse – and we found that barely half of all adults now are married. That's declined quite a bit from the past. In 2010, again it was barely half – 51% – in 1960, it was 72%."
Marriage, work, family – without them, a man thinks differently. Without the yoke of marriage or the traces of family, he runs amok. In China, the 'bare branches' – young men who couldn't find wives – started a revolution.
The Nien Rebellion, which took place between 1851 and 1868, cost 100,000 dead and almost toppled the Qing Dynasty.
Will today's young people accept their lot...and remain in docile debt servitude their whole lives? Or will they rise up, as Mr.Graeber suggests, and burn T-bonds in public spaces...rampage down Wall Street...and perhaps hang Ben Bernanke in front of the New York Federal Reserve?
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