Could you live without debt? Most Americans say that they cannot

by Michael Snyder
End of The American Dream
Analysis

According to a brand new Pew survey, approximately seven out of every 10 Americans believe that “debt is a necessity in their lives”, and approximately 8 out of every ten Americans actually have debt right now. Most of us like to think that “someday” we will get out of the hole and quit being debt slaves, but very few of us ever actually accomplish this. That is because the entire system is designed to trap us in debt before we even get out into the “real world” and keep us in debt until we die. Sadly, most Americans don’t even realize what is being done to them.
In America today, debt is considered to be just part of normal life. We go into debt to go to college, we go into debt to buy a vehicle, we go into debt to buy a home, and we are constantly using our credit cards to buy the things that we think we need.
As a result, this generation of Americans is absolutely swimming in debt. The following are some of the findings of the Pew survey that I mentioned above…
• “8 in ten Americans have debt, with mortgages the most common liability.”
•”Although younger generations of Americans are the most likely to have debt (89 percent of Gen Xers and 86 percent of millennials do), older generations are increasingly carrying debt into retirement.”
• “Seven in 10 Americans said debt is a necessity in their lives, even though they prefer not to have it.”
Most of us wish that we didn’t have any debt, but we have bought into the lie that it is a necessary part of life in America in the 21st century.
It has been estimated that 43 percent of all American households spend more money than they make each month, and U.S. households are more than 11 trillion dollars in debt at this point.
When it comes to government debt, that is easy for us to blame on someone else, but all of this household debt is undoubtedly something that we have done to ourselves.
It all starts at a very early age for most of us. When we are still in high school, we are endlessly told about how important a college education is. All of the authority figures in our lives insist that we should just try to get into the best school that we possibly can and to not even worry about how much it will cost.
So many of us go into staggering amounts of debt before we even get out into the working world. We had faith that the “good jobs” that were being promised to us would be there when we graduated.
Unfortunately, in this day and age those “good jobs” end up being a mirage more often than not.
But whether or not we can find a good job, we still have to pay off all that debt.
According to new data that was recently released, the total amount of student loan debt in the United States has risen to a grand total 1.2 trillion dollars. If you can believe it, that total has more than doubled over the past decade.
Right now, there are approximately 40 million Americans that are paying off student loan debt. For many of them, they will keep making payments on this debt until they are senior citizens.
Another way that they get you while you are still in school is with credit card debt.
I got my first credit card while I was in college, and nobody ever taught me about the potential dangers.
Today, the average U.S. household that has at least one credit card has approximately $15,950 in credit card debt.
So let’s say that you have that much credit card debt and you are paying an annual interest rate of 17 percent. If you only pay the minimum payment each month, it will take you 229 months to pay your credit card off, and during that time you will have paid $13,505.82 in interest charges.
In other words, you will almost have paid twice as much for everything that you originally bought with your credit card by the time it is all said and done.
This is why banks love to give you credit cards. If they can get back nearly twice as much money as they originally give you, they get rich and you get poor.
Most of us get loaded down with even more debt when we go to buy a vehicle. Instead of saving up and getting what we can afford, many of us end up getting the largest loans that we can qualify for.
In a previous article, I discussed the fact that the average auto loan at signing in America today is approximately $27,000. In order to get the monthly payments down to a level where we can afford them, many of these auto loans are now being stretched out for six or seven years. In fact, the number of auto loans that exceed 72 months has hit at an all-time high of 29.5 percent.
It is the same thing with home loans.
In the old days, it was extremely rare for a mortgage to be stretched over 30 years, but today that is pretty much the standard.
Sadly, most people don’t understand how much money this is costing them.
If you take out a $300,000 mortgage at 3.92 percent and stretch it over 30 years, you will end up paying back a grand total of $510,640.
In other words, you will pay for two houses by the time you are done.
Yes, we all need somewhere to live, and there are definitely negatives to renting as well. But it is very important that we all understand what is being done to us.
And I haven’t even discussed one of the most insidious forms of debt yet.
Have you noticed that most doctors and most hospitals will never tell you how much something is going to cost in advance?
They get us when we are at our most vulnerable. When there is something wrong with us physically, we are often desperate to get help. So we don’t ask too many questions and we just go along with whatever they say.
But then later we get the bill and we are often completely shocked by what they have charged us.
If you are completely unethical, it is a great business model. People that are extremely desperate and needy come to you and you don’t even have to tell them how much your services are going to cost. And then once they leave, you send them an absolutely outrageous bill for whatever you feel like charging.
Frankly, I don’t know how a lot of people working in the medical field live with themselves. In their extreme greed, they are ruining the lives of millions of ordinary American families.
One very disturbing study found that approximately 41 percent of all working age Americans either currently have medical bill problems or are paying off medical debt. And collection agencies seek to collect unpaid medical bills from about 30 million of us each and every year.
Most of us will spend our entire lives paying off debt.
That is why we are called debt slaves – our hard work makes others extremely wealthy.
So is there a solution to this?

