Stoller: A Debtcropper Society

By Matt Stoller, a blogger-turned Congressional staffer. He was a policy advisor to Rep. Alan Grayson on financial policy issues. Cross posted from New Deal 2.0.

A lot of people forget that having debt you can’t pay back really sucks. Debt is not just a credit instrument, it is an instrument of political and economic control.

It’s actually baked into our culture. The phrase ‘the man’, as in ‘fight the man’, referred originally to creditors. ‘The man’ in the 19th century stood for ‘furnishing man’, the merchant that sold 19th century sharecroppers and Southern farmers their supplies for the year, usually on credit. Farmers, often illiterate and certainly unable to understand the arrangements into which they were entering, were charged interest rates of 80-100 percent a year, with a lien places on their crops. When approaching a furnishing agent, who could grant them credit for seeds, equipment, even food itself, a farmer would meekly look down nervously as his debts were marked down in a notebook. At the end of a year, due to deflation and usury, farmers usually owed more than they started the year owing. Their land was often forfeit, and eventually most of them became tenant farmers.

They were in hock to the man, and eventually became slaves to him. This structure, of sharecropping and usury, held together by political violence, continued into the 1960s in some areas of the South. As late as the 1960s, Kennedy would see rural poverty in Arkansas and pronounce it ’shocking’. These were the fruits of usury, a society built on unsustainable debt peonage.

Today, we are in the midst of creating a second sharecropper society. I first heard the term “slaves to the bank” from a constituent fighting a fraudulent foreclosure. The details aren’t so important — this couple had been illegally placed in a predatory loan — but at one point, the wife explained that she and her husband were so scared they would have “given their first born to the bank to keep their home”. That was fear speaking, total unadulterated panic. And as we watch debt-holders use the ornaments of fear, such a loan sharking company that set up fake courts to convince debtors they were losing cases, we should recognize that what the creditor class wants is what they’ve always wanted: total dominance of our culture.

Today, the debts do not involve liens against crops. People in modern America carry student loans, credit card debt, and mortgages. All of these are hard to pay back, often bringing with them impenetrable contracts and illegal fees. Credit card debt is difficult to discharge in bankruptcy and a default on a home loan can leave you homeless. A student loan debt is literally a claim against a life — you cannot discharge it in bankruptcy, and if you die, your parents are obligated to pay it. If the banks have their way, mortgages and deficiency judgments will follow you around forever, as they do in Spain.

Young people and what only cynics might call ‘homeowners’ have no choice but to jump on the treadmill of debt, as debtcroppers. The goal is not to have them pay off their debts, but to owe forever. Whatever a debtcropper owes, a wealthy creditor owns. And as a bonus, the heavier the debt burden of American citizenry, the less able we are able to organize and claim our democratic rights as citizens. Debtcroppers don’t start companies and innovate, they don’t take chances, and they don’t claim their political rights. Think about this when you hear the calls from ex-Morgan Stanley banker and current World Bank President Robert Zoellick and his nebulous mutterings pining for the gold standard. Or when you hear Warren Buffett partner Charlie Munger talk about how the bailouts of the wealthy were patriotic, but we mustn’t bail out homeowners for fear of ‘moral hazard’. Or when you hear Pete Peterson Foundation President and former Comptroller General David Walker yearn nostalgically for debtor’s prisons.

Unclogging our constipated economy is not a complex problem — we must simply wipe out the bad debt that cannot be paid back. The complexity of the problem lies in the politics. Debtcroppers have no power, except to stop paying their debts. The constituents I worked with on a fraudulent foreclosure eventually did just that. She and her husband, unshackled by panic, began rebuilding their lives, throwing away their indentured servitude to the bank that abused them. They found their dignity, and used the court system to claim their rights as citizens. They fought the man, successfully, and wiped out their debt. And that is a very scary threat to the creditor class, perhaps the only thing they are really scared of.

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  1. Park Dweller

    For people facing foreclosure and eviction –
    Most people wouldn’t feel comfortable doing their own Chapter 7, but that still wipes the slate clean. It be had for 700-1000 if you slump into an ambulance chaser’s office. Stretch it out a bit, go 13, then convert to 7 for some more months. Fill the living room with trash, take some fixtures, doors, toilets what have you, and move into the park. Get really creative, start disassembling the entire house and deliver the materials piece by piece to Habitat for Humanity or the transfer station. Just don’t do a burn job – that’s arson. Lawyers will claim the bank will attempt to sue you for destroying your house, but fuck the banksters. What, they want more blood from a stone? You were trying to remodel before eviction!

    1. Psychoanalystus

      I like the way you think, my friend.

      Another option is to just max out, go cash, dive under the radar, and tell the banksters to go fu*k themselves. But you’ve got to play hardball, and you’ve got to keep your poker face ’til the bitter end.


      1. traderjoe

        To Park and Psychoanalystus –

        Seems to me that the manner in which a war will be won will influence the world that emerges on the other side. If victory is won in an honorable fashion under the rule of law, a positive society may emerge on the other side. If a scorched earth policy of theft and revenge wins, then I fear we will devolve into Mad Max.

        There’s a big difference, IMHO, between staying in a house and fighting a foreclosure through the courts, and taking the home apart one fixture at a time. Similarly, filing BK and defaulting on credit cards is different from intentionally maxing out credit cards and then hiding the cash in BK (and lying on a court filing).

        Two wrongs most certainly will not make it right…

        1. Ἱερώνυμος Αματι Nώνυμος

          victory is won in an honorable fashion under the rule of law,

          That is a good one. We will all remember this time. But if you had said that to us 9 years ago when we could have used the warning, nobody would have listened. We would have turned our back on you then walked away.

          We have sung to you but you have not danced.

          We have drummed to you but you have not mourned.

  2. Koshem bos

    The environment today is way too hard to live with. Lenders are suspect and in any event slow, inefficient and abusive. Congress is a collection of extremists who pray to the rich and will screw the borrowers any way they can. Other in congress are followers of a well off media that has little patient for the less lucky. The government is occupied by former bankers and their friends; it obviously could care less.

    If you are a borrower or in debt you are on your own.

    1. kievite

      Yes life is difficult even if we ignore the existence of abusive lenders and Congress converted to a banker club. Actually both are side effects of the process of financialization of the economy that has started long ago. The current crisis is just a sign that it reached a mature stage.

      I think that the key effect of financialization is devaluation of labour. This process was actually initiated and supported by government. Dissolution of the USSR removed the last breaks.

      The results actually are pretty sobering:
      — Most people in the USA both in lower and upper middle class work harder and get less and less.
      — Working day became unregulated like in early industrialization period
      — Many work several jobs.
      — Many jobs change too fast to adapt (IT is one example).
      — Outsourcing is like Damocles sword.

      All-in-all financialization of the economy became a real tragedy for labour. Today those who earn their living from work are coming out as huge losers: shrinking wage growth, problematic pension and healthcare insurance coverage, decline in health and safety protection.

      1. scraping_by

        A good discussion of financialization, deregulation, and postmateriality is in the first chapter of Doug Henwood’s After the New Economy. He was writing in 2003 when the “weightless assets” fiction of the dot com era had shown itself a bust. I suppose what’s followed has shown they’ve learned some lessons.

