Former U.S. presidents on debt
Figure 1: U.S. President Andrew Jackson on debt.
Figure 2: U.S. President John Adams on debt.
U.S. Presidents Andrew Jackson and John Adams, described debt as a form of slavery. In a fiat currency based monetary system, which we have today, people getting into debt is something much too common. Due to inflation, the buying power of currencies such as the U.S. dollar is diminishing through time. From my own personal experience with having lived in the U.S. for over 30 years, I can say that almost everyone I know living there is buried in debt! From car loans, student loans, and mortgages, people are struggling just to pay the monthly principle and interest payments.
Unfortunately, this phenomenon of being a “debt slave” is very common in many Western based countries such as the U.S. and the U.K. as table 1 depicts. The countries in most debt are also those with the highest, most extravagant, living standards. Fortunately, interest rates in the last decade have been kept at or around zero, thereby allowing borrowers the luxury to pay low monthly dues. Eventually, interest rates will have to rise and this will lead to many payment defaults similar to what happened in the sub-prime crisis of 2008! In these countries, there is too much peer pressure to maintain a certain standard of living standard that previous generations enjoyed. Unfortunately, due to inflation the buying power of the currency being used is diminishing through time, thus, people need to borrow more and more money to maintain their lifestyle and also impress their friends and relatives. It’s similar to that old saying of, “keeping up with the Joneses” but unfortunately the Joneses are now buried in debt.
Table 1: List of countries by external debt.
Source: https://en.wikipedia.org/wiki/List_of_countries_by_external_debt
The financial elite control people with debt
Debt is a means by which the financial elite, those creating the fiat currency, can control the vast majority of the population into compliance. Additionally, it is a means by which the financial elite slowly transfers hard assets from the general population to their possession as Figure 3 depicts. For example, say you would like a car loan, a home loan, or a small business loan, banks are more than willing to let you borrow the money on the strict condition that you can continually pay the principal and interest payments due the same day of every month. If for any reason you miss a few payments, then after a while, the banks will send collectors to repossess your car, your house, or your small business.
This debt based financial system is one of the reasons why the gap between the rich and poor keeps increasing, especially in Western based countries, the rich keep getting richer while the poor keep getting poorer.
Figure 3: How the banking system transfers hard assets from the people using debt.
Unfortunately, this not only occurs in a micro level but a meta level too. International central banks such as the International Monetary Fund (IMF) can burden countries with so much debt that they can never pay off and if they miss enough regular monthly payments then the collector is sent. In this case, the collector is usually the U.S. military, which will lay claim to some resource owned by the country buried in debt.
Sound money doesn't burden people with debt
In a sound monetary system such as a gold standard, a commodity money based system, or a decentralized cryptocurrency based money system, burdening people with debt is much more difficult to accomplish. Cryptocurrencies, such as Bitcoin, are a digital representation of the gold standard. Bitcoin due to its nature is a limited “digital commodity”. Lending institutions cannot simply lend out more of the cryptocurrency than they have in supply. Therefore, it will be much more difficult to burden borrowers with too much debt using this type of sound money.
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