September 19, 2008: The cause of the near-collapse of worldwide credit markets this week is not complicated. It’s devastatingly simple, really. But, just as Voldemort was referred to as "he-who-shall-not-be-named" in JK Rowling’s famed Harry Potter books, almost no one has the backbone to name the simple cause of our economic meltdown: Debt Addiction.
There. I said it. And I’m still alive and unharmed.
We have become a society, no a planet, of debt addicts. Consumer debt, mortgage debt, corporate debt and government debt.
What must debt addicts do in order to pay for their addiction? Governments and corporations must do everything they can to make sure that economic expansion continues at as rapid a pace as humanly possible, in order to pay tomorrow for the credit they are living on today. Individuals must scramble to make their minimum monthly payments even though these don’t come close to keeping pace with the amount of debt they owe. Instead, the debt they owe continues to grow.
Worse, when debt addiction continues to mushroom at a faster pace than economic expansion can pay for, what does the government and banking system collude to do? They invent money that does not exist. Just like they did this past week.
Think about it: how can the United States government that is itself trillions of dollars in debt loan to the banking industry somewhere between $500 billion and $1 trillion? There are only two ways to do that:
- Borrow from outside the United States
- Invent the money
If the US government borrows from other countries this runs the risk of making the US beholden to those countries. And that’s assuming there ARE any countries that have such a huge cash surplus lying around that they can loan it to the US.
No, the US has to invent the money it will lend to the banking industry in order to supposedly bail it out. US Representative Dennis Kucinich succinctly summarizes what would REALLY occur if the "taxpayers" allegedly loaned the money to the banks:
The taxpayers loan money to the banks. But the taxpayers do not have the money. So we have to borrow it from the banks to give it back to the banks. But the banks do not have the money to loan to the government. So they create it into existence (through a mechanism called fractional reserve) and then loan it to us, at interest, so we can then give it back to them.
This is a powerful summary of the end-stage insanity that has been brought about because a relatively new, utterly dysfunctional and completely unsustainable economic system has replaced Capitalism.
NOTE: I added to this post from September 19, 2008 the following brief Glenn Beck video from January 29, 2009 in order to show you that the problem of inventing money continued to escalate dramatically through the remainder of the Bush administration. You can be certain that this trend has kept going in this direction since President Obama’s additional bailout measures have been approved by Congress. Watch it and weep (you’ll need Adobe Flash loaded on your computer in order to view this Fox News video). Then keep reading beneath the video for the continuation of my September 19, 2008 post.
The economic system we have become dominated by is the preferred economic system for greedy debt addicts: Debtism, an economic system that is neither capitalism nor socialism. Or, if you prefer, Debtonomics. Whichever you call it, this profoundly dangerous and utterly unsustainable economic system has replaced capitalism, in the United States and around the world.
Debtism relies on two very simple but utterly unsustainable requirements:
- Stimulating economic expansion no matter what this costs us as a individual citizens, as a society, or as a planet; and
- Paying for what is desired now by borrowing money against future earnings that are expected as a result of stimulating economic expansion today.
An economic system that relies on these two core greed-based requirements isn’t merely doomed to fail. In fact, it IS currently failing… before our very eyes. This isn’t rocket science, it’s common sense. Debtonomics isn’t a true economy, or true capitalism. It’s unbridled greed masquerading as good business. It serves the few in the short run at the expense of the many over the long run.
Yet, despite the long-term devastation that Debtism unavoidably causes, it remains the economic system on which the US and countries continue to operate, and which none of us are supposed to question. In other words, Debtism is "that-which-shall-not-be-named."
What better way to hide from this truth than by diverting attention. Pundits rail against the alleged evils of capitalism or socialism. Politicians get into endless partisan battles over which band-aid, which temporary symptom control strategy, should be used next in order to try to contain the devastating effects that Debtonomics creates. These debates are in reality smoke screens that entirely evade the real issue, and thus perpetuate it.
The fact is that from the very start of the United States, our founding fathers built into our constitution an economic hybrid containing elements of both capitalism (primarily) and socialism (secondarily). Both of these economic models have their strengths and weaknesses and both CAN be integrated so that they synergistically serve both individual freedom and the common good far better than either can do by itself.
No, what we need to be railing against is Debtism, the addiction-based fake economic system that we have allowed to drown out the best of both of these bona fide economic systems!
I can tell you as a psychologist that living in delusion is one of the cornerstones of any addiction. I can tell you as an integrity analyst and integrity development specialist that Debit Addiction and Debtism is the pinnacle of lack of Financial Integrity.
It is impossible to solve a problem that has not been accurately identified. To paraphrase Aldous Huxley, Debtonomics does not cease to exist because it has been ignored.
As the late brilliant journalist Erik Sevareid said in 1970, "The chief source of problems is solutions." No solution that the head of the Federal Reserve, Ben Bernanke, the US Treasury Secretary Henry Paulson, the US President, the US Congress, or Wall Street, comes up with will succeed unless it moves us decisively in the direction of freeing us from the tyranny of Debtism.
We must join together to put an end to debt addiction. To do this, we must replace our obsessive preoccupation with economic expansion with a disciplined dedication to "enoughness." And we must do this beginning now.
Building prosperity based on constant economic expansion, and the debt addiction this obsession with expansion spawns, will NEVER succeed as a path to personal, business or societal prosperity. In other words, it will never succeed as a viable economic system.
I harbor absolutely no illusions that it will be easy to free ourselves from our massive worldwide Debt Addiction. On the contrary, as a psychologist I have profound regard for how difficult it is to recover from any addiction.
At the same time, I can also tell you that untreated addictions are ultimately fatal. Debtism is an utter lack of Financial Integrity created by the addiction to expansionism and the debt it requires. To recover from our Debt Addiction we have no alternative but to restore our Financial Integrity. Our financial survival as a country and as a participant in the global economy, requires it.
Do not trust any politician, banker, economist or media pundit who claims to understand, or want to do something about, our current financial mess UNLESS they talk clearly and bluntly about Debtism and the absolute necessity of freeing ourselves from its enslavement.
In order to restore Financial Integrity we need to end our delusion that life fulfillment is possible without integrity. Life fulfillment and integrity are inseparable.
For decades now I have used the following anonymous quote in many of my keynotes and workshops: "Mostly people change not because they see the light but because they feel the heat."
Have we as a society finally felt enough heat about Debtonomics to see the light? I fervently hope so, with all of my heart and soul. Because if we have not, our next Wakeup Call with our Debtism-based economic system will be many times more devastating than our current one. I promise. Because that is the law of Wakeup Calls.
Wake up America! Wake up World! Integrity is not simply a good intention or a high ideal — it is a specific set of actions that require a specific set of skills that most of us don’t have but all of us can learn.
My six-award-winning book, The New IQ: How Integrity Intelligence Serves You, Your Relationships and Our World, maps out precisely how these kinds of addictive behaviors and policies develop, and reveals the completely learnable life skills that are necessary for integrity-centered life fulfillment, sustainable success and wise leadership.
There’s plenty that ALL OF US — from everyday people to world leaders — can do about Debtism — and all the other forms of lack of integrity that are tearing our society apart — beginning today.