Buy now, pay forever

in LeoFinance •  2 months ago 

Over the years, I have been writing about debt traps and slavery and how much of it seems generational, with the younger generations being more comfortable living in debt in order to satisfy their carnal consumer desires. A couple times I have mentioned that in Finland there has been a massive increase in the use of "quick loans" but today I was reading a little bit from Australia on Buy now, Pay later services (BNPLs) and how they near doubled their business between 2018 and 2019.

There were some quite alarming interesting trends that support a couple of points I have brought up in the past. Firstly, 50% of the clients of BNPLs are under the age of 30. Not only this, 44% of clients are earning less than 40K dollars a year and likely do not qualify for a credit card due to how low their income is. There was 32 million transactions using BNPL services and with a population of around 26 million, the under 30s have apparently made a lot of those.

But there are some other interesting concerns in the mix, with about 20% of users having to cut back on essentials in order to cover their debts and 15% of people taking out additional credit debt in order to cover their existing debt. Some of these services don't charge interest, but they do charge a fee for missing payments - 21% of users have missed payments.

I think that we are seeing a debt crisis building like we haven't seen before, as in the past there were still people who actually owned stuff, but now there is no backing for the debt. With the savings and wealth accumulated from previous generations already absorbed into the growing wealth of the 0.1%, the lines of credit are extending, but there is nothing left to extract. This creates a massive bubble.

One of the problems that we face is that with so much wealth accumulated at the top that can passively earn from the resource pool to extract at a faster rate than those of the bottom, it is getting increasingly hard to save for what we want. Yet, with consumerism and the techniques used to increase sales so effective at influencing our desires and subsequent decisions, we are essentially under assault on both ends, where there is a decreasing amount coming in and an increasing draw on the amount needed to go out.

A lot of this is self-inflicted through the decisions we make, but in many respects people are doing what they have been conditioned to do, meaning they have little control over it, unless firstly they recognize the issue and then, actually do something about it. This is difficult, if for example you imagine a child that has been raised on sugary and fatty food from a young age to become an unhealthy and obese adult - and then say that it is "their fault" for being in poor physical condition (and likely mental condition too).

Technically, it is their fault, but it is also the way they have been programmed to behave. If we consider that it is apparently hard to change one's own culture, childhood programming is a far larger problem to solve for than just saying "use your will power". Factor in the incessant drive of marketing messages through every digital pore possible to encourage the failure of willpower and it is a recipe for systemic behavior and in this case, economic collapse of monumental proportions.

We can say that "we have seen it all before" but, I don't think that factors in how much wealth transfer has taken place in the last few decades. With family assets being sold off at every dip in order to maintain lifestyle, there has been a massive shift where the inheritances from the past have been moved to those who are already invested, which is generally, not your stereotypical under 40 year old. What this means is that those who were part of a generation that was distributing wealth, are now consolidating that wealth into a "last man standing" scenario where the value keeps consolidating until some kind of economic saturation point.

The problem is that in the past, this consolidated wealth would eventually burst and it would then leak back into the general population with wider distribution. However, this happened through the bubble dying in some way, whether through revolution, war or old age. This is no longer the case as the people who hold their wealth are ageless and lifeless and do not die - as they are corporations.

Even in the advent of "corporation death" of the company, the wealth doesn't get released back into the economy to the people, it gets shuffled into the hands of other large holders to which it is indebted, often businesses larger than itself, so the consolidation process continues past the lifecycle of the business regardless of what actually happens. It even crosses industries, where an entire industry can disappear, but the wealth gets transferred over to what arrives to take its place - while increasing the extraction from the lower reaches by extending them the noose credit to consume the new range of industry products.

The coming economic hardship is likely going to be unprecedented and while some places might be somewhat insulated, I think that only those who actually own something have a chance to come out of it in a better position than when they went in, but this leaves the question of what is going to happen to everyone else. With no will to affect distribution through reducing the amount of reward from the pool for the top, it seems that mass failure and default is going to happen with no way for the economy to recover -

unless it forks to a new economic model.

The alternative to changing the economy is of course to find ways to maintain what we have now, which would mean that in that collapse, there will have to be a further reduction in the lifestyles of the 99% with what would be considered quite extreme measures for the 21st century. If we consider how much disruption and social discontent is happening due to economic disparity now, the mind boggles and likely struggles to imagine what is to come.

Taraz
[ Gen1: Hive ]

Posted Using LeoFinance Beta

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

But there are some other interesting concerns in the mix, with about 20% of users having to cut back on essentials in order to cover their debts and 15% of people taking out additional credit debt in order to cover their existing debt. Some of these services don't charge interest, but they do charge a fee for missing payments - 21% of users have missed payments.

I think that we are seeing a debt crisis building like we haven't seen before, as in the past there were still people who actually owned stuff, but now there is no backing for the debt. With the savings and wealth accumulated from previous generations already absorbed into the growing wealth of the 0.1%, the lines of credit are extending, but there is nothing left to extract. This creates a massive bubble.

One of the problems that we face is that with so much wealth accumulated at the top that can passively earn from the resource pool to extract at a faster rate than those of the bottom, it is getting increasingly hard to save for what we want. Yet, with consumerism and the techniques used to increase sales so effective at influencing our desires and subsequent decisions, we are essentially under assault on both ends, where there is a decreasing amount coming in and an increasing draw on the amount needed to go out.

