“Don’t Owe. Won’t Pay.” Everything You’ve Been Told About Debt Is Wrong

[marmar]

from YES! Magazine:


“Don’t Owe. Won’t Pay.” Everything You’ve Been Told About Debt Is Wrong
With the nation’s household debt burden at $11.85 trillion, even the most modest challenges to its legitimacy have revolutionary implications.


Charles Eisenstein posted Aug 20, 2015


The legitimacy of a given social order rests on the legitimacy of its debts. Even in ancient times this was so. In traditional cultures, debt in a broad sense—gifts to be reciprocated, memories of help rendered, obligations not yet fulfilled—was a glue that held society together. Everybody at one time or another owed something to someone else. Repayment of debt was inseparable from the meeting of social obligations; it resonated with the principles of fairness and gratitude.

The moral associations of making good on one’s debts are still with us today, informing the logic of austerity as well as the legal code. A good country, or a good person, is supposed to make every effort to repay debts. Accordingly, if a country like Jamaica or Greece, or a municipality like Baltimore or Detroit, has insufficient revenue to make its debt payments, it is morally compelled to privatize public assets, slash pensions and salaries, liquidate natural resources, and cut public services so it can use the savings to pay creditors. Such a prescription takes for granted the legitimacy of its debts.

Today a burgeoning debt resistance movement draws from the realization that many of these debts are not fair. Most obviously unfair are loans involving illegal or deceptive practices—the kind that were rampant in the lead-up to the 2008 financial crisis. From sneaky balloon interest hikes on mortgages, to loans deliberately made to unqualified borrowers, to incomprehensible financial products peddled to local governments that were kept ignorant about their risks, these practices resulted in billions of dollars of extra costs for citizens and public institutions alike.

A movement is arising to challenge these debts. In Europe, the International Citizen debt Audit Network (ICAN) promotes “citizen debt audits,” in which activists examine the books of municipalities and other public institutions to determine which debts were incurred through fraudulent, unjust, or illegal means. They then try to persuade the government or institution to contest or renegotiate those debts. In 2012, towns in France declared they would refuse to pay part of their debt obligations to the bailed-out bank Dexia, claiming its deceptive practices resulted in interest rate jumps to as high as 13 percent. Meanwhile, in the United States, the city of Baltimore filed a class-action lawsuit to recover losses incurred through the Libor rate-fixing scandal, losses that could amount to billions of dollars.

And Libor is just the tip of the iceberg. In a time of rampant financial lawbreaking, who knows what citizen audits might uncover? Furthermore, at a time when the law itself is so subject to manipulation by financial interests, why should resistance be limited to debts that involved lawbreaking? After all, the 2008 crash resulted from a deep systemic corruption in which “risky” derivative products turned out to be risk-free—not on their own merits, but because of government and Federal Reserve bailouts that amounted to a de facto guarantee. ....................(more)

http://www.yesmagazine.org/issues/the-debt-issue/don-t-owe-won-t-pay-charles-eisenstein-debt-20150820

[PatrickforO]

1. Good post. Yes, debt in fact in meaningless.

Unfortunately we have our economy set up so that the money we borrow to fund programs that help us is owed to banks.

All we have ever needed to do is take a page from Lincoln's book and nationalize the central banking system. Face it, a dollar is only a dollar because we agree it is. We live in a world of fiat currency that's now not even currency. Our money supply is literally created from thin air by the interest rate mechanism.

Even though it is an abstraction, the dollar is still the world's preferred currency. People like to do business in dollars. They just do. The European Union tried to overturn that with the Euro, and the Chinese with the yuan, but it didn't work. Business is still done in dollars.

So...NATIONALIZE the central bank and start the presses! Pay off the debt. Fund massive infrastructure programs that create jobs and modernize America. Cut the war and domestic spying budgets incrementally over years, and provide generous retraining programs for those displaced (like the current TAA program). Change the tax code to recapture revenue from the $32 trillion in profits that is languishing offshore in havens like the Cayman Islands. Institute Medicare for all Americans and make college free. Remove the cap from the Social Security payroll tax and expand benefits.

