Maslow worked out a heirarchy of human needs represented as a pyramid in which the higher things are not attained until basic things are covered. Basic things such as food, clothing, housing, medicine, education and tools.
I recall a time when, except for housing, people paid their own money for all of the above.
As to housing, people put at least 20% down, and borrowed from local banks that lent local money. People wanted annuities so they would deposit their savings for 30 years, and a bank would lend that to a mortgagee for 30 years, 6% loan would cover the 3% paid on the annuity. It was immoral, but at least it was financially sound, like say, a brothel.
Today, banks can borrow credit for five years (or overnight) at nearly nothing interest and lend it out for 30 years at 5%. Ka ching! Not only is it immoral, it is financial suicide.
It was going off the semi/quasi gold standard in 1971 that allowed the change. So now we have people racking up debt to pay for
food (credit cards)
clothing (macy's card)
housing (see above)
medicine (medical expenses now bankrupt people while that was rare before 1971)
education - not only are student loans a trap, not bankruptable, but if you are really smart and win a scholarship, you get nailed ... scholarships are taxable... when you win your goal of a $100,000 full ride scholarship, you will get a $30,000 tax bill, which cannot be bankrupted. And the funny thing is, there is no money, just notes on a tally sheet of who owes whom for what, and who cannot escape an obligation. The state will enforce the obligations to the uber-wealthy, while ignoring the promises to the poor.
In USA we are being attacked at the level of our most basic needs, which prevents us from moving up to higher needs. The tool in this attack is lending cheap credit, which causes inflation and overpricing.
Rawls talked about the "original position" in which we wipe the slate clean and build a just, rational society. It ain't gonna happen.
Gradualists tell us, adjust here, occupy there, protest this, and we can make progress. It never has happened. What does happen is progressive policies bring down the system and the slate is wiped clean in a crisis.
So it is imperative there are enough people who make it through the coming gotterdammerung to practice business in ways that are sustainable when we move out of the ashes.
That means you.
Feel free to forward this by email to three of your friends.
I recall a time when, except for housing, people paid their own money for all of the above.
As to housing, people put at least 20% down, and borrowed from local banks that lent local money. People wanted annuities so they would deposit their savings for 30 years, and a bank would lend that to a mortgagee for 30 years, 6% loan would cover the 3% paid on the annuity. It was immoral, but at least it was financially sound, like say, a brothel.
Today, banks can borrow credit for five years (or overnight) at nearly nothing interest and lend it out for 30 years at 5%. Ka ching! Not only is it immoral, it is financial suicide.
It was going off the semi/quasi gold standard in 1971 that allowed the change. So now we have people racking up debt to pay for
food (credit cards)
clothing (macy's card)
housing (see above)
medicine (medical expenses now bankrupt people while that was rare before 1971)
education - not only are student loans a trap, not bankruptable, but if you are really smart and win a scholarship, you get nailed ... scholarships are taxable... when you win your goal of a $100,000 full ride scholarship, you will get a $30,000 tax bill, which cannot be bankrupted. And the funny thing is, there is no money, just notes on a tally sheet of who owes whom for what, and who cannot escape an obligation. The state will enforce the obligations to the uber-wealthy, while ignoring the promises to the poor.
Rawls talked about the "original position" in which we wipe the slate clean and build a just, rational society. It ain't gonna happen.
Gradualists tell us, adjust here, occupy there, protest this, and we can make progress. It never has happened. What does happen is progressive policies bring down the system and the slate is wiped clean in a crisis.
So it is imperative there are enough people who make it through the coming gotterdammerung to practice business in ways that are sustainable when we move out of the ashes.
That means you.
Feel free to forward this by email to three of your friends.
3 comments:
in my continuing efforts at self sufficiency i have just become a beekeeper, easy & inexpensive for backyard & even city people...
see
http://warre.biobees.com/bfa.htm
thank you, John, for your great blog!
christina
John,
I'm not sure about the scholarships being 100% taxable. From what I understand the portion used for room, board, and travel is taxable but the portion used for tuition is not. I believe this is true only at degree granting institutions. If you got a 100k scholarship, you'd still be on the hook for a bit but maybe not 30k. Still a horrible system
John, I believe in the Bible God had someone to say about all this to the Jewish people it was called the year of Jubilee.
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