In the last forty years, Americans have gone from citizens to consumers, from consumers to consumables. As citizens, we existed to participate in society by producing goods. As consumers, we existed to proclaim our individuality by consuming more goods than our neighbor (who we didn’t know then, and still don’t know now). As consumables, we exist solely to incur debt and be consumed by it.
We are trapped in the Debtrix, coppertops, and there is no escape. There is no Morpheus in this debt matrix (he’s been rebooted as an actor), there is no Neo (another actor), and there is no red pill.
For the vast majority of us, those of us in what used to be called the middle class, our value to the Debtrix is measured by the size of our credit line and our propensity to use it. So make sure to leverage up and spend borrowed money on things you don’t really need or want. But, whatever you do, don’t lose your job because you are unlikely to find it (especially if you damage your credit score).
For those of us without credit, well, our value to the Debtrix is measured by our ability to provide a pool of cheap, temporary labor, primarily to incentivize those with credit lines to produce more in order to keep them. The middle class coppertops will have to increase productivity or end up like you, eating cake.
For those of us at the top of the pecking order, our value to the Debtrix is measured by our complacency in allowing it to persist. The longer we are in the Debtrix, the more time it has to consume our wealth and our humanity (it’s already too late for Charles Munger and this guy, too).
Although the Debtrix cannot be escaped, it can be destroyed through the very means it uses to consume us: debt.
First, stop taking on new debt. This alone will prevent the Debtrix from growing and will even force it to shrink as it fails to maintain the illusion of perpetual exponential growth.
Second, start retiring old debt. If that means selling some of your possessions to pay the debt off, do it. Many of us don’t use or need a lot of what we own. If that means defaulting on non-recourse mortgages, do it. The bottom 90% of households owes roughly 80% of the outstanding household debt, which is about $11 trillion total, of which $8 trillion is mortgage debt. When you include the leveraged side bets the architects of the Debtrix placed on us coppertops paying that $8 trillion back, you’re looking at as much as $88 trillion in total losses for the Debtrix, which would break it. TBTF would become TBTB (“Too Big To Bail”).
The Debtrix cannot be escaped, but it can be destroyed, and when it is, we'll be citizens again.
