The Debt Myth

The Star (St. Lucia) - - LOCAL - By Michael Walker

St Lu­cia seems to be ex­ist­ing, some might call it liv­ing, un­der the weight of an ever-in­creas­ing bur­den of debt upon a bent back borne on legs al­most bent dou­ble as she strug­gles along from day to day. But let me di­gress a lit­tle. A Ro­tary col­league of mine, a lawyer, shocked me once and let me tell you why. I was chair­per­son of the Club Com­mit­tee and I got it into my head that I would buy a dif­fer­ent book each week, read a page from it aloud to the club at our reg­u­lar Ro­tary meet­ing and then do­nate the book to a Ro­tar­ian who would read it and then pass it on to another Ro­tar­ian, and so on. The books dealt with a num­ber of gen­res and top­ics and the book scheme was a great suc­cess un­til one week I do­nated the book to my afore­men­tioned lawyer friend who re­fused to ac­cept it.

“Oh, no, no!” she cried and put out a hand as if to ward off evil spir­its, “I don't have time to read. I'm a lawyer!” as if lawyer­ing were a per­fectly ac­cept­able rea­son for not know­ing any­thing about any­thing other than law! No won­der our lawyers are so one-track minded.

And if our lawyers do not have an all­round ed­u­ca­tion isn't it a lit­tle con­cern­ing that many of our politi­cians are lawyers? I mean shouldn't our lead­ers have an all­round ed­u­ca­tion in or­der to deal with the mul­ti­tude of di­verse ev­ery­day prob­lems that be­set the coun­try on a daily ba­sis?

But enough of these pipe dreams! Let us re­turn to the very real prob­lem of our na­tional debt. You might, Dear Reader, re­call Mr. Mi­caw­ber's fa­mous, and oft-quoted, recipe for hap­pi­ness in Charles Dicken's novel David Cop­per­field when Mr. Mi­caw­ber said, “An­nual in­come twenty pounds, an­nual ex­pen­di­ture nine­teen [pounds] nine­teen [shillings] and six [pence], re­sult hap­pi­ness. An­nual in­come twenty pounds, an­nual ex­pen­di­ture twenty pounds ought and six, re­sult mis­ery."

In other words, if you spend a penny more than you earn, you will live in mis­ery. A sim­ple enough rule to live by, one might think, but strangely one that our great­est minds – as they be­lieve them­selves to be – just don't get. In­stead of work­ing them­selves out of debt, they bor­row them­selves into even greater debt – and boast about it – Check it out in the Gov­ern­ment Pro­pa­ganda Pages, the great­est loan ever!

But maybe they have a point. Af­ter all, as David Graeber re­lates in his book “The First 5,000 Years”, The Bank of Eng­land, the first suc­cess­ful mod­ern cen­tral bank, was founded on debt: “In 1694, a con­sor­tium of English bankers made a loan of £1,200,000 to the king. In re­turn they re­ceived a royal mo­nop­oly on the is­suance of ban­knotes. What this meant in prac­tice was they had the right to ad­vance IOUs for a por­tion of the money the king now owed them to any in­hab­i­tant of the king­dom will­ing to bor­row from them, or will­ing to de­posit their own money in the bank—in ef­fect, to cir­cu­late or "mon­e­tize" the newly cre­ated royal debt. This was a great deal for the bankers (they got to charge the king 8 per­cent an­nual in­ter­est for the orig­i­nal loan and si­mul­ta­ne­ously charge in­ter­est on the same money to the clients who bor­rowed it), but it only worked as long as the orig­i­nal loan re­mained out­stand­ing. To this day, this loan has never been paid back. It can­not be. If it ever were, the en­tire mon­e­tary sys­tem of Great Bri­tain would cease to ex­ist.”

Of course, the gov­ern­ment of Saint Lu­cia is not a bank – that's one thing – and did you no­tice that the orig­i­nal bankers were charg­ing in­ter­est from dif­fer­ent clients for the same amount of money? And they've been do­ing this for the last 400 years!!!

Thomas Jef­fer­son did not be­lieve in bor­row­ing money that had to be paid back by the grand­chil­dren of the bor­row­ers. “I sin­cerely be­lieve that bank­ing es­tab­lish­ments are more dan­ger­ous than stand­ing armies, and that the prin­ci­ple of spend­ing money to be paid by pos­ter­ity, un­der the name of fund­ing, is but swin­dling fu­tu­rity on a large scale.” In Saint Lu­cia's case it will be the great, great grand­chil­dren that will be pay­ing off our debt.

Some­how, our lead­ers seem to have dis­tanced them­selves from the re­al­ity of be­ing in debt. They live in another world where money bor­rowed need not nec­es­sar­ily be re­paid. The Amer­i­can poet E.E. Cum­mings got it right when he said, “I'm liv­ing so far be­yond my in­come that we may al­most be said to be liv­ing apart.” He could have been talk­ing about our gov­ern­ment.

In Lit­tle Dor­rit, Charles Dick­ens ex­plained the sys­tem of liv­ing off credit. “Credit,” he said, “is a sys­tem whereby a per­son who can't pay, gets another per­son who can't pay, to guar­an­tee that he can pay.”

I wish our lawyer politi­cians would read a lit­tle more, and maybe learn a thing or two.

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