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The History Of Debt

Tyler Durden's picture





 

Starting from a simple loan (remember them), credit markets have evolved many innovations to cater to an increasing need for leverage (intrinsic firm leverage - levered loans to high-yield bond market; and extrinsic instrument leverage - securitizations and derivatives) for issuers, traders, and investors. However, as the following maze of the history of debt, NY Times shows these have led to many costly crises (and will do in the future...)

 

 

Source: NY Times

 


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Fri, 11/15/2013 - 13:57 | Link to Comment moonman
moonman's picture

I only see chutes, where are all the ladders?

Fri, 11/15/2013 - 14:26 | Link to Comment CitizenPete
CitizenPete's picture

Chuckle.  This board comes with extra (weighted) dice.

 

 

Who voted this this down?  Some Millenial who doesn't know what your talking about? 

Fri, 11/15/2013 - 15:07 | Link to Comment Four chan
Four chan's picture

top of chart rothschilds.

Fri, 11/15/2013 - 19:22 | Link to Comment BellyBrain
BellyBrain's picture

Debt: The first 5,000 years:  http://www.youtube.com/watch?v=CZIINXhGDcs

Fri, 11/15/2013 - 14:05 | Link to Comment Crash Overide
Crash Overide's picture

Debt = fraud = control = slaves

Fri, 11/15/2013 - 14:10 | Link to Comment Groundhog Day
Groundhog Day's picture

The circle of life

Fri, 11/15/2013 - 14:11 | Link to Comment Skateboarder
Skateboarder's picture

OMG, you're the terriss the gub's been warning us about.

*frantically searches for scissors*

---

I would like to see this tautology engraved on every street corner.

Fri, 11/15/2013 - 14:06 | Link to Comment rosiescenario
rosiescenario's picture

Here's my simple history of debt: Citi informs me that they will now be charging up to 30% interest on their MasterCard....I stop using their card. When greed reaches a certain point it backfires.

Fri, 11/15/2013 - 14:13 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

Great.  It especially works if you send the chopped up CC to the CEO in an envelope marked personal.

Nothing will happen and I am sure that some minion opens the mail but without  some action, a serf will go crazy

Fri, 11/15/2013 - 14:08 | Link to Comment Big Johnson
Big Johnson's picture

Strange that there is always a BS reason why things went wrong on the back end of leveraging up the balance sheet. Moral hazard was in play due to our friend the govt who has the big boys back at the end of each credit cycle.

Fri, 11/15/2013 - 14:08 | Link to Comment Bearwagon
Bearwagon's picture

I always hear this talk of debt, debt, debt. That's not just debt - that's money. And for many of us it is the only money they will ever get ...

Fri, 11/15/2013 - 14:08 | Link to Comment yogibear
yogibear's picture

Don't play the their consumerism game.  Higher taxes, health plans and prices have robbed the 99%.

Let the 1% blow their profits they took from the 99%. Add in the school loans and those 7 year car loans.

The 90% are tapped out. 

Fri, 11/15/2013 - 14:13 | Link to Comment Groundhog Day
Groundhog Day's picture

If the 90% are tapped out well then the .0995 are just going to have to cover for them through taxation.  The .05 certainly won't be

Fri, 11/15/2013 - 14:23 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

"A nickel ain't worth a dime anymore."

"We made too many wrong mistakes."


Fri, 11/15/2013 - 15:28 | Link to Comment Pesky Labrador
Pesky Labrador's picture

1942 War Nickel is :)

Fri, 11/15/2013 - 16:25 | Link to Comment Tall Tom
Tall Tom's picture

Actually it is only some the 1942 War Nickels that are .350 Fine Silver. The 1943 -1945 mintages are 35% Silver. In 1946 they resumed the standard alloy.

 

They are easy to identify with the Large Mintmark over Monticello's Dome on the Reverse. I still get those in circulation from time to time.

Fri, 11/15/2013 - 14:17 | Link to Comment carbonmutant
carbonmutant's picture

Great Chart... Where's Bitcoin?

Fri, 11/15/2013 - 14:26 | Link to Comment kralizec
kralizec's picture

Looks like entrails...

Fri, 11/15/2013 - 14:31 | Link to Comment Pairadimes
Pairadimes's picture

It will be.

Fri, 11/15/2013 - 14:40 | Link to Comment indio007
indio007's picture

Item #1 is BS.