        The current crop of weightless assets are supposedly tied to something real, mortgages on homes and credit card debt, but were also traded as abstract entities, and are also showing themselves just as much a bust. If there’s no middle class income to pay the mortgage, a 3000 sq ft house is worth the same as 3000 sq ft of air. If there’s no middle class income to pay off the credit cards, you can keep adding zeros on the balance due, it’s ultimately worth nothing. The traders have been trading something for nothing, and now they’re trying to salvage the appearance. At least until they unload.

        It’s the accounting fantasies that drive the trading fantasies that are the important parts of the game.

  3. paper mac

    I agree with the gist of the post, but isn’t the problem really that most “debtcroppers” haven’t been illegally placed in a loan and have no legal recourse against their creditors? An additional problem is that the creditors have vastly more power over the legal and political systems which determine what’s legal and what isn’t- so really the only way for there to be a mass revolt against this phenomenon is outside of the legal system itself. I really can’t see debtors standing up en masse against the banks and entering into a payment strike, particularly when a good chunk of society is convinced that they’re mostly deadbeats and scum anyway, and the creditors are, as you note, gearing up to direct the vast and terrifying police state apparatus against the debtors..

    1. Jason Rines

      The losses of fraud are not shared equally between bondholders and citizens as they should be. That will mean a 30%-35% true unemployment rate.

      Until the opportunity to benefit is restored as a level playing field of equal losses and level playing field to compete, the pain will continue mounting. Fundamental extemism should be expected and TPTB decided on heading toward the police state (at least for now)option. Americans aren’t the Bolsheviks they are far more highly inventive.

  4. Edwardo

    “We should recognize that what the creditor class wants is what they’ve always wanted: total dominance of our culture.”

    Going on from there what we must recognize is that the proper clinical description, or, rather, diagnosis for those who seek total dominance of others is sociopath. There really is no treatment for such a severe condition, and, therefore, the only effective response entails stern measures.

    1. Psychoanalystus


      As a shrink with considerable forensic experience, I agree with your statement that there is no treatment for sociopathy. If anything, treatment is highly discouraged, as it only teaches them how to be even better criminals. Sociopaths are not human beings, as they lack a conscience or basic human emotions such as empathy.

      As such, the only 2 options we have when dealing with sociopaths: (1) containment, which means putting them in prison for the rest of their lives with no possibility of release, or (2) destruction, which can be accomplished via a number of ways, such as public lynching or giving them the death penalty in a speedy, followed by immediate execution.


  5. Chris

    There will be two economies developing as this continues: one for those able to live with thier debt and the second that have walked away into an underground. Today students are begining to walk away from thier student loans and indentured servitude to foreign countries to escape thier debts.

    1. Matt Stoller

      Underground economies do develop in societies without legal protections for the poor and middle class.

      1. Stephen G

        Explains why interest in Bitcoin (a cryptocurrency that might be used in an underground economy) is 4X greater in Russia, for instance, than in the U.S.?

        1. lambert strether

          Now, that’s interesting and useful. I’ve always wondered how long it’s going to be until they cash (since cash is hard to track and the banksters can’t charge rent on it. At least not yet).

  6. CaitlinO

    There’s another kind of payment strike that can work. It requires organization, focus and self-denial, though. When we realized in the early fall of 2007 that the eonomy was headed into the toilet, we decided to pay off our debt. Today we owe less than 20% of what we did and will be rid of our mortgage debt this winter.

    The banks will never get another cent of interest or fees from us.

    If enough people get out of debt, either through default or pay off, the banks will have measurably less wealth and power.

    1. Psychoanalystus

      But my friend, how much is worth your soon-to-be “free and clear” home? If you sold it today, would you recoup half of your investment? If not, perhaps default would have been a better option?

      As I wrote above, we have been victimized enough by these banksters. It is time we stand tall, stare them in the eyes, spit on them, and softly whisper to them, “fu*k you, as*hole. I’m paying you nothing. Nothing. Got that? Foreclose that”. And then burst into laughter while walking away.


      1. Lyle

        The question is does one really care that much how much a free and clear home cost? Taking that point of view relates to the cause of the crisis as was remarked at the hearing on the mortgage mess, that most of subprime was not for purchase but to extract the equity from a home. If you take the old fashioned view that a home is a place to live period then its not that big a deal. Yes if you want to look at it as an investment it may have been a bad one but, that sunk cost now and crying over spilled milk is well known just to make ones eyes red.
        The critical question is what level of lifestyle is needed. How much stuff is needed. And of course the biggest question relates to having or not having children. At probably 300 to 350k each if enough people don’t have children we will get to be like Japan, in a slow slide and looking to get the better silicon servants in place.

      2. CaitlinO

        Why would we sell it? If we did that, we’d still be sending a check every month to some rentier somewhere. According to Zillow the home has appreciated at an average annual rate of 2.4% over the years we’ve owned it, or at just about the rate of inflation. It’s a lousy investment but a great way to get rent-free living, it seems to me.

          1. CaitlinO

            Maybe I didn’t make my point clearly. Living without debt, including a mortgage, is an effective form of bank boycott. We have chosen to refuse to play property ladder, withdraw equity, rack up credit cards or borrow for autos or school since we began to realize three plus years ago how much damage the financial criminal class had done to our economy and country.

            We won’t contribute to their profits, wealth or power anymore. We haven’t defaulted; we’ve paid our debts down quickly and determinedly. But we absolutely refuse to send another cent of interest or fees to a banker criminal. We’re done.

  7. attempter

    While student debt is a tougher nut to crack (though I’d love to see class action fraud suits against the universities), at least in non-recourse states walking away from mortgage debt is easy.

    Better yet, since when we pay the mortgage we’re not paying any legal noteholder, but just a criminal with no standing or title, everyone should simply stop paying the mortgage. Underwater or not, distressed or not, just stop paying, stay in the house, maintain the property, keep paying the property tax.

    If we could get a critical mass of people jubilating the debt that way, we could break the banksters right there.

    Not only do they probably have no right to either the money or the land even according to their own rigged law; they certainly forfeited ALL rights according to any law of justice when they intentionally crashed the economy and then stole $14 trillion and counting through the Bailout they concocted.

    A debt jubilee would simply be one of history’s great paybacks.

  8. Jim Haygood

    I was loving Matt Stoller’s essay, until he suddenly hit an off note:

    Unclogging our constipated economy is not a complex problem — we must simply wipe out the bad debt that cannot be paid back.

    Think about this when you hear the calls from ex-Morgan Stanley banker and current World Bank President Robert Zoellick and his nebulous mutterings pining for the gold standard.

    HUH? What a complete non sequitur! Our entire economy is pyramided on debt, because ever-expanding debt is the asset which backs the currency.

    This would never have happened under the gold standard. Contrary to Matt’s simplistic notion, the gold standard is the ultimate populist weapon against the usurers.

    It was the soi-disant ‘progressives’ who handed the ususer cartel ownership of their own quasi-public agency, the Federal Reserve. Gold is the way out of this nightmarish corporatist Ponzi scheme.

    1. DownSouth

      Jim Haygood said: “Gold is the way out of this nightmarish corporatist Ponzi scheme.”