by Paul Craig Roberts
Analysis

Information has been leaked about the Trans Pacific Partnership (TPP), which is being negotiated in secret by US Trade Representative Ron Kirk. Six hundred corporate “advisors” are in on the know, but not Congress or the media. Ron Wyden, chairman of the Senate trade subcommittee that has jurisdiction over the TPP, has not been permitted to see the text or to know the content.
The TPP has been called a “one-percenter” power tool. The agreement essentially abolishes the accountability of foreign corporations to governments of countries with which they trade. Indeed, the agreement makes governments accountable to corporations for costs imposed by regulations, including health, safety and environmental regulations. The agreement gives corporations the right to make governments pay them for the cost of complying with the regulations of government. One wonders how long environmental, labor, and financial regulation can survive when the costs of compliance are imposed on the taxpayers of countries and not on the economic activity that results in spillover effects such as pollution.
Many will interpret the TPP as another big step toward the establishment of global government in the New World Order. However, what the TPP actually does is to remove corporations or the spillover effects of their activities from the reach of government. As the TPP does not transfer to corporations the power to govern countries, it is difficult to see how it leads to global government. The real result is global privilege of the corporate class as a class immune to government regulation.
One of the provisions allows corporations to avoid the courts and laws of countries by creating a private tribunal that corporations can use to sue governments for the costs of complying with regulation. Essentially, the laws of countries that apply to corporations are supplanted by decisions of a private tribunal of corporate lawyers.
The TPP is open to all countries. Currently, it is being negotiated between the US, Australia, Brunei, New Zealand, Singapore, Vietnam, Chile, and Peru. Australia, according to reports, has refused to submit to the private tribunal system.
What are we to make of the TPP? It is perhaps too early to have all the answers. However, I can offer some ways of thinking about it.
I doubt that the TPP is a New World Order takeover. If anything, the TPP reduces the scope of global government by exempting corporations from government control. Also, global government, unless it is government by the American Empire, is inconsistent with the neoconservatives insistence on US hegemony over the world. Powerful US ideological, private, and government interest groups have no intention of losing the power that they have acquired by being rolled into some New World Order unless the New World Order is a euphemism for American Empire.
In the criticisms of the TPP, much emphasis is placed on the costs that corporations of foreign members of the agreement can impose on the US. However, US corporations gain the same privileges over those countries, as the agreement gives every country’s corporations immunity to the other countries’ laws.
It could be the case that US corporations believe that their penetration of the other countries will greatly exceed the activities in the US of Brunei, New Zealand, Peru, et al. However, once Japan, Canada, China and others join TPP, the prospect of American firms getting more out of the agreement than foreign firms disappears, unless from the US perspective the definition of foreign firm includes US corporations that offshore the production of the goods and services that they market in the US. If this is the case, then US offshoring firms would be exempt not only from the laws and courts of foreign countries, but also exempt from the laws and courts of the US.
This point is possibly mute as the agreement requires all governments that are parties to the TPP to harmonize their laws so that the new corporate privileges are equally reflected in every country. To avoid discriminatory law against a country’s own corporations that do not engage in foreign trade, harmonization could mean that domestic corporations would be granted the same privileges as foreign investors. If not, domestic firms might acquire the privileges by setting up a foreign subsidiary consisting of an office.
As the TPP is clearly an agreement being pushed by US corporations, the implication is that US corporations see it as being to their relative advantage. However, it is unclear what this advantage is.
Alternatively, TPP is a strategy for securing exemption from regulation under the guise of being a trade agreement.
Another explanation, judging from the unusual collection of the initial parties to the agreement, is that the agreement is part of Washington’s strategy of encircling China with military bases, as the US has done to Russia. One would have thought that an agreement of such path-breaking nature would have begun with Japan, S. Korea, and Philippines. However, these countries are already part of China’s encirclement. Brunei, Singapore, New Zealand, and especially Vietnam would be valuable additions. Are the special privileges that Washington is offering these countries part of the bribe to become de facto outposts of American Empire?
Yet another explanation is that Ron Kirk is caught up in the deregulatory mindset that began with the repeal of Glass-Steagall and financial deregulation. If financial markets know best and are self-regulating, requiring no government interference, then so also are other markets and businesses.
The TPP is likely serving many agendas. As we learn more, the motives behind the TPP will become clearer. From my perspective as an economist and former member of government, the problem with Ron Kirk’s TPP is that the agreement is constructed to serve private, not public interests. Kirk is a public official charged with serving and protecting the public interest. Yet, he has conspired in secret with private interests to produce a document that exempts private corporations from public accountability.
There is a paradox here. While financial corporations and now all corporations are being made independent of government, US citizens have lost the protection of law and are now subject to being detained indefinitely or murdered without due process of law. Corporations gain an unimaginable freedom while citizens lose all freedom and the rights that define their freedom. Similarly, foreign countries, which as members of TPP can be exempt from US law, are subject to “pre-emptive” US violation of their air space and borders by drones and troops sent in to assassinate some suspected terrorist, but which also kill citizens of those countries who are merely going about their normal business.
Perhaps one way to understand TPP is that the US government is now extending its own right to be lawless to corporations. Just as the US government today is only answerable to itself, the TPP makes corporations answerable only to themselves.
Public Citizen’s analysis of TPP can be found here: http://www.citizen.org/documents/Leaked-TPP-Investment-Analysis.pdf and the leaked document here: http://www.citizenstrade.org/ctc/wp-content/uploads/2012/06/tppinvestment.pdf
This article first appeared at Paul Craig Roberts’ new website Institute For Political Economy in July 2, 2012. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His Internet columns have attracted a worldwide following.