The Middle Ground Between Slavery and Default
Gary North today defends limited liability with this core claim: "you cannot logically deny the legitimacy of enslavement for debt without becoming a defender of limited liability". I disagree.
There is a middle ground between these two extremes: liquidation of assets of the debtor and partial payment, with the recognition of further debt due. As I have written regarding the modern scandal of bankruptcy laws, there is no reasonable case against, or any modern problems accruing to, the practice of keeping debts "on the books" for those who are not currently in a position to pay back those debts. People fall out of and into good fortune, and what is a bad debt today may become payable in the future.
All of this is not to assault North's fundamental point, with which I agree -- limited liability corporations are compatible with a free market, and indeed are part of the story of How the West Grew Rich.
Comments (7)
It seems to me that the federal government is ultimately responsible for this era of faux outward appearances of financially secure individuals, when every necessity is now bought on credit, so much so that McDonald's has been forced to accept them (used to be just cash) as they lose market share to the likes of Wendy's and Jack-in-the-Box.
Especially now when the economy is truly in the crapper, yet credit is flying out the window to any schmuck with a SSN.
I agree that bankruptcy laws constitute theft but our monetary system and the central banks' cronies that are the primary creditors freely expanding the money-supply in doing so are the ones creating the theft on the grandest scale, causing inflation, the business cycle and the dowturns of the economy in the first place. Somewhere the member banks of the NCUA fit into this.
I don't think I could ever feel sorry for the number one creditors in our nation (Nat Banks). Through their continued partnership with government socialism (guaranteed college loans, etc.) they continue to mold our fellow countrymen into an endless horde of slaves who owe their souls to "the company store."
You better play by the company's rules (get your SSN, sign up for the draft) or we'll make sure you'll never make it out on your own (sovereign) self, boy.
Still think governments don't create their own realities?
Published: November 1, 2004 11:08 PM
Gary North knows of mortgage banks that will agree to limit the debtor's liability to the value of the collateralized property? Please get me their phone number ASAP.
Published: November 2, 2004 8:14 AM
the problem isn't bankruptcy, it's credit to begin with; also known as usury. the whole world economy has essentially become a vast pyramid / ponzi scheme, with the WTO/IMF and its SDRs at the top, working down to governments, then (centralized) banks (and fractional reserve), then other corporations, then all of the individuals holding a bunch of credit which has become a fantasy characture of value/wealth. so long as governments and banks work in partnerships to perpetuate the system of credit, bankruptcy is one of the few countermeasures the individual has while still enslaved in this larger system.
but of course, i consider corporations as sub-chartered communist governments: the same problem on a smaller scale.
-z
Published: November 2, 2004 8:26 AM
To quote mises, used as recently as a previous weblog entry on oct. 29th:
"Credit expansion is the governments' foremost tool in their struggle against the free market. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous."
-z
Published: November 2, 2004 9:08 AM
I'm still a little confused about credit and interest. Is the credit issued by credit card companies money substitutes (after all, you have to pay your credit card bill with U.S. currency), or is it "money"?
It's also interesting to note that credit cards generally have pretty high interest rates--if credit for businesses should be fostered by low rates, why shouldn't personal credit also be fostered by low rates?
Sure, I know there are differences between a business that's trying to expand and an individual who's simply trying to buy more stuff, but I think it would be good to relate economic theory to everyday mainstream experience.
Published: November 2, 2004 10:55 AM
Credit cards generate new money. They are usually paid off by electronic transfer. Less than 3% of the money in circulation is U.S. currency.
"Money" is only one way of keeping score in the game of life and has no intrinsic value. Back when we were on a gold standard half of all Americans and Canadians lived in poverty. (Controlling for the WW2 anomily) It wasn't until we went off the gold standard that the size of the middle class exploded.
Since then, even the nature of poverty has changed. Poor people have the same variety of things that rich people do, but in lessor quality. The main difference between rich and poor is that the rich go on extended vacations and have servants.
Credit card interest is higher than interest paid by businesses because people who buy toys on credit and carry a credit card balance are generally (at least economically) stupid.
2000 years ago 90% of the people were slaves or virtual slaves who enabled the other 10% to live well. These days the half of all credit card holders who carry an average $8,000 balance are voluntary wage slaves who keep the economy going and enable people like myself to live well on a half pay retirement. Thank God for them.
I wish someone would explain to me how these people - the ones who carry an average $8,000 credit card balance - will have the intelligence to provide for their old age if not for Social Security and medicare?
Published: November 2, 2004 12:06 PM
People who are poor and run up credit cards are not stupid people, they are people who have used credit cards to keep a roof over their heads and maybe see a doctor or two.. The plight of the struggling poor and so called middle class is much more difficult and out of reach than our government/controllers-of-media want anyone to realize. When working slaves resources are low, and they always are, and something has to be fixed like the car, or the furnace,or a broken leg, they foolishly keep the wolf from the door with a little help from the one percenters/masters/banks. Of course, the banks know you'll never keep up with the cost of living with the wages at slave levels. Those new immigrants will probably cause sky rocketing credit card debt as the working poor have to scramble for lower and lower wages and stand in longer lines to see a doc on the Walmart Plan/Tax payer subsidized medical. God help us. Our government serves us up like bbq. IT's a formula... cost of living out of reach to wage earner & easy high interest credit. It's like taking candy from a baby. Our children will no property what so ever, Wake up slaves. Join the awakening. Demand a living wage and socialized medicine. They beneifit from a national campaign of making us think we are losers when we are breaking our backs working for them. Credit cards are the yoke of society.
Published: June 19, 2007 4:19 PM