      Well I’m happy you’ve found your one true faith. You’re certainly not alone. As Robert H. Nelson observes in Economics as Religion: “If the wars of religion four hundred years earlier had been fought among Catholics and diverse Protestant denominations within Christianity, the great wars of the twentieth century were now fought among socialist, Marxist, fascist, American progressive, capitalist, and other branches of an overarching religion of progress.” “The intellectual history of Western thought since the Enlightenment,” Nelson continues, “is characterized by one utopian vision after another, each finding fault with its predecessors, but then holding out the prospect of yet another, truer—-more scientific—-path to heaven on earth.”

      The problem is that your particular utopian vision has already been tried. And it failed miserably. Of course that’s not much of an obstacle for a true believer, is it? “This would never have happened under the gold standard,” you assure us. “Contrary to Matt’s simplistic notion, the gold standard is the ultimate populist weapon against the usurers.” History thus gets sacrificed on the altar of ideological conceits.

      To set the historical record straight, here’s what Lawrence Goodwyn concluded on the subject of the gold standard in his book The Populist Moment:

      In monetary analysis, Gold Democrats were neither better nor worse than Silver Democrats, merely their equals in hyperbole and in their misunderstanding of how monetary systems worked. Both represented the triumph of form over substance.

    2. reslez

      You: This would never have happened under the gold standard.

      Gold isn’t a mystical relic that can keep the government honest. Bankers and politicians will steal or spend regardless.

      As for “never happening”, in case you missed it Stoller’s post literally begins with a 19th Century-era example, during which U.S. currency was convertible to gold. William Jennings Bryan’s populist rallying cry was the “cross of gold” that doomed farmers and laborers to penury. Switching to a strict gold standard led to three decades of grinding deflation beginning in the 1870s; the entire 19th Century is littered with depressions. The gold standard should be renamed the fool’s gold standard because only an idiot would want to live under it. Who would want to base economic growth on how much sparkly metal we dig out of mines?

      You: Our entire economy is pyramided on debt, because ever-expanding debt is the asset which backs the currency.

      The private sector is indeed burdened by debt, but it is factually incorrect to say debt “backs” the currency. The U.S. dollar is backed by the government’s ability to collect taxes. They can, for example, throw tax dodgers in jail or shell militia compounds. The government may decide to match its spending with its borrowing, or even make such a rule into a law which it can just as easily repeal, but one is not dependent on the other.

      1. Jason Rines

        The militias are not a way of life for me but they are much more self-sustained than the rest of the citizenship. They total 300k and from what I read on their intent, they intend to be left alone if the United States faces radical transformation.

        More like Indian Reservations than Minutemen I suppose. I doubt you would see a violent physical revolution in America. Times have changed since the 18th Century.

        This is a world run by a “virtual” semi-transparent body. What is more likely if dialogue between world government and global citizens doesn’t appear to promote freedom is retired military in special forces executing their oaths to the Constitution and this would largely happen in distant lands in South America and Asia. I doubt we would even read about it in the media outside of a general obituary.

      2. traderjoe

        Yes, it is true that all of our money is debt. In our private fractional reserve system all money is issued as debt (debt-money). See Modern Monetary Mechanics (google it). The vast bulk of our money is created/issued through debt loaned by our commercial banks. Our Treasury does not issue currency (as it can/should be by the constitution) except coin -it must borrow it from the Federal Reserve and the bond markets (including commercial banks that can create the currency for free) in order to spend it. The Federal Reserve Note is the currency of the land, and it is issued by the commercial banks and the Fed.

        The first story of the article had nothing to do with the gold standard per se, it had to do with the usury and deception of the farmers by the bankers. It could have happened under any monetary standard. Also, I would argue that deflation isn’t the bogeyman either, it’s the real interest rate. Any system where the real interest rate is above the rate of growth is destined for failure (and the confiscation of the real property by the bankers).

    3. Paul Repstock

      Jim; before these guys finish ripping your head off, you need to spend two hours to complete your financial education. It is easy to understand and is time well spent.

      These crashes did occur under gold standards in earlier times. A gold standard is the very last thing we need at this time.

      1. traderjoe

        But the video makes it clear that it doesn’t matter what backs the currency, it matters who controls the quantity of it. So, it’s not the gold standard per se, but the idea that the money supply can be expanded and constricted for private purposes.

        I’m all for a debt-free money issued by the UST. Who does control the supply of money though? In any event, I think this is still widely preferable to the current debt-money systems.

        Personally, I like the idea of publicly issued (without debt) currency and multiple private currencies, one of which would likely include precious metals, so that I can choose (liberty and freedom) which system will work best for me at any particular time.

        1. Paul Repstock

          Point for Joe..

          I guess my main concern with the gold standard is that because of the relative scarcity of gold it is easy for people to be confused by it’s true value. If precious metals are used as money the action of saving adopts many aspects of hoarding. In that case, by saving, you are denying other people access to the use and the liquidity of money. By doing that (decreasing the money supply), you also deflate the economy. With fiat (paper) money, the issuing authority (Hopefully the government not the Fed), has the authority to print more money to increase liquidity and keep the economy functioning.

  9. Barry

    JC says:
    I love that jackass talking about debtor’s prisons as a deterrent; who’s gonna pay for those?”

    Taxpayers (but not the rich, they get tax breaks), and the inmates, who will be rented out in service.

      1. Francois T


        Do you have any idea how far this country have sunk since the road building in Alabama?

        Here’s a wake up call:

        Human rights organizations, as well as political and social ones, are condemning what they are calling a new form of inhumane exploitation in the United States, where they say a prison population of up to 2 million – mostly Black and Hispanic – are working for various industries for a pittance. For the tycoons who have invested in the prison industry, [FT that includes Rep Grayson’s ‘best friend’ Dick Cheney!] it has been like finding a pot of gold. They don’t have to worry about strikes or paying unemployment insurance, vacations or comp time. All of their workers are full-time, and never arrive late or are absent because of family problems; moreover, if they don’t like the pay of 25 cents an hour and refuse to work, they are locked up in isolation cells.

        There are approximately 2 million inmates in state, federal and private prisons throughout the country. According to California Prison Focus, “no other society in human history has imprisoned so many of its own citizens.” The figures show that the United States has locked up more people than any other country: a half million more than China, which has a population five times greater than the U.S. Statistics reveal that the United States holds 25% of the world’s prison population, but only 5% of the world’s people. From less than 300,000 inmates in 1972, the jail population grew to 2 million by the year 2000. In 1990 it was one million. Ten years ago there were only five private prisons in the country, with a population of 2,000 inmates; now, there are 100, with 62,000 inmates. It is expected that by the coming decade, the number will hit 360,000, according to reports.

        What has happened over the last 10 years? Why are there so many prisoners?

        [FT Note: Read “The New Jim Crow” for part of the explanation of this explosive rise in the prison population. It is even uglier than the economic hypothesis, but no one ever pretended that US society was getting nicer or more compassionate than before. Quite the contrary in fact.]

