So, continues the debt train. Choo-choo! Today, 70% of automobile purchases involve financing through an automobile loan. In addition, the lengths of automobile loans have gotten progressively longer. 45% of automobile loans are more than 6 years in duration. 45% of automobile loans are issued to what are classified as subprime borrowers.
Mortgage debt in the United States is approximately 5 times larger than 20 years ago. Mortgage debt as a percentage of Gross Domestic Product has more than tripled since 1955, at least 8 million Americans are at least one payment behind on their mortgages, and 29% of all homes are underwater, meaning the mortgage balance exceeds the value of their home.
Approximately 41% of all working age Americans have problems with medical debt or are attempting to pay off their medical bills. According to the American Journal of Medicine, medical bills are a significant factor in more than 60% of personal bankruptcies. Of the bankruptcies prompted by medical bills, 75% involved persons that had health insurance. All of these problems were accentuated by Obamacare, which imposed penalties on the taxpaying Americans who do not have health insurance, or who were no longer able to afford health insurance because of, you guessed it, Obamacare.
Furthermore, the predatory medical care system in the United States provides substandard care at Cadillac prices. Government policies act to stymie real competition among medical providers. Most doctors and hospitals will not reveal the cost of their treatment until after the treatment is rendered. The arrogance and insanity of this billing practice are obvious. Imagine filling your gas tank and the attendant subsequently informing you that a tank full of gasoline costs $10,000 and if you do not fork over that amount, the gas station will harass you, possibly sue you, and garnish your wages, or seize your assets and personal property.
The total student loan debt in the United States is approximate $1 trillion dollars. Approximately 2/3s of all college students graduate with student loan debt. After adjusting for inflation, US college students are borrowing twice as much as they did a decade ago, with an average student loan debt of about $25,000. Furthermore, roughly 23% of college students use credit cards to help pay for tuition, fees, and other costs associated with their secondary education. The student loan default rate has doubled since 2005.
Government participation in the funding of secondary education is, in fact, the main reason for the rapidly escalating cost of such education. For example, if the average college student in the United States was able to pay to say $500 per month for his or her education, through either family savings, earning from his or her own employment, or other private manners, the secondary education providers would necessarily need to manage their costs to reflect that contribution from its students. Most colleges that were unable to control their costs would necessarily seize to exist. By providing student loans of an additional $500 per month, for example, the same fiscal restraint is no longer necessary. The cost of a student’s academic pursuits will naturally double, as there is lessened motivation on the part of the provider, and the recipient, to control or question, costs.
Numerous studies have determined that student loans are the primary driver of the high costs of pursuing a college education. This same dynamic exists in other areas where government subsidies are present, including medical care and housing.
The primary driver of debt slavery in the United States is its Federal and State Governments. The total taxes paid by the average, working, taxpaying citizen in the United States, is between 50% to 60%. Often, discussions of taxpayer obligations will mention federal income tax, but avoid mention of the many other taxes imposed upon its citizenry. In addition to federal personal income tax, there are often state and local income taxes, sales tax, social security and medicare tax, federal and state corporate income tax, property tax, fuel and gasoline tax, estate tax, gift taxes, accounts receivable tax, building permit tax, capital gains tax, CDL license tax, cigarette tax, corporate income tax, court fines, dog license tax, federal unemployment tax, fishing license tax, food license tax, fuel permit tax, gasoline tax, hunting license tax, inflation, inventory tax, IRS interest charges, IRS penalties, liquor tax, lottery tax, luxury taxes, marriage license tax, Medicaid tax, septic permit tax, service charge taxes, road usage taxes, recreational vehicle tax, toll booth taxes, state unemployment tax, telephone federal excise tax, telephone federal, state and local surcharge taxes, telephone minimum usage surcharge tax, telephone recurring and non-recurring charges tax, cell phone state and local taxes, telephone usage charge tax, traffic fines, trailer registration tax, utility taxes, vehicle license registration taxes, vehicle sales tax, and watercraft registration tax, among others.
Their onerous taxation of the citizenry is the primary source of its impoverishment. The government does not create wealth. The government can only redistribute wealth and transfer wealth. The impoverishment of its citizenry through either direct or indirect taxation propels further debt slavery. Then, in order to maintain one’s basic necessities, the population is often forced to acquire additional debt through credit card usage, and borrowing in various forms.
Expanded public taxation leads to expanded private borrowing, and each element ultimately leads to a working population composed, primarily or entirely, of debt slaves. The very wealthy can, to some degree, avoid the crushing burden of debt slavery, by virtue of their wealth. The nonworking poor, additionally, are able to avoid such debt slavery, by their lessened participation and funding of the system of debt slavery. Debt slavery falls most squarely on the working poor and the middle class.
Part VI in our series on debt slavery will discuss what one can do, either individually or collectively, to ameliorate one’s standing as a debt slave in modern America.
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