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CREDIT CARD DEBT WHOSE FAULT IS IT
Posted by: Darrell Castle
February 25, 2010
Topic: Bankruptcy
We've heard a lot about credit cards lately especially with the new rules for card companies going into effect in the last few days. The new rules assume that there is something at least suspicious about credit card debt and the way that debt is collected. I see credit card debt everyday in my office and I know that it can and often does get out of hand and cause damage to people. Why then has it become so pervasive in our society? Why is it a rare individual who does not have any credit card debt from which he is recovering? We have an article from Todd M. Schoenberger of Tiapan Publishing Group's Tipping Point to enlighten us.
"For those stuck in the quicksand of debt, then you know that it is literally impossible to ever get ahead in your financial life if all you're doing is paying back creditors." Wow, that is a great stand alone statement and very true but Mr. Schoenberger has more. "You've always heard stories about the amount of debt carried by Americans, but the epidemic really came into focus as the housing bubble burst and the U.S. economic system crumbled. Peopled seemed more than willing to remove equity from their homes to pay off credit cards and ignore every cautious sign about the risks they were taking." What cautious signs Mr. Schoenberger? I don't remember the stop sign ever being given, instead it was always go. He continues his analysis. "Once that equity started evaporating, credit card holders saddled with piles of debt, realized they were in trouble and had little chance of recovering. So, realizing this, consumers either filed for bankruptcy or decided to do what seems to be socially acceptable these days in the U.S.: Complain to their local congressional leader and say they are being "ripped off."
Credit card holders realized they were in trouble and had little chance of recovering. Well then, what should they do continue as debt slaves for the rest of their lives? I've counseled thousands of clients about debt and I've yet to have one complain to a congressional representative. How dare they become as impudent as to attempt to cast off their chains? If that were all from Mr. Schoenberger it would be plenty, but there's more. "Now, before I go any further, I have to say that I agree the credit card game is a losing proposition for the consumer. There is no doubt that charging loan-shark like rates to borrowers with little care about how it impacts their lives, is just as damaging to the overall economy as it is to the individual. However, the problems consumers face with credit card companies are completely self made. The banks did not tell the card holders that they needed to take the card, all they did was offer creative marketing with promises of "points, lavish vacations, and a lifestyle that was sure to make your sibling and neighbor super jealous. And the consumer fell for it."
That statement is so untrue, absurd, and ridiculous that it begs a response. He admits that card companies are loan sharks, and they have slick marketing to "market" their cards, and he further admits that their unbridled greed damaged both the individual card holders and the overall economy. He then goes on to lay the whole sordid mess at the foot of the "consumers" because they "fell for it." If an ordinary con man did to individuals what card companies do, it would probably constitute a crime. What then is at the root of all this debt?
In August of 1971, in an attempt to pay for the war on poverty welfare programs and the Vietnam War at the same time, President Nixon took the dollar off the gold standard and let it float without any anchor of value. He did that to inflate the currency and pay debts with cheaper money thus robbing bond holders or at least imposing an unseen tax on them. Since August of 1971, the standard of living of American working people has steadily declined relative to inflation. Each year wages do not increase enough to cover inflation and that dictates a lower and lower standard of living. The government has the same problem of course, and it solves that problem with debt. The government is our example and we follow it quite well. Credit allows us to not only keep the same lifestyle but to expand it. That is until the final day of reckoning comes and there is no more credit. No more home equity as collateral and no more refinancing resulted from the housing crash of September 2008. The large robber banks were bailed out using the labor of their victims, and then the victims were told that it was their entire fault.
Don't fall for it anymore. Make a commitment to stop using credit and live within your means no matter what that is. Hard times are here and will get worse so make preparations for stormy weather. Get out of debt right now by the best means you have available, and live a free life.
