<snip>
In the interests of brevity, we'll confine our examples to banks. Until well into the 20th century, most banks in the former U.S. were locally owned and operated. A merchant, farmer, or skilled laborer, using measurable collateral (which might include the banker's knowledge of his or her character), applied for a loan at reasonable interest, then spent that loan locally, benefiting the community. The bank, profiting from the interest, in turn loaned more money locally, also benefiting the community. This was, more or less, honest commerce, which is, in its essence, trade – a means by which work was done and goods and services were made available. Mostly, these goods and services were not superfluous; they concerned the basics – food, tools (in its most inclusive meaning), clothing, shelter. Quality was a value. Materials were durable, and objects of all kinds – from typewriters, say, to houses – were built to last. Work, too, was a value. To do even humble tasks well and responsibly was generally considered worthy of respect. If this portrayal sounds too rosy, we need only remember that every human system from time immemorial has been rife with excess, greed, pettiness, exploitation, and cruelty; this one was no exception. Nevertheless, this form of commerce, at its heart, involved supplying what is necessary to an orderly society, and necessity makes for a kind of baseline of sanity.
Time passed; things changed. How they changed is all too well-known; no need to go into detail here. Suffice it to say that, by the end of the 20th century, the bank was no longer locally owned. It had become a "branch," as it was called, of a much larger tree. The health of the community was no longer necessary to the health of the bank. (We are using banks only as a convenient example; the same became true of many enterprises.) Commerce was still important, for life had to be sustained, but speculation became more profitable. A citizen applied for a loan, but it was no longer the same loan. The banks "packaged," as the saying went, many loans and sold those loans to larger entities; these entities, in turn, used the packaged loans as collateral for grander investments and speculations. In this system, banks (and other enterprises) profited from the debt of the community. It was in the interest of banks (etc.) to keep the community in debt. The more debt the community incurred, the more the banks (etc.) could package and sell that debt to larger entities, and the more the larger entities could prosper by speculation. Gradually, speculation replaced commerce as the central source of wealth.
For large-scale speculation to be possible, small-scale debt had to be enthusiastically encouraged. So-called "credit cards" became available, even to those of humble means. But when one buys on credit, one is, in reality, taking out a loan. More accurately named, a credit card was a loan card. As such cards became common, people were borrowing from banks on everything from groceries to lawn mowers. After loan cards became the norm, their interest rates became usurious – 18% was commonplace; 20-odd% was not unheard of. The citizens of the former United States became, in effect, little profit engines for entities beyond their knowledge or control. Everyone was in debt. The so-called "stock market" became a worldwide system of speculation, which thrived on the average household working incessantly to manage its debt.
This was no longer commerce. This was no longer about necessity. This was, rather, a speculative system that fed upon individual desire to create collective helplessness – a citizenry so mired in financial obligation that a baseline of sanity became a sentimental memory, and they knew only a baseline of anxiety. Anxious people stampede toward any illusion of safety. Thus the brave, resourceful people of the former United States gradually became an easily manipulated herd, always stampeding, fearful, suspicious. Commerce thrives on stability. Speculation thrives on instability – not extreme instability but a kind basic built-in instability, in which, for instance, the workforce (up to its highest levels) cannot count on job security, and even people with high salaries can suddenly be in danger of losing their homes.
<snip>
In possessions, they appeared wealthy. In fact, measured by the extent of their debt, their net worth was much less than zero.
When climate change became too disruptive to ignore, two consequences felled this country: Its speculative economy lost much of its "paper" wealth and could not shift in time back to the commerce of necessities that the crisis required, while its lender nations needed all their resources just to cope – leaving the former United States too broke to meet the crisis. Its central government became irrelevant, able only to decree, but unable to act. Gradually, region by region, people began to realize that they were on their own.
(To be continued, eventually.)
http://www.austinchronicle.com/gyrobase/Issue/column?oid=oid%3A549268
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