And you know what? We'd ALL be better off.

[questionseverything]

2. imagine if the power of fractured interest was used to benefit

we the people instead of enslaving us

[JDPriestly]

5. This is the perfect time for states to start their own banks.

Bank interest rates on deposits are extremely low. States could not offer worse rates.

Each state should organize a bank and let anyone from any state deposit in it. The states could give tax breaks on interest earned from deposits in state banks. And the state banks could lend to the municipalities and other government entities.

Why not?

[KansDem]

7. Like North Dakota?

Welcome to Bank of North Dakota (BND)

As the only state-owned bank in the nation, we act as a funding resource in partnership with other financial institutions, economic development groups and guaranty agencies. We have four established business areas: Student Loans, Lending Services, Treasury Services and Banking Services. BND’s support services and dedicated employees provide you with the best customer service.

http://banknd.nd.gov/

Check out its student-loan programs! http://mystudentloanonline.nd.gov/

It think it's a great idea!

[JDPriestly]

22. Yes. It is.

Credit unions are very popular now. State banks would do even better. Money is cheap at the moment. I think I will call my states representatives about it now. We could have a fantastic bank in California and fund lots of good things in our state.

[A HERETIC I AM]

6. "People like to do business in dollars."

Even though it is an abstraction, the dollar is still the world's preferred currency. People like to do business in dollars. They just do. The European Union tried to overturn that with the Euro, and the Chinese with the yuan, but it didn't work. Business is still done in dollars.

So why do you think that is?

And for what it's worth, the often repeated idea that money is "created out of thin air" is frankly simplistic and not accurate. If it is true, it is never mentioned that money is also destroyed into thin air.

[PatrickforO]

10. Why do I think that is?

Two reasons. We have the biggest economy and we're the biggest kid on the block.

The problem is that we're borrowing money from bankers (the Fed) to run our government. My point is if we did like Lincoln and nationalized the Fed, we could simply expand the money supply to retire the debt and pay for things that are beneficial to the American people. Simplistic? Yes. Untenable? No.

Ellen Brown's brilliant treatise on banking (Web of Debt, 2010) spells all this out. On the ground we can look at the Central Bank of ND. The more states that create and own central banks, the better, because the whole Wall Street thing has created this massive imbalance of wealth where $22 trillion has basically been taken off the table and lies untaxed in places like the Caymans. In the meantime, you and I get squeezed, nickel and dimed to death, and it gets harder and harder to get ahead.

North Dakota has this one right.

[A HERETIC I AM]

12. This part is incorrect; (Edited)

The problem is that we're borrowing money from bankers (the Fed) to run our government.

The United States Treasury does NOT borrow money from "The Fed".

That's not how it works. The rest of that paragraph is dubious, at best.

The rest of your post involves double-edged swords and non-related points, and I don't really have the time or the inclination at the moment to respond. Suffice to say, I agree with some of it but not all. A well run central banking system is necessary, in my opinion. Let each state create their own central bank? Should they all issue their own script as well? 50 competing "dollars"? Great. Let's go back to the days when localized depressions were commonplace.

I'll have to read some of this from Ms. Brown, but I am skeptical right off the bat as she is in the camp (as are you, perhaps?) of promoting the bullshit idea that the Federal Reserve is a "private bank".

It's nonsense.

Edit to address your answer to my question;

Two reasons. We have the biggest economy and we're the biggest kid on the block.

It is a bit more involved than that, let me assure you. There is a much deeper reason why a greenback is accepted easily in almost all of the world than merely because we are big.

[PatrickforO]

19. Yeah I know about the T-Bills we sell to finance our deficit spending, but I'm still saying

that a) the ND central bank is doing fine, and b) if we dissolved the Fed and nationalized our central bank, in the words of an editorial from the London Times c. 1868, "If that mischievous financial policy which had its origin in the North American Republic during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe," would come true.