        “The private contracting of prisoners for work fosters incentives to lock people up. Prisons depend on this income. Corporate stockholders who make money off prisoners’ work lobby for longer sentences, in order to expand their workforce. The system feeds itself,” says a study by the Progressive Labor Party, which accuses the prison industry of being “an imitation of Nazi Germany with respect to forced slave labor and concentration camps.”
        The prison industry complex is one of the fastest-growing industries in the United States and its investors are on Wall Street. “This multimillion-dollar industry has its own trade exhibitions, conventions, websites, and mail-order/Internet catalogs. It also has direct advertising campaigns, architecture companies, construction companies, investment houses on Wall Street, plumbing supply companies, food supply companies, armed security, and padded cells in a large variety of colors.”

        According to the Left Business Observer, the federal prison industry produces 100% of all military helmets, ammunition belts, bullet-proof vests, ID tags, shirts, pants, tents, bags, and canteens. Along with war supplies, prison workers supply 98% of the entire market for equipment assembly services; 93% of paints and paintbrushes; 92% of stove assembly; 46% of body armor; 36% of home appliances; 30% of headphones/microphones/speakers; and 21% of office furniture. Airplane parts, medical supplies, and much more: prisoners are even raising seeing-eye dogs for blind people.

        According to reports by human rights organizations, these are the factors that increase the profit potential for those who invest in the prison industry complex:

        . Jailing persons convicted of non-violent crimes, and long prison sentences for possession of microscopic quantities of illegal drugs. Federal law stipulates five years’ imprisonment without possibility of parole for possession of 5 grams of crack or 3.5 ounces of heroin, and 10 years for possession of less than 2 ounces of rock-cocaine or crack. A sentence of 5 years for cocaine powder requires possession of 500 grams – 100 times more than the quantity of rock cocaine for the same sentence. Most of those who use cocaine powder are white, middle-class or rich people, while mostly Blacks and Latinos use rock cocaine. In Texas, a person may be sentenced for up to two years’ imprisonment for possessing 4 ounces of marijuana. Here in New York, the 1973 Nelson Rockefeller anti-drug law provides for a mandatory prison sentence of 15 years to life for possession of 4 ounces of any illegal drug.

        . The passage in 13 states of the “three strikes” laws (life in prison after being convicted of three felonies), made it necessary to build 20 new federal prisons. One of the most disturbing cases resulting from this measure was that of a prisoner who for stealing a car and two bicycles received three 25-year sentences.

        . Longer sentences.

        . The passage of laws that require minimum sentencing, without regard for circumstances.

        . A large expansion of work by prisoners creating profits that motivate the incarceration of more people for longer periods of time.

        . More punishment of prisoners, so as to lengthen their sentences.

        Prison labor has its roots in slavery. After the 1861-1865 Civil War, a system of “hiring out prisoners” was introduced in order to continue the slavery tradition. Freed slaves were charged with not carrying out their sharecropping commitments (cultivating someone else’s land in exchange for part of the harvest) or petty thievery – which were almost never proven – and were then “hired out” for cotton picking, working in mines and building railroads. From 1870 until 1910 in the state of Georgia, 88% of hired-out convicts were Black. In Alabama, 93% of “hired-out” miners were Black. In Mississippi, a huge prison farm similar to the old slave plantations replaced the system of hiring out convicts. The notorious Parchman plantation existed until 1972.
        During the post-Civil War period, Jim Crow racial segregation laws were imposed on every state, with legal segregation in schools, housing, marriages and many other aspects of daily life. “Today, a new set of markedly racist laws is imposing slave labor and sweatshops on the criminal justice system, now known as the prison industry complex,” comments the Left Business Observer.
        Who is investing? At least 37 states have legalized the contracting of prison labor by private corporations that mount their operations inside state prisons. The list of such companies contains the cream of U.S. corporate society: IBM, Boeing, Motorola, Microsoft, AT&T, Wireless, Texas Instrument, Dell, Compaq, Honeywell, Hewlett-Packard, Nortel, Lucent Technologies, 3Com, Intel, Northern Telecom, TWA, Nordstrom’s, Revlon, Macy’s, Pierre Cardin, Target Stores, and many more. All of these businesses are excited about the economic boom generation by prison labor. Just between 1980 and 1994, profits went up from $392 million to $1.31 billion. Inmates in state penitentiaries generally receive the minimum wage for their work, but not all; in Colorado, they get about $2 per hour, well under the minimum. And in privately-run prisons, they receive as little as 17 cents per hour for a maximum of six hours a day, the equivalent of $20 per month. The highest-paying private prison is CCA in Tennessee, where prisoners receive 50 cents per hour for what they call “highly skilled positions.” At those rates, it is no surprise that inmates find the pay in federal prisons to be very generous. There, they can earn $1.25 an hour and work eight hours a day, and sometimes overtime. They can send home $200-$300 per month.
        Thanks to prison labor, the United States is once again an attractive location for investment in work that was designed for Third World labor markets. A company that operated a maquiladora (assembly plant in Mexico near the border) closed down its operations there and relocated to San Quentin State Prison in California. In Texas, a factory fired its 150 workers and contracted the services of prisoner-workers from the private Lockhart Texas prison, where circuit boards are assembled for companies like IBM and Compaq.
        [Former] Oregon State Representative Kevin Mannix recently urged Nike to cut its production in Indonesia and bring it to his state, telling the shoe manufacturer that “there won’t be any transportation costs; we’re offering you competitive prison labor (here).”

        The prison privatization boom began in the 1980s, under the governments of Ronald Reagan and Bush Sr., but reached its height in 1990 under William Clinton, when Wall Street stocks were selling like hotcakes. Clinton’s program for cutting the federal workforce resulted in the Justice Departments contracting of private prison corporations for the incarceration of undocumented workers and high-security inmates.
        Private prisons are the biggest business in the prison industry complex. About 18 corporations guard 10,000 prisoners in 27 states. The two largest are Correctional Corporation of America (CCA) and Wackenhut, which together control 75%. Private prisons receive a guaranteed amount of money for each prisoner, independent of what it costs to maintain each one. According to Russell Boraas, a private prison administrator in Virginia, “the secret to low operating costs is having a minimal number of guards for the maximum number of prisoners.” The CCA has an ultra-modern prison in Lawrenceville, Virginia, where five guards on dayshift and two at night watch over 750 prisoners. In these prisons, inmates may get their sentences reduced for “good behavior,” but for any infraction, they get 30 days added – which means more profits for CCA. According to a study of New Mexico prisons, it was found that CCA inmates lost “good behavior time” at a rate eight times higher than those in state prisons.

        Profits are so good that now there is a new business: importing inmates with long sentences, meaning the worst criminals. When a federal judge ruled that overcrowding in Texas prisons was cruel and unusual punishment, the CCA signed contracts with sheriffs in poor counties to build and run new jails and share the profits. According to a December 1998 Atlantic Monthly magazine article, this program was backed by investors from Merrill-Lynch, Shearson-Lehman, American Express and Allstate, and the operation was scattered all over rural Texas. That state’s governor, Ann Richards, followed the example of Mario Cuomo in New York and built so many state prisons that the market became flooded, cutting into private prison profits.
        After a law signed by Clinton in 1996 – ending court supervision and decisions – caused overcrowding and violent, unsafe conditions in federal prisons, private prison corporations in Texas began to contact other states whose prisons were overcrowded, offering “rent-a-cell” services in the CCA prisons located in small towns in Texas. The commission for a rent-a-cell salesman is $2.50 to $5.50 per day per bed. The county gets $1.50 for each prisoner.

