God bless Google Video - they have a wealth of interesting documentaries that aren't broken up into ten minute segments like YouTube. This movie is Maxed Out, the documentary on credit cards and debt in America. Some truly heartwrenching stories in there.
The biggest tragedy of the financial changes we've gone through in this country, where debt has been used to make slaves out of the industrious or vulnerable classes, is that people are being blamed, and blaming themselves. They think that they've failed in a market where the game is fair and they simply did not have the inner fortitude to cut it. They couldn't live up to the challenges; they'll never get ahead like others who were able to cope just fine. The debt becomes spiritual as people let their sense of self-worth, which is decidedly not under the authority of the banks, suffer.
And for what? For not being as sophisticated and connected as the finance industry. It's not just a matter of an elaborate back-scratching circle going on between banks and government, or that a central bank that creates loanable money out of thin air, or even that the financial elites who effectively dictate the direction of monetary policy, or that they benefit from the privilege of occupying the closest position to the magic dollar faucet. Rather, it's that the very foundation of our livelihoods - money - has been made into an instrument of oppression. The goal is predatory: to drive people into a leveraged bargaining position. Capital sharecropping is where we're headed.
I've been meaning to view this documentary for a while, and was psyched to find it on Google Video via The Daily Paul. However, it shocked me to see the comments of fellow Paul supporters who are supposed to be so knowledgable and savvy about economics and financial politics. Many commenters dismissed the suffering people in the movie as responsible for their own position; how stupid do you have to be to not read the fine print, to take on more debt than you can afford, to sign your life away? Of course, some people brought up fractional reserve banking and the Fed, but that's only one part of the story.
Another part to be taken into consideration is the Austrian concept of malinvestment. When you have big, privileged players distorting the system, the little guys at the bottom don't get the proper signals from the market. Getting offers of credit is a market signal, not just a lure. When people get these signals, they make decisions about how to postion themselves in the marketplace just like Citibank and Chase Manhattan. The difference is they don't write the rules; the banks do. When you can write the rules and manipulate the way the information is transmitted to people, you have quite a market advantage. And you can't expect anybody, I don't care who you are - an unemployed person, a working guy, or a multinational firm - to make proper, judicious decisions without good information about prices and allocation.
Another point to think about: there are thousands and thousands and thousands of professionals who work in the finance system. Analysts, salesmen, debt collectors, you name it. All of these people are paid a salary to know how the system works; many even take oaths to this effect. Making money, i.e. finding potential debtors, is their job, and they go home at night and have lives. However, you and I have to deal with these people on our time, with whatever basic financial education we have. When debt collectors call, they cut into your time, while they get paid. When bankers negotiate the terms of your loan, that's your limited amount of free time outside of work to try to find a contract that works for you. Yes, you should read any contract fully, but then, what is the purpose of "fine print"? Why should you be expected to be as knowledgeable about the system as a professional? And, getting to the heart of the matter, why is the system so complex that you can't understand it without mediators from the industry with whom you're negotiating?
Yes, people should be more responsibile. But vulgar libertarians have to have big, heavy blinders on not to realize that irresponsibility is no recent phenomenon; you can read about people defaulting on loans, going bankrupt, and losing their farms all throughout American history (and before). What's new now is that this outcome is the premier source of profit. How do they get away with it? They wrote the rules. When the game is incomprehensible unless you have specialized training, access to privileged information, and fourty hours a week to devote to it, and you are large enough to send false or distorted economic signals into the marketplace, it's easy to win. When people lose at a rigged game it is not strictly fair to single them out for blame. Fixing the problem means locating the true cause, and as long as we blame ourselves for being too stupid we are just putting ourselves in another leveraged bargaining position.
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