I also think on some of the things Jefferson and the other founders said about the banking system.

See, the problem is the zero sum idea - that you've got to lose for me to win because we are competing for finite resources. While some resources, such as oil, natural gas and coal are finite, others are not. Now, I have read quite a few things, and spoken to many thought leaders both in my own community and in places like this, and my question in the face of the way things are is: Why?

Why do we have to have poor? Why do we allow people to starve, or die because they cannot afford some drug that costs thousands per dose? Why do so many children live in poverty?

What it all boils down to, at least in my eyes, is that our current neoliberal capitalist framework is unsustainable. It is unsustainable because it is predicated on the concept of elevating the individual interest above that of the society at large. This is a northern European idea, and came by virtue of immigration to north America. We've been running the world on that basis for centuries now.

However, it has gotten to the point where our very quest for profits has created the largest inequity in wealth since 1929, and is in fact in danger of doing irreversible harm to the very earth upon which we live. We need to develop a different mindset, heretic; we need to begin thinking of ourselves as a species and making decisions based on the value of ALL capital, including human and environmental. We need to rethink what we have and build a system that is regenerative. What we build needs to be in right relationship with each other and with the earth. It needs to seek balance and empower the participation of all people.

You say why? I say why not? There's nothing to lose by making the decision to get rid of the billionaire parasites. There really isn't. We can value entrepreneurism, engage at the community level in slow money, slow food, microlending and employee owned enterprises. It would be a much better world for everyone except parasites like the Koch brothers, Adelson and the Waltons. Would it be a better world for you, heretic?

[A HERETIC I AM]

23. Of all the above post.....

I frankly find none I disagree with.

It is true that in this country, nay the entire world, profit or greed trumps everything, particularly the public good.

In this I have no argument with you.

I have long been convinced that in the late days of 1945 and early 1946, there stood, for a short period, an opportunity for the winners of WW II to actually change the world for the better. They decided not to, and a similar opportunity has yet to present itself, or at least rational, decent leaders have not been in place or willing to do it.

[TexasBushwhacker]

15. They do business in dollars because the US wants it

that way. Having the dollar as the exclusive reserve currency props its value up artificially.

When Saddam Hussein decided to take Euros for oil, the US invaded Iraq.

When Dominique Strauss-Kahn challenged the dollar as the primary reserve currency in February, 2011

http://www.telegraph.co.uk/finance/currency/8316834/International-Monetary-Fund-director-Dominique-Strauss-Kahn-calls-for-new-world-currency.html

he was accused of rape at the Hotel Sofitel in NYC just 3 months later. Though all sorts of claims and rumors swirled around, all charges for crimes in the US were dropped. He was prosecuted for a single charge of "aggravated pimping" in France and ACQUITTED.

Christine Lagarde hasn't been nearly so pushy about challenging the dollar. She likes her job.

But if we go to war with Iraq, it won't be because of nukes. That's a red herring. It will be because they are willing to sell their oil for Euros or gold (to China and India).

The thing is, the dollars inflated value makes our exports more costly.

[A HERETIC I AM]

17. Well of course they (we) want it that way.

It is in our best interest.

Just as it is in the best interest of the Chinese to have the Renminbi taken more seriously or the Euro or the Ruble, for that matter.

I am under no illusions about the why's and how's, trust me. But I am not real big on conspiracy theories and the ones surrounding the dollar and the Federal Reserve are particularly amusing.

But of course, don't fuck with the money. Too much is being made to allow any real changes. (tongue in cheek, here)

[Octafish]

3. ''Citizen Audits''

I like where this is heading.

Thank you for this excellent article, marmar!

[Dont call me Shirley]

4. Time for a debt jubilee!

[Nye Bevan]

8. Pension funds own billions of debt.

If the value of that debt was reduced to zero, many people's pensions would be drastically reduced.