        Ninety-seven percent of 125,000 federal inmates have been convicted of non-violent crimes. It is believed that more than half of the 623,000 inmates in municipal or county jails are innocent of the crimes they are accused of. Of these, the majority are awaiting trial. Two-thirds of the one million state prisoners have committed non-violent offenses. Sixteen percent of the country’s 2 million prisoners suffer from mental illness.

        The most tragic in all this is that people in general swallow hook, line and sinker the propaganda about how NECESSARY and VITAL it is to get even TOUGHER on crime, ergo, each and every prison project is CRUCIAL for the survival of this Republic.

        1. i on the ball patriot

          Great response! Jim Crow is alive and well in Matt Stoller’s Florida where he struts around ignorantly pontificating on freshly made prisoner side walks.

          Deception is the strongest political force on the planet.

          1. Yves Smith Post author

            That was out of line. I have little tolerance for gratuitous attacks, particularly on guest bloggers. Keep it up and you go in moderation. Your comments generally verge on being overly aggressive, and you need to watch your tone when you are dealing with people who post here (both the main post and comments) as opposed to public figures.

          2. i on the ball patriot

            Let me see if I have this right …

            You characterize my comment below as; “Honestly, this is just knee jerk blather.” when I responded to CaitlinO regarding the depth of the corruption in the system, and where I expressed my belief that the system has become so odious and so corrupt that those who participate in it (Alan Grayson and and Matt Stoller), and who thereby through their actions legitimize and validate it, are complicit in its crimes, specifically the slow and painful murder of debt enslaved citizens. And I also pointed out that tokenism is a very real part of the system scam — as it is in most Ponzi scams, and that she might consider that.

            And here now in this comment, you characterize me as being generally overly aggressive in my comments and chill my expression by cautioning me to watch my tone when I point out that;

            • I thought Francois T provided an excellent response to what I thought was Stoller’s deflective comment.

            • Jim Crow is alive in well in Matt Stoller’s Florida today, it is! There are hundreds of laws on the Florida books that prevent citizens from exercising their constitutionally guaranteed freedoms and having equal opportunity.

            • And that Matt Stoller struts around on freshly made prisoner sidewalks, which he does! Living in Florida I walk on them every day and see the prisoners, few whites among them, under armed guard, mix and pour them.

            • And so I characterize him as engaging in “ignorant pontification”, which is exactly what it appears to be to me.

            Would it be in better tone to characterize his remarks as, “just knee jerk blather.” If you want me to leave simply ask me I am not one for staying where I am not wanted. But I will not respond to having my expression chilled or the threat of being sent to “moderation”.

            Deception is the strongest political force on the planet.

          3. Yves Smith Post author

            i on the ball,

            First, you have utterly failed to make any kind of specific case against Grayson and Stoller. Your position is extreme and dogmatic, that their is no way to influenced the system in a positive fashion from inside. If you really believe that, you should be taking much more aggressive action than hyperventilating in blog comments. You are taking no positive action to make a difference, yet you have the temerity to criticize those who are.

            Second, it’s completely bogus to make a first term Congressman and his staffer who are of the decidedly liberal persuasion responsible for the high rate of imprisonment in the US. This is sheer guilt by association.

            Third, you mischaracterize Francois T. He pointed out that Stoller could have used contemporary examples that are far more damning. Somehow, in your desire to score points, that becomes some sort of defense of Florida. In case you didn’t notice, Grayson is not a state legislator and therefore can’t directly influence the “Jim Crow” laws you note exist in Florida (I’ve commented before on how Florida does not permit former felons from voting, but Florida is not alone in this regard). And you absurdly imply that Grayson is a supporter, when the black vote is typically 90% Democrat.

        2. Doug Terpstra

          A horrifying wake-up call, like a prophetic cry from Jeremiah. What have we become? We have met the evil empire, and it is us. Hideous. Beyond redemption?

  10. F. Beard

    Gold is a tool of oppression too. What we really need is true liberty in private money creation. After a bailout of the entire population which I have often described we should have separate government and private money supplies.

    1) Government money would be pure fiat and only legal tender for government debts (taxes and fees) not private debts. Fractional reserve lending would be forbidden in it.

    2) Private monies would only be good for private debts. They would be totally unacceptable for government debts.

    Under those rules I expect that corporations would be forced to issue their common stock as private money supplies thereby sharing wealth rather than looting it via the government backed counterfeiting cartel.

  11. F. Beard

    Hey goldbugs,

    Let’s have a truly free market in private money creation and you’ll quickly discover that it is government privilege (accepting it for taxes, for example) that gave value to gold beyond its commodity value.

    It would be fun to see central banks and the uber-rich take an 80% haircut on their gold hoards should we ever have true private money creation liberty.

    1. Paul Repstock

      LOL, FB. At this point it would be much more than an 80% haircut for the price of gold.
      Gold is fairly scarce, and it can be quite pretty in jewlery. However, as a commodity metal the scarcity works against it’s value, and it’s physical properties make it useless for most processes. Infact lead is in someways quite superior to gold. Lead also, is very plentiful and therefore only costs about 50 cent per pound as opposed to $1400 per oz.

      Except for portability and storage, lead is also far superior as a store of wealth than gold is. It’s value is more stable and it would be hard to imagine a situation where owning it would be illegal.

      1. F. Beard

        I don’t know what the pure commodity value of gold is. People will always hoard it to some extent till we figure out how to do money properly. After that, its value should rapidly drop.

        1. traderjoe

          I would happily take a ‘haircut’ in my gold holdings if we could get money “right”. But, in advocating for multiple private currencies, don’t you think one backed by gold/silver would emerge? And in what I understand of your paradigm, that would be perfectly acceptable, since people could choose the currencies they prefer to store their value in.

          I’m not a gold bug per se, but do believe it has some attractive monetary aspects, and would like to see at least one currency backed by precious metals to emerge, so that I can exercise my freedom and liberty to choose how to transact business. I think most ‘monies’ have some pros and cons, therefore a system that utilizes different types of monies would allow me to trade back and forth, and hope that the pros and cons counter-balance themselves.

          1. F. Beard

            But, in advocating for multiple private currencies, don’t you think one backed by gold/silver would emerge? traderjoe

            Sure. And I would permit fractional reserves too but only with private currencies.

            And in what I understand of your paradigm, that would be perfectly acceptable, since people could choose the currencies they prefer to store their value in. traderjoe

            Sure. However,imo, common stock would be a better store of value than gold after true monetary reform. But to each his own. Plus diversification is wise.

  12. Bernard

    The Owners don’t like Government to interfere with the stealing of American wealth. First they sent all the jobs overseas. They bought the Republican Party years ago. The Democrats followed in pursuit.

    With no “Regulations” or Regulators enforcing laws, the Owners get to steal more and more from the poor and Nobody enforces the “laws.” The Rich buy the Government, “Voila.!”

    Now the Government really is BAD. the Government is here to help Business steal. Steal from everyone that can’t buy justice. Making more people poor is avery profitable business for the Owners. Without enough Power to counter the Owners, the poor lose continually. Capitalism works for some.

    Class war of Privatize the Profits and Socialize the Costs. Worked so well in the South for so long. still does, somethings get better. some get worse.

