Financial aside #1: Interesting

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
William Shakespeare, “Hamlet”, Act 1 scene 3

“…the borrower is a slave to the lender” (Proverbs 22:7)

“Then since, as he says, the borrower is a slave to the lender, and the debtor to the creditor, disdain the chain, preserve your freedom; and maintain your independency: be industrious and free; be frugal and free. At present, perhaps, you may think yourself in thriving circumstances, and that you can bear a little extravagance without injury; but, For age and want, save while you may; No morning sun lasts a whole day…”
Benjamin Franklin

Interest is usury. It is a tax on production, given to those who were either wealthy or lucky enough to have the money to loan in the first place. It is inherently either inflationary (as the people in charge of the money supply try to stay ahead of it by printing money) or a redistribution of wealth from the debtor to the creditor (if the economy is zero-sum). It is a form of “passive income”, a concept squarely opposed to the time-honored concept of “an honest day’s work for an honest day’s pay”.

The American consumer is strung out on “credit”, the Orwellian term for debt. The American economy is built on fractional reserve lending and fiat money. Both are fraudulent, and dangerous. It’s literally a huge confidence scheme. Confidence in the government backed paper (with no physical value underpinning it), confidence that a bank run won’t happen, despite the inherent instability of fractional reserve lending, confidence in the government’s implied backing of unsound financial institutions.

On a more personal level, the financial gurus who crow about “debt reduction” or who sell “debt consolidation” products often also proclaim the merits of “investing”. Investing is gambling. Investing is not saving (though saved money loses value due to systemic inflation, it is completely out of the hands of the saver). Saving is literally “not spending”. It is “living within your means”. Investing, on the other hand, is most often becoming a creditor, often in the form of a shareholder. Investors put themselves in position where their “money works for them, instead of working for their money”.

…which about sums it up. Many mock the Puritan concepts of working for your living, living within your means, and honest recompense, instead intentionally (and/or ignorantly) turning to worship at the altars of “compound interest”, Wall Street, and “retirement planning”. People want to be rich, and they don’t want to work. They want other people to do the work for them, while they skim off the top.  An investor society, an interest society, as America has become, is inflationary and/or steeped in redistribution of wealth and value from the debtors to the creditors.

The troubles in the economy aren’t mysterious. They are natural consequences of a usurious system built on fractional reserve lending and fiat money. Such a system is built on a sandy foundation, and cannot function forever. It is increasingly unstable, simply by virtue of its construction. Bernanke, Paulson, Congress and President Bush (as well as past politicians; this isn’t a new system) may try to apply buttresses to the grand pyramid of state, but without shoring up the foundations, and building on solid ground, it’s all just so much shuffling of deck chairs on the Titanic. It is not imagined doom and gloom, it is a fundamentally unsound structure that will have problems. Make sure you know where the life rafts are.

-Tesh

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