Or were you really just saying that you would like your personal credit card bills and mortgage to be eliminated?

[Dont call me Shirley]

9. It would be wise of what pension funds still exist to divest of investment in debt.

[muriel_volestrangler]

11. If funds couldn't lend money to people or governments

(or lost what they had lent once, which would make them suspect it would happen again), then they'd crash the value of their loans as they rushed to get out before the jubilee, thus cutting everyone's pensions. For the future, you'd need them to own companies to provide future returns; if the global economy hadn't been ruined by the crash in pensions, I suppose that might work. But it might not; there may be limits to what businesses can be invested in.

But how willing do you think anyone would be to lend money again? Could the world economy function without mortgages? It might be fine for those who come from a family where there's only one or 2 to inherit from the generation that dies off and has homes to pass on, but if you're from a larger family, or a family in which people are renting, someone is out of luck.

I suspect we might end up with a compromise for the situation - most houses owned by pension funds who rent them out. That way, people can take part in something that will provide them with a retirement income, while there's no borrowing involved. Would you prefer that?

[Dont call me Shirley]

13. Debt is an endless shithole. Nationalize banks, reinstate glass-stiegel, unions and democratic

workplaces can manage their own pension funds. Wall Street can turn themselves into the Sands Hotel and Casino exactly where they belong.

[muriel_volestrangler]

14. "workplaces can manage their own pension funds" - in what way?

Are you saying they should put all their money only into that business? Doing that is very dangerous - look at what Robert Maxwell did to the pension funds in his companies when he forced them to invest in the companies, rather than spread the risk.

What about people who work for small companies, or themselves? Would you deny them the safety of collective investment that spreads the risk?

[Dont call me Shirley]

18. Mondragon was more what I was thinking of.

[muriel_volestrangler]

20. Which may be OK for a large, diversified entity like Mondragon

(revenue €11.5bn, 74,000 workers, in several sectors), but for the self-employed it's no solution. And for people in small companies, it means they depend on that one small company continuing to do OK for all of their retirement.

[Dont call me Shirley]

21. We need to create more Mondragin-like businesses here and throughout the world.

[1939]

25. Good Point

There used to be a very solid Haberdashers Union. Since most hat factories were small businesses, the businesses sent a portion of their payroll to the union. The Haberdashers Union ran the fund honestly with no one dipping into union pension funds. As hat makers retired, they would draw pensions from the union fund. All was well with the world till January 1961.

In that fateful month, John F. Kennedy was inaugurated and chose not to wear a hat. All of a sudden, most American men quit wearing top hats, homburgs, fedoras, derbies, etc whenever they went out doors. Hat factories were pretty much limited to cowboy hats and many closed their doors. As contributions to the pension fund dwindled to a small trickle, the union was force to trim pensions. By the mid-70s, the pensions for retirees had to be cut back to $40 a month.

[dixiegrrrrl]

16. "A movement is arising to challenge these debts"

Greeks tried to, in their special election, and voted NOT to pay, but their Gov't goons ignored them!

[Rex]

24. The worse fear is realized - you cannot sqeeze money out of a turnip. Equality scares the wealthy.

Equality and these younger generations. Also, people that have nothing cannot be hurt when everything else becomes worthless. That point is starting to make the rounds with the Jet set group.

[last1standing]

26. Very interesting read.

Thanks for posting.

[Nuclear Unicorn]

27. So, no more credit cards, small business loans,student loans, mortgages, etc.

Credit markets dry up, savings accounts bear no interest and the only way to grow money will be by investment because nobody is going to put money into a bank that would loan that money without guarantees of repayment.

Then what happens?

[whatthehey]

28. You forgot to complete the aphorism

Last edited Mon Aug 24, 2015, 11:11 AM - Edit history (1)

Don't owe. Won't pay. Will be shut off from any source of capital for life.