    That’s why Reagan killed the unions. and the decline followed.

  13. Paul Repstock

    My God Psychoanalystus, I’m not sure you have enough rope. The condition appears nearly systemic. I suppose Mr. Obama’s concentration/oh sorry meant Fema, camps might be large enough.

    Enforcement might be a problem though as it appears many lawyers, judges, and police are involved. Keeping the bulk of the standing army and much of the National guard on extended tours of duty 10,000 miles from home starts to make a lot of sense now.

    Oh well, it always comes down to personal accountability in the end. And with over 60 million titles having been run through MERs, nobody can feel complacent any more.

    1. Psychoanalystus

      Indeed, my friend. Indeed. As a nation I think we are doomed. However, as individuals, we can still save ourselves.

      This is why I have been long suggesting here that we are at the point where we must look out for our own families. A second home in another country not dependent on the US, plus a second passport can make a big difference when all hell breaks loose in this quickly-fading bankrupt empire.


      1. Paul Repstock

        Look a bit further. For one thing this is Global in scale. Unless you go to China (perhaps), there is nobody to thwart the United States. And they all have bilateral extraditions.

        Pull together, not apart. The country is worth saving, so are ‘most’ of her people! The core values of Americans, before everything got perverted to greed, were outstanding. There are legions of people standing tall to protect freedom. Would you walk away and leave them?

        1. LJR

          Legions of people “standing tall” for freedom. Sounds like something right out of a John Wayne movie.

          If I left the country tomorrow I don’t think Yves would notice the difference one way or the other. And she’s standing tall. I can tip her via Paypal from Costa Rica just as easily as from here. Or bloviate on the board like this. My physical presence in this country is pretty unimportant.

          Leaving the country means one less family for the country to support so, in a way, leaving is a favor if one doesn’t intend to stay and go down swinging.

          Platitudes don’t help much here I’m afraid. And that seems to be all you are offering.

          I don’t understand at all what your reference to bilateral extradition means. It’s not illegal to leave the country – why would the US try to get you back? I guess you figure that if you left you’d drain your credit cards and screw everybody you could for cash. Well, OK. But that’s not what the guy you’re responding to said he intended. He was just going to leave.

          1. Paul Repstock

            I do tend towards dramatics sometimes.

            If you did leave the country, would you one day return to claim your kids’ birthright when things got straightened out?

        2. Nathanael

          It’s like saying “There’s nobody to thwart the Roman Empire.”

          It thwarted itself.

          The same way the Soviet Union collapsed from within.

  14. A S E

    Stoller is most correct in this sense: the key is asserting our humanity in the fast of the vast inhuman machinery of finance. We must create laws that limit the power of their abstractions to control our lives. While finance is undoubtedly powerful and important, we must put it in its place. And it is a religion. The tone of comments on this blog (and gives me hope for a broad-based political renewal that sidesteps the bizarre (gold) or violent alternatives. If we don’t there’s going to be trouble. The only question is when.

  15. i on the ball patriot

    Matt Stoller, congressional staffer for Alan Grayson, trying a little bit too hard to relate to his audience in his first sentence, drops the decorum of his office and says …

    “A lot of people forget that having debt you can’t pay back really sucks.”

    That same first sentence comes with a link to government shill Elizabeth Warren who prattles on about her childhood values “in her own words”.

    But back to that first sentence …

    Sorry Matt Stoller, but I don’t believe that a lot of people that are in debt they can’t pay back forget that it really sucks. I think it is pretty much uppermost in their minds 24/7. And those lucky enough to not be in debt also don’t forget that debt sucks. Read the comments above.

    But what really sucks Matt Stoller is having a totally hijacked government full of sell out political shills that have allowed the scum bag parasitic gangster elite to gain control of the financial system and exploit and oppress its citizens.

    An exploitation and oppression so severe that many of those good and hardworking citizens, because of their suffering and exploitation, are dying early deaths in tent cities, under bridges, and on back streets and alleys across the nation. Many more citizens, also slaves to this illegally and immorally imposed debt burden, are on an anxiety ridden and early to the grave treadmill. Its simple cause and effect Matt Stoller.

    Given that these elite gangster scum have gained power by illegally and immorally usurping the now scam, ‘rule of law’ (through pac money, hard money, soft money, etc., all cute little euphemisms for bribes, graft, corruption, etc., that’s right Matt Stoller, they bought it, and your savvy enough to know it), and, given that they now operate under the color of that hijacked ‘rule of law, that would CLEARLY make them murderers. And it would also make those sell out political ass hats who grease the chutes for these wealthy elite parasitic scum, like Alan Grayson and yourself Matt Stoller, accessories to murder.

    To say that anyone can find dignity in this corrupt legal system, run by psychopathic murderers, is a lie. By being forced to engage with it one is forced to validate and legitimize its corruption. That is not an act of dignity.

    Matt Stoller, you are the man …

    Deception is the strongest political force on the planet.

    1. Paul Repstock

      Does anyone know how Mr. Greyson voted on HR. 3808??

      That would be telling. I had read it was originally near unanamous.

          1. Yves Smith Post author

            Why would you assume Grayson would support HR 3808? He’s been the most vocal opponent of foreclosure fraud in Congress. I find it remarkable how this thread has been influenced by i on the ball’s unwarranted slurs.

    2. CaitlinO

      ball –

      I never heard of Matt Stoller until today, but can you actually name anything that Greyson did to ‘grease the chutes for these elite scum?’

      I thought it was his refusal to play that game that got him defeated in the election by a much better financed opponent.

      1. skippy

        Naw his voting record was never a part of it, one bad commercial can kill…eh…suiside IDK.

        Any whoo none enters the ring with out the bosses sayin it Okalidoky…a fracas affair yes…but in the end none shale pass with out vetting…snort the line…and ye shall pass.

        Sippy…have a nice day

        1. Yves Smith Post author

          That’s not correct. Grayson was down by a large margin before that commercial. He was targeted by Republican corporate donors for having the most liberal voting record in the House (and being more than a bit effective in punching above his weight in terms of media attention for some of his stands). Palin repeatedly went after him, as did Glenn Beck, which is hardly the treatment your average freshman Congressman gets.

          The commercial changed the odds of turning things around from low to impossible.

          1. Skippy

            Yes, there was a massive national Rep backed effort to unseat him ( hell in the old days he would have had an accident ). Yes he did fight above his congressional weight class, hell even scored a few telling blows. Yes it was most likely over before the commercial but, that was one mother of a stupid commercial, desperation of that magnitude is hard to compute ( disclaimer: the American political infomercial is in a class of its own ), self inflicted wound stuff.

            Personally I don’t believe in pining hopes on individuals (Warren, Grayson or your self, et al), especially when the field is so tilted it would be better described as a vertical wall…cough barrier. To me, it would seem a better strategy if everyone worked together in small groups. Preparing for what ever the asshats in the clown car we call our representative government have in store for us. Too delegitimize its authority by turning our backsides to it, qnd yes hold up a magnifying glass for everyone on their shenanigans…the job of which you excel at.

            The citizens of American need to walk away from the corrupt, moneyed special interest, industry backed, legacy bondholder, parasite classes/groups. They neither care or are interested in how citizens vote, its a scam, to make one feel responsible, a part of this hole pedophile credit debt ring.