Credit appeared at least 1000 years before money.

see Debt: The First 5000 years By David Graber

 

Fri, 11/15/2013 - 15:04 | Link to Comment Vidar
Vidar's picture

Graber's book is thinly veiled nonsense. See http://mises.org/daily/5598 for the reality behind Graber's claims.

Fri, 11/15/2013 - 15:46 | Link to Comment indio007
indio007's picture

Hmmm... which should I give more weight to , the book with references ,citations and footnotes based on physical evidence or an OPINION piece without any of those.... ?

 

 

Fri, 11/15/2013 - 14:47 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Not bad for 319 years of work [Bank of England-1694] and of course, they've always had OUR best interests close to their heart....

Fri, 11/15/2013 - 14:50 | Link to Comment venturen
venturen's picture

I heard there is a Soul Repo option with every JPM loan? 

Fri, 11/15/2013 - 14:54 | Link to Comment indio007
indio007's picture

I should also say the credit is not working the way people think in the current system.

 

The way it works now is an exchange of a promise to pay for a promise to pay.

The funny thing is YOUR promise to pay is the collateral for THEIR promise to pay.

Can you say -hypothecation?

Fri, 11/15/2013 - 17:53 | Link to Comment orangegeek
orangegeek's picture

debt?  what's that?  how do you spell it?

Fri, 11/15/2013 - 19:50 | Link to Comment Fíréan
Fíréan's picture

re. The History Of Debt #3. Securitization. ( the one in red): 

".. .Most securitizations are sliced up so that some investors can take more risk than others for a higher payout. This goes wrong when investors underestimate the risks of the underlying loans"

The risk goes wrong, for the investor when they are fed lies regarding the true risk of the underlying loans, via the ratings given by the ratings agencies or regarding the true nature of the underlying loans.

 

Fri, 11/15/2013 - 19:54 | Link to Comment nowhereman
nowhereman's picture

Here's my sad story. I had retired but not yet collecting my pension, so I went to the bank because I was "richer than I thought" and asked the nice lady if the money I had put away could be made to provide me a modest income until I was 75.  Sure she says, and we set it up.  Everything was going swimmingly until I moved, and notified my local office of the same bank of my new address.  Stange things began to happen, monies were disappearing from my account, my balance was evaporating.  I went to the bank branch and asked "what gives"  they said the government is taking 1/3 of your money every time we pay you.  I said, "why didn't you tell me that things had changed" he just shrugged his shoulders and said, "we thought you knew".  Needless to say I was pissed.  I closed out my account, now  1/3rd less and did something I had never done before.  I maxed out my credt card to the tune of $17,000.  And I am refusing to pay it back.  You steal my money, I steal yours.   Well, I'm on my third collection agency, the latest being quite crude, but I have charged them with bullying and they seemed to have backed off a bit, I suppose agency 4 can't be far away.

Lesson:  They can only hurt you if you let them.

Sat, 11/16/2013 - 00:33 | Link to Comment Radical Marijuana
Radical Marijuana's picture

Although interesting to study, this kind of chart does not emphasize the most important event in the history of debt, which was the emergence of the legalized counterfeiting, which enabled more and more "money" to be made out of nothing, as debt. The previous systems of lending money that previously existed, because it was previously earned, and had intrinsic value, or a ring of truth within it, is NOTHING like that compared to lending "money" that did not exist until the borrower promised to repay their loan with interest, but otherwise had no intrinsic value in itself, but actually was merely a form of fraud.

In my view, this kind of chart is a good example of LYING BY OMISSION. While what it presents may well be correct, what it does NOT present is by far the most important aspect of the bigger picture, especially today, when the runaway debt slavery based on legalized counterfeiting of "money" by private banks has driven the numbers to become debt insanity, since the whole economy became based on force backed frauds, which are euphemistically referred to as "financialization," but which are actually due to totally triumphant force backed frauds taking over.

The deeper reality is that the history of debt has been inverted and perverted into becoming a Bizarro Mirror World, at the same time that the meaning of "money" was inverted and perverted. People still talk about "money" and "debt" as if those things are the same now as they were thousands of years ago. However, in fact the social meaning of those basic concepts have been reversed during history, at an exponential rate, especially during the past few Centuries, and even more so during the last few decades, and then again even more so during the last few years, due to the nature of its structure depending upon exponential growth, which makes the longer term future of that system so extremely problematic!

