Dear America: Better Read The Fine Print On Your Credit Card Statement

Tyler Durden's picture

Authored by Charles Hugh-Smith via OfTwoMinds blog,

What will replace the current system after it self-destructs? That's the question.

You know those disclosures on your credit card statements? That it will take 27 years to pay off your balance if you only make the minimum payment each month, and so on?

You might not be aware of it, but America's "credit card"--our national debt--comes with its own disclosure statement:

Here's a chart of America's credit card: clearly, any credit line expanding this fast will bankrupt the borrower, regardless of their income.

I often refer to debt serfdom, the servitude debt enforces on borrowers. The mechanism of this servitude is interest, and today I turn to two knowledgeable correspondents for explanations of the consequences of interest.

Correspondent D.L.J. explains how debt/interest is the underlying engine of rising income/wealth disparity:

Here is a table of the growth rate of the GDP.


If we use $18 trillion as the approximate GDP and a growth rate of, say, 3.5%, the total of goods and services would increase one year to the next by about $600 billion.


Meanwhile, referencing the Grandfather national debt chart with the USDebtClock data, the annual interest bill is $3 trillion.


In other words, those receiving interest are getting 5 times more than the increase in gross economic activity.


Using your oft-referenced Pareto Principle, about 80% of the population are net payers of interest while the other 20% are net receivers of interest.


Also, keep in mind that one does not have to have an outstanding loan to be a net payer of interest. Whenever one buys a product that any part of its production was involving the cost of interest, the final product price included that interest cost. The purchase of that product had the interest cost paid by the purchaser.


Again using the Pareto concept, of the 20% who receive net interest, it can be further divided 80/20 to imply that 4% receive most (64%?) of the interest. This very fact can explain why/how the system (as it stands) produces a widening between the haves and the so-called 'have nots'.

Longtime correspondent Harun I. explains that the serfdom imposed by debt and interest is not merely financial servitude--it is political serfdom as well:

As both of us have stated, you can create all of the money you want, however, production of real things cannot be accomplished with a keystroke.


Then there is the issue of liberty. Each Federal Reserve Note is a liability of the Fed and gives the bearer the right but not the obligation to purchase — whatever the Fed deems appropriate. How much one can purchase keeps changing base on a theory-driven experiment that has never worked. Since the Fed is nothing more than an agent of the Central State, the ability to control what the wages of its workers will purchase, is a dangerous power for any government.


If a Federal Reserve Note is a liability of the central bank, then what is the asset? The only possible answer is the nations productivity. So, in essence, an agent of the government, the central bank, most of which are privately owned (ownership is cloaked in secrecy) owns the entire productive output of free and democratic nation-states.


People who speak of liberty and democracy in such a system only delude themselves.


Then there is the solution, default. That only resolves the books, the liability of human needs remain. Bankruptcy does not resolve the residue of social misery and suffering left behind for the masses who became dependent on lofty promises (debt). These promises (debts) were based on theories that have reappeared throughout human history under different guises but have never worked.


More debt will not resolve debt. The individual’s liberty is nonexistent if he does not own his labor. A people should consider carefully the viability (arithmetical consequences) of borrowing, at interest, to consume their own production. The asset of our labor cannot simultaneously be a liability we owe to ourselves at interest.

Thank you, D.L.J. and Harun. What is the alternative to the present system of debt serfdom and rising inequality? There is none in our financialized, Neofeudal-Neocolonial State-Cartel Rentier Economy that creates and distributes credit-money at the top of the wealth-power pyramid.

As Harun noted in another email, Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must).

What will replace the current system after it self-destructs? That's the question, and my answer is laid out in my book A Radically Beneficial World: a radically decentralized, transparent, opt-in system of creating money at the bottom of the wealth-power pyramid rather than at its apex.

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Seasmoke's picture

Default. Debt Jubilee. $20 Trillion coin. Reset. 

Pinto Currency's picture

$20T - that's just Federal debt. The total debt is $63T for Fed, state, muni, corp., & consumer debt.


On wiretapping Bush and Obama both illegally tapped trumps 30+ offices, residences, cell ph since 2004.

Not a peep fr MSM

There's a New Snowden - 600M docs Leaked Including Trump Wire Taps on 30+ Phones

Documents Show Obama Surveilled Entire Trump Family For 8 Years

New NSA Whistblower Goes Public About Trump Surveillance


bwh1214's picture

This video is my most likely guess, it fits past monetary resets.  More specifically, it results in the banks and the government getting stronger unfortunatly.

N2OJoe's picture

Now now, what the real minimum payment on an unsecured loan? It's coming sooner than later.

Save_America1st's picture

"Does this look remotely sustainable?  If so--what are you high on?"

on weeeeeeeeeeeeeeeeeeeeeeed...

stizazz's picture

Dear America: Karma As Financial Disaster Is Calling Out Your Name For The Greatest Injustice Of The 20th Century.

techies-r-us's picture
techies-r-us (not verified) stizazz Mar 21, 2017 7:28 PM

Like they say, karma is a biyatch.

cue in cue's picture
cue in cue (not verified) techies-r-us Mar 21, 2017 8:16 PM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

philipat's picture

"Default. Debt Jubilee. $20 Trillion coin. Reset."