            Skippy…BTW did you see this:


            Palmer plays Santa with cars for employees

            Townsville 4810 An employee ideas program has paid off in more ways than one, with massive christmas bonuses for 800 North Queensland workers.

            At a lavish Christmas party in Townsville last night, 55 luxury cars and 700 Pacific island holidays were handed out to workers at the Yubulu Nickel Refinery.

            Skippy here…now how Oprah can you get, mining tax HA! Royal weddings for the poms etc etc. How can the common person ever hope to have a say in things via their elected officials with this sort of rubbish going on…eh…their all bought and payed for, hell you can’t even get in the race without some narrow minded benefactor giving you a nod.

      2. i on the ball patriot

        CaitlinO, Grayson did NOT refuse to play the game.

        He is a game player, an integral part of the game, and through his player actions validates and legitimizes that crooked game. The crooked game that greases the chutes of the wealthy elite scum. See Skippy’s comment — no one gets in without vetting.

        You might also want to consider the concept of tokenism whereby a few champions of the little guy, or popular causes, are let through the gate and tolerated to keep the marks in the game — Kucinich and Ron Paul come to mind, preppy left moron’s champion, Elizabeth Warren, is another. But even there, those loner individuals are suspect in their intelligence or intent. They are either blind to how they are being used to keep the corrupt system alive, hardly likely as they are relatively bright people, or they see it and rationalize it as doing good simply for the perks, spotlight, and prestige that they love so much.

        The present system, through aggregate generational corruption (which functions as a one way wealth building ratchet for the elite scum), is now a well oiled killing machine they preys equally as hard on its domestic populations as it does on populations in its foreign exploitation.

        Truly bright and honorable citizens would not lend their good names to such a corrupt and blatantly murderous system and would instead be working outside that system for positive change.

        Deception is the strongest political force on the planet.

        1. CaitlinO

          So does that mean no, you can’t name anything Greyson did to further the interests of the elite?

          If he was a token, then the puppet masters behind the token don’t seem to have been doing their job very well given that he only served, what? One term?

        2. Yves Smith Post author

          Honestly, this is just knee jerk blather. You clearly don’t know Grayson’s history, either before or during his term in office.

  16. William c Wesley

    Remember the concept of “co-dependency”?
    I saw a national geographic special on North Korea and as we saw people worshiping the “great leader” as a God with fanatical fervor it became obvious to me that the whole nation is co-dependent with the great leaders moral bankrupt brand of “communism”. The more abusive and monstrous his utterly sick behavior is (he murders and enslaves the entire extended family of a transgressor for even a tiny infraction) the more his potential victims adulate him, this being their only hope of survival. We see this in many religions as well in which a cruel and vengeful God threatens all with eternal and absolute torture (damnation)and so is loved as no other entity could be, this being, once again ones only defense.
    Our nation is also deeply co-dependent, only the addiction is to leaders that lust for absolute control through the bankrupt philosophy of consumerism instead of the bankrupt philosophy of Communism. they lure potential victims into eternal dept by seduction rather than by induction (as in North Korea), but the effect is to create slaves in ether case.

    1. Paul Repstock

      Well Willy, you probably have the meat of the thing right there. That is what allows the ‘Enforcers’ to perpetrate their monstrous punishment on the weak, or whom ever is randomly chosen for the ‘catch of the day’.

      As long as one supports the system with enough fervor, one is safe.

    2. KnotRP

      I think you are confusing co-dependancy (a need to be abused) with learned helplessness (no where to hide)…

  17. Doug Terpstra

    Thank you, Yves, for a good post.

    i on the ball has valid gripes (where were you, Matt?), but following William’s insight, Stoller’s main message is right: fear is our greatest enemy. It kills the heart and cripples the mind; it expels love and destroys family values. And dammed-up fear of course finally erupts in rage and violence, so our real enemies are none other than our own fear-mongering leaders. They are the clear and present danger.

    As Stoller notes, fear is the modern slaver’s weapon of domination. This is why Wall Street’s predator-creditors, the media with talk-radio, and congress are continually stoking fear and loathing while our military terrorizes the world with murder and violence.

    In fact, this is the most conspicuous “error” of our hope-and-change president — his obvious failure to uplift the paralytic and talk the despairing down from the ledge. Maybe more than policy, this lapse of inspiration, especially, appears to put him most squarely in league with the slavers.

    Enlightenment banishes fear like light in darkness, and your blog has done much to empower readers. Specifically too, Attempter has always urged just what Stoller proposes: pushing through fear and standing up to the debt-slavers. Once such fighting spirit and voluntary jubilee reaches a tipping point this rotten casino will collapse rapidly.

  18. LJR

    The answer is – tada! – that there is no answer to the dilemma of money. Gold isn’t it and neither, apparently is fiat. Sometimes the wise way is to just shake one’s head sadly and conclude that we just have to bungle our way through these bad, bad times a coming.

    Monetary gold quickly gets sequestered in vaults and paper is issued against it. Then the bankers discover they only need to be able to cover daily demands for a small amount of the gold – thereby paving the way to issuing more paper than there is gold. Then there comes the inevitable run on the bank and people discover there is no gold at all – it having been sent abroad to the banker’s private deposit boxes in Switzerland.

    The essential problem with money is greed in the human heart coupled with the cleverness of the human brain – and there’s no fix for that. Sad state, that.

    1. emca

      “The essential problem with money is greed in the human heart…”

      -and so it is not. One side of a coin you’ve tossed which neither in part are whole.

      We have laws, rules which govern how an individual interacts with another. Not exactly concocted with the ideal of purity of heart.

  19. Ron

    99.9 percent of Americans prefer debt/credit slavery to living a simply Amish lifestyle. Take away modern credit expansion based life and away goes the toys!

    1. Lyle

      Yes while not going quite as far as the Amish, in particular electricty and the like, one could ask is living as people lived in terms of lifestyle like the 50s or the 70s bad. One of the big problems that has been noted if people dialed back we would have a permanent slow economy, since we can produce more goods and services than society really needs. In addition the slowdown IMHO is due to having to pay back all the spending we did in the past the Bush boom was a fake boom based on borrowing and having no real basis. So now we get the lean years to go with the fat years.

      1. Sid

        Make the Average Frustrated American live like the masses did in the 1980’s and there will be a wailing and gnashing of teeth in Our Consumerist Zion such as was never delivered unto the prophets of old, yea, not even unto Jeremiah.

        And that will be like as to nothing, compared with the rage of Mrs. Average Frustrated American and their All-American Offspring.

        Forget the 70’s or the 50’s. Only Commies have to suffer like that.

    2. Chris

      Modern-day American aren’t nearly as selfless and cooperative as the Amish are. A barn burns down, and the whole community rebuilds it. I think in future hard times, Americans hopefully will become more like this. Kevin Carson advocates mutualism

      1. Lyle

        But we have an industry that provides this service the insurance industry. Since the amish do not believe in insurance as it is evil along with interest they have to do this. Recall that originally a lot of insurance companies were mutual companies which is essentially the amish model but done thru the financial system. We all agree to pay so much so that if one of us suffers a disaster they will be made whole.
        The problem is the industry got big and folks decided insurance was a money making affair.

