Serfdom in the Global Economy

by Mayuri on May 19, 2009

Obama Bailing Out the Banks

In my last post, I talked about debt from the point of view of the individual getting off the wheel of bondage. Today I want to talk about debt again, but from the point of view of the Macro.

Why? Because we can’t talk intelligently about our own money actions without talking about the canvass upon which these money actions are being played. Also, because we can’t really be conscious with money without this knowledge. And finally, we won’t really know what right action is.

With respect to what is going on, both in our country, and in the bigger field of the world, I have run into two very powerful articles this recently. One was entitled ” Financial War Against Iceland” by Michael Hudson.   Michael is a Distinguished Research Professor of Economics at the University of Missouri. He is also a Wall Street analyst and  president of the Institute for the Study of Long-term Economic Trends. So he knows what he is talking about. I have been reading his articles for years about the true effects of the US Treasury policies and the resulting inevitable current financial crisis. His is a voice of intelligence, true intelligence, not just intellectual analysis, in a sea of self- serving rhetoric.

The other article was “Resist Or Become Serfs” by Chris Hedges. 

Both of these articles talk about the bondage of our creditor society.

The real issue in this economic crisis should be overall the health of the overall economy.  But that is not happening. Rather, the parties seeking the most are not the most indebted individuals, but the largest creditors. Their aim is to maximize the power of debt over labor (us). The worse the economy does, the stronger the creditor position will grow.This is a recipe for economic suicide that will lead to outright debt peonage as domestic depression intensifies.

In his book,  The Wealth of Nations, the economist Adam Smith warns against creditors becoming free enough to disable governments to protect citizens from creditors. As we have witnessed, creditors want to extract wealth for themselves rather than create wealth. They created bubbles- in dot.coms- then real estate and then stripped the inflated values through predatory lending practices. Everyone was paying interest payments, instead of increasing their standard of living,or  supporting industrial growth, or creating real capital.   So this  greed is destructive to society. Michael Hudson points out that the result we have is not the “ownership” society that Greenspan and  George W. Bush claimed to be creating in America, but rather a “loanship” society.

The economist, John Maynard Keynes, believed that the proper task of governments was to prevent over-indebtedness from leading to economic depression. Hoping to make credit productive, instead of extractive, his followers have advocated making banking a public utility. This “extractive” debting has been going on in other continents and countries for years. It is now hitting us at home.

But Obama has supported the creditor regime. It seems he has believed that a return to our “normal” economic life meant  a strong banking system. So he has gone the route of bailout of the banks rather than making them accountable. And what they have done is taken the money and run. Michael Hudson points out that the government could have bailed out failing pension funds, including social security, for a fraction of the cost of the bank bailouts. All these have done  in effect, is propped up the assets of the affluent and kept the destructive centralized financial system going. And he did that by putting us into massive debt.

I just got back from Norway this week where I was teaching a money weekend. That country has not been caught in the creditor regime. They have no debt, and pension funds for generations, and social systems that work, and government health care for every one. Their citizens are not becoming peons to the creditor system like we have in America.

This supremacy of the banks in the financial sector has taken generations to achieve. Allowing societies to be crippled by interest payments used to be unthinkable, even just as long ago as after the second world war. It used to be that usury was seen as the bad guy. Debt cancellation is part of our Christian heritage. Liberating indebtedness  is in the old testament.  And when Christianity gained political power, the first thing it did was to outlaw debt bondage in our Western civilization.

What are the effects of our creditor-run regimes?  

Michael Hudson says the effects on human life have been and will continue to be devastating. The financial austerity they impose “shortens life spans, reduces birth rats, increases labor flight, suicide rates, disease, alcoholism, and drug abuse”. Sound familiar?

In his article, Chris Hedges quotes Nader :”Bankrupt corporate capitalism is on its way to bankrupting the socialism that is trying to save it,” Nader added. “That is the end stage. If they no longer have socialism to save them then we are into feudalism. We are into private police, gated communities and serfs with a 21st century nomenclature.”

In The New Yorker May 18, 2009 issue, Nick Paumgarten in his article, The Death of Kings, warns that the current generous- to- Wall-Street economic policies of our new government, is a “transfer of wealth from future taxpayers to incompetent or opportunistic financiers- an extreme instance of privatizing gains and socializing losses”.

He refers to  NYC Philanthropist and financial guru Colin Negrych who believes “there is a commercial-financial complex, analogous to the military-industrial complex (merchants of debt rather than death), which promotes borrowing and spending, and spins indebtedness into fools gold.”

So. Here we are. In the middle of this. What do we do as individuals? How can we bring this knowledge into being conscious with our money.

That is the subject of my next blog.

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