The Lies We Tell Ourselves

 


As a bankruptcy lawyer I saw plenty of debtors. Those that bothered me most were people nearing retirement age with grim prospects of being able to re-establish themselves and young families who got caught in the grinder of our debt-driven economy and slipped between the cracks.

In my day, Vancouver had a volatile real estate market. Boom and bust. It was the sort of market that panicked young couples to "take the plunge" fearing, if they didn't get into the market, they could be priced out and left to raise their family in rented digs.

There were plenty of speculators who gamed the market, buying in a crash and cashing out as prices neared their peak. Those young families were their victims.

The experience taught me a lesson. Value is notional. It's here today, gone tomorrow. Debt, on the other hand, is as brutally solid as concrete. I also learned the lengths people may go to ignore that, to look the other way and stake their future on a hope.

What if an entire nation, the wealthiest in the world, falls into that same delusion?

Every year or two I check out the US National Debt Clock. Today it stands at a whisker short of $29 trillion. Today that comes to about $89 thousand per capita or $229 thousand per taxpayer.

In 1960 when the US, like most countries, was struggling to pay off its war debts, the national debt was just over 52 per cent of GDP.  By 1980, successive administrations, Democrat and Republican, had reduced that ratio to 34.7 per cent of GDP. Along came the Gipper, Ronald Reagan, ushering in the era of soaring debt and deficits.  Today the debt to GDP comes in at a staggering 126 per cent.

As America's debt soared so did income and wealth inequality.  The rich have become massively richer while the poor rely on low-interest credit.  

The state itself has adapted to its changing reality. The US has transitioned from a democratic republic to an oligarchy. The legislative, regulatory and even judicial branches increasingly put private interests ahead of the public interest. That's where the money is. That's where the power is.

Aldous Huxley's Brave New World depicts a society addicted to pleasure in the form of a drug, Soma. It's said that, in America, today's Soma is easy and cheap credit. Debt loses much of its sting in an era of easy credit at low, low, low rates of interest. Desires, be it a new car or a holiday abroad, are easily satisfied.  The national debt and all the unfunded liabilities don't matter so long as no one is asking you to pay your share. Soma, baby.

But can this bachannal of debt - federal, state, municipal and personal - just keep rolling over indefinitely? What about the creditors who hold that debt be it government bonds, bank debentures or credit card balances? How far will they let this go? 

Last week's US National Intelligence Estimates on climate change predicted a world in which even major nations become destabilized. It's the sort of thing that can trigger a crisis of confidence in markets and counries. That's the last thing a country needs when in the throes of a climate emergency.

We may not be able to depend on this tissue of lies much longer.  What happens if we stop believing?


Comments

  1. I think the reason the debt is not an issue with Americans, Mound, (unless you are talking about Mitch McConnell fulminating about how Biden's infrastructure bill will burden citizens with higher taxes), is that the numbers are so abstract. How do we conceive of trillions of dollars of debt? Very little effort is ever made to use metaphor and analogy to explain such things to people, so they will continue not to reckon with debt levels it until it becomes concrete.

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    1. I agree, Lorne, but we've seen the Americans are slow to rally against those who orchestrate this pillage. Look how many Americans were "underwater" during the Great Recession of 2007-2008. What did they do?

      Some joined the Occupy Movement in 2011 demanding reform without ever expressing what reform they meant. They thought that was their strength and yet their movement fizzled and died.

      What emerged in its wake? The Tea Party.

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  2. It would seem that everything that has been accepted about Neo liberal economics is failing and we are just covering up it's inevitable demise .
    At the end of failed states and failed economics there is quiet rush for the advantaged to profit from the failure.
    When we consider that we now have huge income disparity and the world expects it's first trillionaire in Elon Musk; we now have individuals wealthier than states or countries.
    Such wealth overwhelms the governance of states and countries; particularly the poorer ones.
    The future is bleak.

    TB

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    1. .. it’s a valid & timely post Mound, even more so as COVID has just trashed so many peoples around the planet

      Lorne’s comment reminds me to put far more of my personal political effort into bite size useful metaphor & analogy.. much as a cartoon by Michael de Adder does
      I think it priceless if the staggering phenomena you describe, can be grasped easily at the family or individual level.. taken to heart

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    3. Neoclassical economics, the old school stuff I was taught in university, still prevails, TrailBlazer. It's full of nonsense, embracing perpetual exponential growth and the notion of the rational consumer. It was a convenient fairy tale and we rode it to our ruin without regard to inevitable consequences.

      Debt was somehow transformed into an asset, your ability to access credit a sign of your success. The art of refinancing the home mortgage became commonplace if you needed a new RV or that long-awaited Harley. It reminds me a bit of those 17th century Europeans who went mad after eating rye bread made of moldy flour full of ergot.

      As this was happening two things occurred that went unnoticed: the annihilation of the once robust middle class and the greatest transfer of unearned wealth from the middle class into the pockets of the 1%.

      Why was there no uprising, no revolt? I suspect it was because the emerging oligarchy was able to divide the people and turn them against each other. Isn't that what has transpired with the rise of the Tea Party and Trump's base?

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    4. Hey, Sal. Covid has been something of a stress test of democracy itself. Governments have struggled to cope with it. Remember when, after the first wave, they prematurely sounded the "all clear"? It's said we're now on the fourth wave and there were reports a few days ago about a new variant that, while no more lethal, is far more transmissible.

      The Guardian had an article last week about industrial poultry farms as the source of the next pandemic and I've seen reports about another Asian swine flu that, thankfully, has not yet turned zoonosis.

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    5. Empires crash, Mound, because -- in the end -- the people who inhabit them just stop caring about the future. As the future gets darker, many of us simply tune it out.

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    6. When Reagan, Thatcher and Mulroney launched the neoliberal order the future became more or less irrelevant, at least beyond the next electoral cycle. Posterity, the voice of the future, was extinguished as a pointless fetter on perpetual exponential growth, maximized production and consumption. And we went along with it.

      Many of us still "tune it out." What a selfish, inexcusable failure of our responsibility to our children, our grandkids and whatever future we bequeath to them.

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