In order to have a deeper understanding of "money" and "debt" one needs to appreciate how the meaning of those words became practically reversed. Furthermore, in order to understand that reversal one has to understand how and why there could develop such a Bizarro Mirror World situation in general. To understand the history of debt deeper, one must go deeper into an understanding of "money" which transcends not only the way that the meaning of that world has become perversely reversed, but also, understands the concept of "money" at a much deeper level, as an information system, within a thermodynamic system.

The larger history of debts has been the history of organized lies, operating organized robberies, where those who were most successful at doing that were gradually able take more control over those who were not as successful. That is the history of private property, manifesting through the domestication of plants, and animals, with the "domestication" of some human beings by others as the most important aspect of that, in the form of slavery. If one goes back in the history of "debts" one finds that most of the words that we use today have their origins from sources that seem strange to us today. For instance, the origin of the word "freedom" started as meaning "free from debt." However, today, the almost perfected perversity of reversing the meaning of words, so that "money" now means almost the total opposite to what "money" meant Centuries ago, has resulted in everything else becoming simultaneously perversely inverted.

Therefore, as the American democratic republic was recaptured and controlled by the international bankers, its touted "freedoms" were actually turned into collective debt slavery, which has run away to become collective debt insanity. Furthermore, that process has pretty well taken over the whole world. The basic realities were always systems of organized lies and robberies, in which context was the operation of "money" and "debts." However, more and more, the ability of the biggest bullies' bullshit stories to dominate society enabled the meaning of those words themselves to become perversely inverted, which then enabled the vast majority of people to end up living inside of an increasingly insane "money as debt" system, which has enabled the debt slavery to generate numbers which became debt insanity, without any effective checks and balances left operating within those systems.

This chart seems to start from "simple loans." However, it really starts from the privatization of the environment, due to staking claims, and backing up those claims with violence. After studying this chart, I notice almost nothing to indicate how profound the difference was between lending wealth that was previously claimed, while yet still actually existing, to be what was loaned, compared to the contemporary systems, which were built upon runaway "fractional reserve banking," which was legalized frauds, which have become no longer tethered to the real world in any realistic ways, which has enabled the debt slavery to blast off into orbit around, or even reach an apparent escape velocity from the real world, in the form of debt insanity.

In my opinion, a more useful chart would necessarily add in that transformation from lending based upon previously existing wealth, to "lending" based on being able to make "money" out of nothing, as debts. Of course, in order to do that, one has to also include the social facts that slavery was the main social system throughout most of history, and that the modern system became sophisticated slavery, through increasingly symbolic frauds, backed by force, rather than, as before, blatant slavery based on physical force.

To understand any of these things in really better ways takes backing way up to the perspective of basic information and thermodynamic energy systems, and then takes understanding how those basic systems were understood through the processes of the biggest bullies' bullshit stories about those systems became the most socially dominant communication language. The history of debt is really the history of slavery. That can not be understood unless one perceives that the debt controls depend upon the death controls, and what always actually existed was a combined money/murder system, which still exists now, but has been astronomically amplified in size, so that the old-fashioned forms of debt slavery have become the postmodern forms of debt insanity, in which fundamentally fraudulent financial accounting systems have been able to take the form of globalized electronic money frauds, backed up by the force of weapons of mass destruction. Therefore, in my opinion, for all its apparent comprehensive complexity, this chart is so grossly oversimplified as to be seriously mistaken and misleading!

Fri, 11/15/2013 - 20:04 | Link to Comment Fíréan
Fíréan's picture

So how about an ammended version of this diagram with "self -securitization" added to the picture. as per ZH article:

http://www.zerohedge.com/news/2013-11-15/unspoken-toxic-secret-heart-sha...

 

 

 

 

Sat, 11/16/2013 - 04:01 | Link to Comment virgule
virgule's picture

I love #2 where people "want to cash out on a loan they've made". Easy, isn't it? Somehow in my world, it's the other way around, once I've lent my money, I can't quite cash out until the borrower pays me back.

I've made the decision to lend based on a very particular set of circumstances that I (hopefully) fully understood. Somehow popular culture says it's normal that other investors can make the same investment decisions that I did, based on *my* evaluation of those circumstances...but without them ever making their evaluation for their circumstances?

Suposedly securitization and derivatives have somehow "spread the risk" in some kind of dilution process. Bollocks. Risk has never changed or been reduced, it's just camouflaged away from the investor's eyes.

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