FP Article 30 (To sign up for a FREE 6-lesson eCourse on Defeating Credit Card Debt, please click here.)

Beware the Dark Side: Credit Slavery Abounds

by Rajen Devadason

...however, before you rush out to buy it from a big bookstore, which may or may not stock copies of this masterpiece of insightful thought and research, or you simply click over to Amazon.com, which I know has copies, it is worth noting that Brown's book is more than 500 pages long and contains many difficult concepts concerning the way the US Federal Reserve system operates and why many of the woes we see around us might possibly be traced back to dangerous banking practices. In my opinion, most individuals who start the book won't finish it! I believe this to be the case because most individuals would honestly rather focus on issues that pertain directly to their own lives and, in any case, aren't great readers.

FACT 1: We live in a time of enormous bounty.

FACT 2: Unfortunately, even as the store of planetary wealth grows exponentially through the dynamic infusion of value through human effort and thought, the gap between the world's richest people and the world's poorest continues to widen.

This is true not just on a planetary scale but also within the world's biggest economy, the USA.

Back in 1900, according to the United Nations, the world's richest 20% of people owned 10 times more wealth than the poorest 20%. By 1950 that ratio had tripled to 30:1, and by 2000, it was 75:1. Several years ago, I ran a simple regression analysis that suggested on May 1st 2045, the world would reach a 100:1 rich-poor gap. If that happens, the mid-21st century outlook for planetary peace and stability will be grim.

As I mentioned, even in America a similar problem is worsening. In a landmark paper that unfortunately boasts the painfully obscure title of New Unnoticed CBO Data Show Capital Income Has Become Much More Concentrated At The Top, the authors Isaac Shapiro and Joel Friedman pointed out, in early 2006, that something called 'capital income' has become increasingly concentrated at the top of the American economic food chain.

Capital income is something all of us should aspire to earn, especially if we hope to ever get out of the all too common rat race and enter the realm of financial freedom. But it is clear that too few people pay attention to what capital income is and even fewer make it a goal to build up a personal store of capital to generate such income. (For more on goal-setting, keep reading.)

According to Shapiro and Friedman, capital income is defined as income from interest, dividend, rents and capital gains. Based on their study, which is an eye-opening analysis of data stemming from the US's Congressional Budget Office: "In 2003, the top one percent of the population received 57.5 percent of all capital income."

If you take a moment to mull over that, you'll realise this means that back in 2003 - incidentally, things are even worse now! - 99% of Americans had to share the remaining 42.5% of total capital income.

Compassionate, decent people faced with such information for the first time often reel in shock.

Is the solution to do a 'Robin Hood' and steal from the rich to give to the poor'? I don't think so. In George S. Clason's classic book The Richest Man in Babylon, he addresses that issue. The book comprises 10 loosely connected so-called Babylonian parables written in archaic yet easily understood language. Here's a brief excerpt from the third chapter entitled ‘Seven Cures for a Lean Purse’. In case you aren't familiar with Clason's amazing book, this portion contains a  fictitious conversation between King Sargon and his Royal Chancellor on the problems faced by the general populace because of an economic slowdown brought about by the completion, and therefore cessation, of mega construction projects:

“But where has all the gold gone that we spent on these great improvements?” demanded the king. 

“It has found its way, I fear,” responded the Chancellor, “into the possession of a few very rich men of our city. It filtered through the fingers of most our people as quickly as the goat’s milk goes through the strainer. Now that the stream of gold has ceased to flow, most of our people have nothing to show for their earnings.”

“The king was thoughtful for some time. Then he asked, ‘Why should so few men be able to acquire all the gold?’

‘Because they know how,’ replied the Chancellor. ‘One may not condemn a man for succeeding because he knows how. Neither may one with justice take away from a man what he has fairly earned, to give to men of less ability.’

‘But why,’ demanded the king, ‘should not all the people learn how to accumulate gold and therefore become themselves rich and prosperous?’”

Why, indeed! That question posed by Clason’s fictional rendition of an actual historical figure – King Sargon of Akkad, who ruled the entire Euphrates valley about 4,000 years ago – is one each of us must answer.

As you turn that over in your brain, do bear in mind that no one is going to be able to even make a decent start on building personal capital if he or she remains mired in debt, specifically bad debt! The opening paragraph of Ellen Brown's The Web Debt, which hinges on the historical development of banking, might help you make sense of the core issues we all must contend with in our own 21st century:

President Andrew Jackson called the banking cartel 'a hydra-headed monster eating the flesh of the common man'. New York Major John Hylan, writing in the 1920s, called it a 'giant octopus' that 'seizes in its long and powerful tentacles our executive officers, our legislative bodies, our schools, our courts, our newspapers, and every agency created for the public protection'. The debt spider has devoured farms, homes and whole countries that have become trapped in its web.

All that makes for disturbing reading. But we should remember we do live in the time of greatest economic bounty in all of human history. Therefore, I believe the 2 most proactive things you and I can aim to do are:

1. Work on our own lives so that we too become good stewards of money and thus cause more passive capital income to gush into our lives; and

2. Help our friends and family members escape the dangerous clutches of bad debt so that they too will be able to channel their available funds wisely to purchase assets that generate passive capital income.

(Suggesting they read this article might be a good start.)

Those who totally avoid getting entangled in the clutches of bad debt, be it in the form of credit card liabilities that are not paid off in full each month or other consumer loans used to purchase things that go down in value, end up way ahead of the game! Unfortunately, most of us know what it is like to have been caught in the insidious debt spider's web.

Note: This is the dark side of consumer debt - modern-day slavery involves being forced to stay in employment that sucks out the lifeblood from our very souls simply because we carry too much bad debt to risk venturing out on our own or even risk searching for a better position.

And yet we all know that life is to be lived to the full. And in truth, myriad opportunities to 'follow our bliss' exist. So, I reckon we owe it to ourselves to do whatever is necessary to break the shackles of bad debt slavery so we can eventually walk, then jog and one day even sprint toward the side of the global economic fence that contains most of the fulfillment and bounty. Do you agree?

Finally, if you would like to learn how to set great goals, you're invited to check out, buy and study my ebook on goal-setting Unleashed. Alternatively, if you would like to learn how to take practical steps to move from debt slavery to financial freedom, you may read my free article entitled Moving From Debt to Riches? And, if you're based in Malaysia, and want my help in the realm of financial planning and retirement planning, you may learn more about me here.

© Rajen Devadason