        1. Paul Repstock

          LOL..That wasn’t discovered after the fact…That was what built the gulping monster called the insurance industry. And it truly is evil!

  20. tdraicer

    Too bad the leadership of both our major political parties-most certainly including Obama-are on the side of the creditor class. If only there was still a Democratic Party, but alas…

    1. Lyle

      The US has always been thus, recall Shays rebellion, when the folks in western MA shut down the court house and stopped people being thrown in jail for debt. It got put down, and then the constitution was written to protect the creditor class from the great unwashed.
      Recall that in 1787 it took holding property free and clear to vote. If you were and employee it was felt you would not make good choices, likewise if poor.
      Unfortunatly the American History (mythology) taught in school does not address this point of why we have the federal government in the first place to protect the moneyed class from the peons.

    1. liberal

      Yep. It’s all about rents. That’s what the bubble was about, of course—a bubble in _land_, the biggest rent-generator of all.

  21. Truthi Teller

    Tripe. Sure, there was some predatory lending, but for the most part people WANTED their debt, and the assets and concomitant cashout goodies. Those who didn’t want debt, like me, don’t have it. So just suck it up and let those who can learn from the examples.

    1. F. Beard

      Sure, there was some predatory lending, but for the most part people WANTED their debt, and the assets and concomitant cashout goodies. Truthi Teller

      Maybe so but they are STILL ENTITLED to a bailout because of the moral implications of a government backed fractional reserve banking cartel using the government enforced monopoly money supply.

      Those who didn’t want debt, like me, don’t have it. So just suck it up and let those who can learn from the examples. Truthi Teller

      A bailout of the entire population would include an equal amount of new legal tender to savers too. And savers would be wise to support such a bailout otherwise the shrinking economy may cost them their jobs.

  22. Mickey Marzick in Akron, Ohio

    “The goal is not to have them pay off their debts, but to owe forever. Whatever a debtcropper owes, a wealthy creditor owns. And as a bonus, the heavier the debt burden of American citizenry, the less able we are able to organize and claim our democratic rights as citizens.”

    The other road to serfdom, aka DEBT PEONAGE. [But I don’t recall Hayek or Milton Friedman ever talking about this possibility, not that it didn’t occur to them, but was deemed outside the scope of their inquiry.]

    I’m not certain if there is a strictly inverse relationship between debt [left-hand axis] and freedom [right-hand axis], at least in a material sense, but rather a > shaped curve with a certain amount of debt allowing for a bit more freedom until an inflexion point, the right-hand tip of the – > – is reached. From this point onwards more individual debt is inversely related with individual freedom with the line reversing direction – less freedom – and moving upwards – more debt.

    “Everywhere “man” is born free, but finds himself/herself in chains.” J. J. Rousseau. Is debt just another link in the chain after private property?

    “Debt free” means something or did at one time. But so many Americans have become accustomed to living in debt that “debt free” is increasingly meaningless with all that it entails for freedom. Has debt now merely become equated with consumption which now equates with freedom? [DEBT=CONSUMPTION=FREEDOM] The “freedom to consume” versus “the freedom to think differently” with the irony that material possessions [property] own us and not the the other way around? Is material consumption increasingly inversely related to spiritual freedom? For every increment of the former is there a corresponding decrease in the latter, another inflexion point? Granted, hunger in the belly gnaws away at freedom from both dimensions, but once hunger is no longer the issue…

    It is also interesting that many concepts – debt peonage – once found in the “development literature” are increasingly making their way back from the periphery to the supposedly developed countries in the center to describe socioeconomic conditions found there.

    MMT would suggest that the “collective [national] debt” of the American citizenry is not a problem as the deficit hawks claim because the US is sovereign vis-a-vis its currency and the collection of tax revenues. And while the individual/household and the government/national debt are not to be treated as equal entities, it’s difficult to see how individuals in debt up to their eyeballs collectively cannot impinge on the other side of this equation, especially as the “debt” – private and/or public – is still held by wealthy creditors, whether as individual Americans or other sovereign entities/countries.

    It may simply be a question of accounting identities, but “the man”, whether American or Chinese, is still THE MAN! And GLOBAL debt peonage is still GLOBAL debt peonage! At the “end” of the accounting period, someone owes someone else more than they borrowed at the beginning of this accounting period, suggesting the law of holes: when you’re already in one you have to know when to stop digging. Of course, if you dug deep enough and long enough you would emerge from this hole somewhere in China – a place where debt peonage has a long history.

  23. lambert strether

    Yves writes (apparently after a certainly level of nesting the reply doesn’t appear):

    Why would you assume Grayson would support HR 3808? He’s been the most vocal opponent of foreclosure fraud in Congress.

    1. A reading of my comment indicates that I made no such assumption.

    2. I checked the record, however (as the link shows) and a search of Grayson’s site doesn’t come up with a hit on 3808.

    So, that’s the record. Make of it what you will. Here’s what I make of it:

    What I find remarkable isn’t some random comment, but that (a) a Grayson staffer would assume that people aren’t informed enough to know that the final, on-the-record vote wasn’t the important one, and (b) a Grayson staffer didn’t have the talking point on what Grayson did before the vote immediately at hand.

    I agree that Grayson has been a “vocal opponent,” and that’s all to the good, but unfortunately the lesson of Democratic performance 2006-2010 is one of non-delivery and non-performance, and in consequence skepticism is fully warranted, as much as if they were banksters.

  24. Peter T

    I would like to nominate this thread of comments as one of the best of the year – a good posting was followed by additional points, like the high prison population and American history, and by sober insight in how deep we are stuck. Thank you for the comments!

  25. k

    13th Amendment:
    Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

    Slavery was never really outlawed. It was just modified. A loophole was put in to allow enslavement of blacks. ” no slavery “except as punishment for a crime ………”

    Of Course what was a “crime” was subsequently expanded to include just about anything. Just like today where just about every crime is a felony.

    All of this was designed from the very beginning to maintain slavery and a race based caste system. Of course, the “Controllers” are now prepared to expanded the slavery beyond the narrow confines of race. All those not in the 1% are prime targets.

    Slavery will be re- introduced to the greater population. Now, and In the future, expect to see those with large debts and blemished credit reduced to slave status:
    -unable to buy medical/life/auto insurance: profiling and made prohibitively expensive
    -unable to procure employment
    -unable to acquire professional licenses
    -unable to procure driver’s license
    -unable to procure passport and therefore travel overseas
    -unable to rent

    -all of the debt will be easily tracked by a chip placed under your skin – like a brand on a slave.

    A wise man once said that “Injustice anywhere is a threat to justice everywhere” (MLK)

    On cue, it turns out that the epic injustices doled out to “blacks” over the centuries – injustices for the most part tolerated by “whites”, have threatened justice for all.

    “The chickens have come home too roost” (Malcom X)

    God help us all.

  26. Nathanael

    “Debtcroppers don’t start companies and innovate, they don’t take chances, and they don’t claim their political rights.”

    Until they hit 1789-France levels of desparation. It happens. It happens when the creditors get *too greedy*. You can keep people in a state of peonage for a long time but when you threaten their home and their health they get angry…. and when you threaten their food, then they no longer have anything to lose and they fight back.

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