Sure, followed by nobody will want UST's and China (possibly also Russia) backs its currency partly with Gold which will be used for global trade because of the implicit backing by Gold. Bye bye USD, bye bye "entitlements" and most other USG spending, along with hyperinflation as the Fed buys and monetizes all the new debt because nobody else wants it.

roadhazard's picture

So, it had nothing to do with Trump. A bunch of criminals live in Trump Tower. I wonder why.

Saucy-Jack's picture

Freegold replaces it. Very simple.

philipat's picture

Freegold is intellectual masturbation. It's quite simple actually; Gold is Money. There, fixed it for ya.

Bendromeda Strain's picture

Yeah, we're over FOFOA and his reading of entrails for lunch money. I was into his blog until I realized that the EU wasn't doing ANY of the things Another predicted.

TAALR Swift's picture

Natural Selection will take care of this.

ParkAveFlasher's picture

Better a living dog than a dead lion.

unsafe-space-time's picture

Natural selection doesn't fix anything. only slows down degradation. 

4shzl's picture

Kommisar Krugman will allocate resources: to each according to his need (greed); from each according to his ability (gullibility).


Oldwood's picture

Debt servitude is nothing BUT political oppression. As we see right now, any political leader who attempts to change the direction of this disaster is attacked BECAUSE he offers solutions. No one WANTS solutions because they understand that solutions demand reality, the one thing that EVERYONE  is trying to escape. Reality means hardship, work, ACCOUNTABILITY.

This massive debt hanging over our head is EXPLICITLY in place to intimidate us into accepting....even EMBRACING the corruption that dominates every aspect of our economy and society.

prymythirdeye's picture

Unfortunately, most people don't realize that it can be zeroed out with a simple keystroke.  It's an odious debt occuring because our own government can not print and coin it's own money.  All money must be purchased with interest from a private, criminal, fraudulant entity known as the Federal Reserve.

slightlyskeptical's picture

Absolutely correct. One day we can and will just decide to issue non-debt money. Pay off all the crap Fed Notes and start over. Won't happen until the PTB have squeezed out every possible asset for their cronies. 

Print debt free money

Ban fractional reserve banking

Abolish income tax and fund government by printing

Pay a basic income to all americans. 

Let people work to supplement that income. 15-20 hours a week is enough to actually get everything done we need done. 

Ensure that basic neccesities stay affordable for all. Everything else can be a free market capitalist's dream. 

Tax the fuck out of death over a certian threshhold (the accumulators) to keep the overall money supply on a balanced trajectory. 

Just like the healthcare system cannot be fixed under the current medical cost structure, the real economy cannot be fixed under our current money system. 

shamus001's picture

Nice slave system youve concocted there. The uber-rich in top STAY on top, elite nobles, and the rest of the wirker ants have no hope of changing their stars. You might as well tatoo commoners at birth to guarantee they never escape their serfdom!

East Indian's picture

No. A much easier Indian solution: divide people into castes, forbid them from intermaarying, and convince each caste separately that they are very bright and unique and other castes are jealous of them and out to get them. Then sit on the top of the pyramid and enjoy.

The pyramid will eventually sink, but that will take centuries,so dont worry. 

Bay Area Guy's picture

Kind of sounds like the American political system.

rf80412's picture

An act of Congress created the Fed.  Could an act of Congress un-create it?  If the Fed ceased to exist with the stroke of a president's pen, then who is the debt owed to?  The Fed's member banks?

Of course, the same people who complain so bitterly about the Fed would complain even more bitterly about the US Mint taking over the job of creating money out of thin air, a la MMT.  At the same time, they'd have no problem with Citibank, BofA, Wells Fargo, and the rest printing notes against their deposits ... the way banks used to be able to do.

TheReplacement's picture

Gold and silver are not thin air.  But, nice try.

Eeesh's picture

The Fed prints the bills, the Treasury mints the coins. Time to convert all your bills to quarters.

jmack's picture

I am pretty sure serfdom, or slavery is totalitarian. There is no financial serfdom vs politicial serfdom.  It is total. if the bastards want to pop your wife's cherry before you consumate the marriage, they can, what are you going to do no eat for the rest of your life?

Nobodys Home's picture

Nah. Please don't hurt her so bad she can't make me a sandwich my lord!

centerline's picture

Whats next?  Take a look at South America.  There is the model. 

Nobodys Home's picture

We had a lot to do with that, not all, but a lot. So the model's design is what may come. I have a shitload of toilet paper stashed away! Pun intended.....but I really do.

cowdiddly's picture

Growth is a .09 and thats after adjusting the way GDP is calculated at least twice. 10 trillion dollars has been spent that has entered this economy somewhere in 8 years under Obama.

IF you take that 10 trillion or doubling of the debt back out of the economy  what would the GDP look like? -5% or maybe -10%% compounded for 8-10 years?

