OfTwoMinds May 21 2014
Fiat money is at base a form of indirect wealth transfer from those forced to hold the money to those issuing the money.
I describe the pernicious servitude created by debt as debt serfdom, as serfdom implies a neofeudal arrangement that requires serfs’ acceptance of this financial yoke of servitude. In other words, debt is freely accepted as the line of least resistance in a system that incentivizes debt and places high barriers to debt-free independence from a Status Quo operated to benefit the owners and issuers of debt, not the debtors.
Correspondent Jeff W. has identified an even more insidious form of monetary servitude that he calls fiat slavery, as the servitude is enforced by fiat (unbacked government-issued) money.
In other words, being forced to use state-issued fiat currency is a form of servitude, as fiat money is at base a form of indirect wealth transfer from those forced to hold the money to those issuing the money.
Beyond this state-enforced wealth transfer from citizens to the state, there is a secondary wealth transfer going on in any fiat-money system: the neofeudal financial nobility who are closest to the money spigot get to buy whatever real-world assets and income streams offer the best return before the money trickles down to the debt-serfs paying interest and taxes.
For example, the financial nobility can borrow billions of dollars at near-zero interest from the Federal Reserve, and use this nearly-free fiat money to buy student loans that pay 7+% annually. They can also snap up houses for cash that the nobility then rents to debt-serfs who have been outbid by those with the extraordinary advantage of unlimited access to the Fed’s nearly-free fiat money.
Here is Jeff’s commentary:
In a world where every country prints fiat money, the entire human race today, except for its money masters, is subjected to fiat slavery.
Almost everyone understands what it means to be a tax slave. It means that people must work several months of the year for the benefit of the taxing authorities. Taxes in the U.S. today are several times higher than they were 100 years ago, and at present-day tax levels, today’s Americans are rightly called tax slaves.
What it means to be a debt slave is also easy to understand. It means that one must spend a large fraction of one’s time to earn money to pay creditors. Millions of Americans today are mired deeply in debt, but today’s America is also a country where if you personally stay out of debt, the government will go into debt for you. Continue reading