This economy on its own minus this infusion has possibly shrunk maybe even as high as 50% over that timeframe. This is what your feeling in your ass pocket and standard of living.

Q: If I create money out of thin air and lend it out at ursury without conpensating for the added  money for interest payments how do I ever pay it all back? When the debt gets to the point it can never be paid back, what do you do?

a> Start WWIII and blow up the planet and everything collapses in the aftermath

b> default on the debt and crash everything and everything collapses.

c> Keep raising taxes more and more on the poor and working classes until they refuse to work or revolt and everything collapses

d> create a new sound monetary system backed by something tangible, ANYTHING

e> keep printing more until you no longer have space on the bill to write zeros and everything collapes

You are here world at the biggest Debt Bomb the world has ever seen.. Charles Ponzi was a piker

If you picked D go to the head of the class, but this will be THE LAST Choice they will go to kicking and screaming to have to resort to as it limits their ability to rob you blind and enslave.

"The United States always does the right thing, after it has tried everything else" W, Churchill

fbazzrea's picture

+1 i like your maff...

i forecast ACE, in that order. then B and finally D if anyone left.

Nobodys Home's picture

The first script or currency (I think) was Chinese. It was basically an IOU.
It was very big. Almost the size of a magazine page. Quite intricate in design. It pictured how many ingots of copper, how many...whatever was valued at the time was owed. It had writing describing it as well. Finalized with your seal. (not the kind with flippers and whiskers)

I think this could work in the retrograde future.

randombraindead's picture

Of course  the debt is unpayable, but the U.S. is the ultimate too big to fail.  Plus, this article is mostly rambling nonsense trying to sell a book.

Nobodys Home's picture

" Since the Fed is nothing more than an agent of the Central State, the ability to control what the wages of its workers will purchase, is a dangerous power for any government"

In reality This relationship has reversed. The Central State is now an agent of The Federal Reserve.
A dangerous power for any (((Group of Shareholders))).

Awesome credit card disclosure statement!

3Wishes's picture

Whom ever owns this debt has a big problem :) Trump might give them 5 cents in the dollar or less. :)

Nobodys Home's picture

I'll pay .08 on the dollar as long as I can leverage at least x7 and have them provide the funding.

rf80412's picture

There are no good solutions:

  • Default destroys "the full faith and credit of the United States", leaving the US government unable to borrow, and almost certainly crushes the US economy for the foreseeable future, especially if the US dollar ceases to be the international reserve currency and the petrodollar arrangement breaks down
  • Austerity (complicated by the inevitable lack of tax hikes on wealth and the highest income brackets) and pennies on the dollar privatization of government assets - to be turned into opportunities for extracting rents - both sold as "pro-growth" policies, definitely crushes the US economy for the foreseeable future.  Imagine a reverse Laffer curve scenario where tax receipts plummet with employment and incomes, prolonging the austerity period ... but you can't cut your way to growth.
  • Business as usual for as long as it can be maintained
RichardENixon's picture

The "solution" will be completing the annihilation of the dollar

HenryHall's picture

>> default ...  leaving the US government unable to borrow, and almost certainly crushes the US economy for the foreseeable future,

Not if the USA becomes isolationist and self-sufficient.

Actually, all the USA needs to do to solve its long term debt problem is to close and give up all overseas military bases. Problem solved at a simple stroke!

RichardENixon's picture

Wow I hadn't thought of that! 200 trillion in debt and unfunded liabilities gone with a simple stroke!

OCnStiggs's picture

So the Fed was "forced" upon our government by the rich Elites.

The Fed is not part of the federal government. They just borrow that "federal" word to fool people with their title.

The Fed is essentially a private investment group that has loaned money both to our government and to our banks (to us).

This Federal Reserve consortium has loaned out way too much money without real collateral. And, they have fostered the widespread indebtedness we now, as a nation, suffer.

If this were any other private corporation, I'd say they effed up. They deserve to go out of business. They have lost their right to survive. They have dorked up massively.

What am I missing here?

Everyone buy as much metals as you can. When the ruse is over, that Fed organization will be gone and we can move on. We'll be the nuvo-riche and we can finance the New Era free of the moneychangers from Hell.

AMF Federales. AMF Elites.

The Gauleiter's picture

Then log their pool and haul


   Vidi Vici Veni

TePikoElPozo's picture

... they forgot to disclose what happens when you don't repay an UNSECURED loan

The Gauleiter's picture

Not much happened to me.....I learned to live in a COD/barter world....and now all the TBTF want me back....maybe I should say yes, max them out before it all ends....what a country!


   Vidi Vici Veni

Twee Surgeon's picture

It's a Fictional monetary system and it looks to be quite efficient. I can do a Theoretical Contractual Coupon system for the furtherance of trade, It sounds reasonable and it looks like it kind of works. We are not in a Money system, we are in a Trade Coupon system.

It's Coupons, have you got any coupons ? Who gets the Coupons is the problem.

besnook's picture

simplified- it is all about compound interest. increasing income disparity is a function of compound interest. compaound interest will cause trillions more dollars to be printed. compound interest will destroy the world.