Dear @tarazkp, Please understand first that I may have misunderstood your argument because I am not good at English.
Do you mean that in the end, people have to owe them again to pay off their loans?

Currently, the majority of Koreans are often turned homeless because they are unable to pay their debts. Many Korean families are often destroyed by economic problems.
So, in China, American-style capitalism argues that the limit has come.
The Chinese argue that Korea should accept the Chinese-style communist or feudal-style economic system.

Korean and Chinese-style feudalism is an institution dominated by local communities based on rural economy rather than capitalist entrepreneurs.
Communism in Europe was dominated by urban workers, while communism in China was dominated by rural farmers.
So, unlike Europe, communism in China had a feudal economic structure based on an agricultural economy.
In the future, Korea is likely to be dominated by the Chinese economy.
Koreans, who are now slaves to growing debt, may embrace the Chinese-style communist economy.

Dear @tarazkp, What solutions do you have for Koreans to be free from debt slavery?

Do you mean that in the end, people have to owe them again to pay off their loans?

Yes, some people are taking loans to pay off loans.

You have spoken about the strength of the Korean economy recently, but if it is running on debt of the people,does it have strength, or is it like many other places in the world, where a few people/ companies are very wealthy, the rest of the population is living on borrowed time?

What solutions do you have for Koreans to be free from debt slavery?

Stop borrowing money and live within one's means instead. Spend less, buy less useless. It is no wonder as like you say, Koreans only care about profits - they seem to need to in order to cover their loans :)

You have spoken about the strength of the Korean economy recently, but if it is running on debt of the people,does it have strength, or is it like many other places in the world, where a few people/ companies are very wealthy, the rest of the population is living on borrowed time?

Dear @tarazkp, Thank you for commenting like this even though you are always tired.

Korea's wealth and power are monopolized by a small number of ruleing class. They build factories in underdeveloped countries to produce cheaper manufacturing products.
So, Korea's domestic industry has weakened.
Korean conglomerates are making dollars from goods produced at factories built overseas.
The dollars earned from exports by Korean companies are distributed as unemployment benefits to the unemployed in Korea.

The current situation in Korea is similar to those of ancient Roman citizens.
Many unemployed people live on state unemployment benefits.
As China's economy develops, exports of products produced in overseas factories by Korean companies to China increase.
However, most of the Koreans live on unemployment benefits because the industry in Korea has weakened.
The Korean government gives the unemployed people a minimum of living, but the unemployed have given up marriage and childbirth.
Many young Koreans use the money they make on temporary jobs, mainly to purchase smartphones and games.
They have given up on their future and are living by enjoying and consuming the present.

Although Korea's exports to China are increasing, most of its profits are accounted for by the Korean ruling class and foreign investors, and the Korean common people receive unemployment benefits.

Thank you!

Sounds like it is pretty close to the dystopias I have described before and I imagine it is going to get increasingly worse at a faster pace. Many living on unemployment at the mercy of centralized control is leading to the downfall of a state.

I agree with you! Many of the unemployed in Korea would rather want a war. They think that if the war reduces the population, the unemployed will have more chances to get a job.

That is a pretty messed up way to create employment opportunities.

The unemployed in Korea think it's better to have war than to live as a slave for life. 😆

Are you willing to die so others can have a job? If so, why does there need to be a war, wouldn't a mass suicide do the same thing without having to kill others?

With family assets being sold off at every dip in order to maintain lifestyle, there has been a massive shift where the inheritances from the past have been moved to those who are already invested, which is generally, not your stereotypical under 40 year old. What this means is that those who were part of a generation that was distributing wealth, are now consolidating that wealth into a "last man standing" scenario where the value keeps consolidating until some kind of economic saturation point.

Historically it was more generally practiced that wealthy men established harems, and had dozens and dozens of sons (daughters were considered property), who each then inherited only a share of his wealth. It's actually a pretty organic redistribution method.
Those sons who invest it wisely had the option of establishing their own harems etc; One man's stockpile of wealth can be split 100 ways between his grandsons; all of whom need somewhere to live, food to eat, travel, entertainment etc.
Now we have billionaires who may only have 1 or 2 children, and that wealth all stays in a very small number of hands; with minimal living expenses from one generation to the next.
If harems became socially acceptable again, with daughers/women no longer considered property, and getting a cut of that inheritance; the intergenerational wealth redistribution would be huge.

While I think it would work for better distribution - I myself couldn't possibly manage to have more than one wife :D

I wonder if there would be a better way to distribute wealth at all levels for those that do not have children. I guess a lot of it goes to extended family, similar to a harem anyway. I am always in two minds about wealth distribution as it has to happen, but how it happens is very important - the problem is that it isn't happening at a fast enough rate to beat the concentration at the top.

I let my kids get into debt (just to us or their siblings) when they wanted more than what they could afford and I'm hoping how much they hated having to pay back so much of their pocket money every week sticks with them forever XD

Every time you talk about wealth accuminated at the top all I can see in my head is something like a triangle balanced on the apex and I'm kind of waiting for it to fall over.

Being indebted to siblings would be the worst! Though I do owe Galen a bit for some things over the years - Come on Hive.

It is very much like an inverted triangle and unfortunately, I am not sure it is going to fall, because while the wealth is at the top, the triangle of society has a massive base that supports it.it is kind of like an hour glass with two concurrent streams - the sands of wealth moves up the tube, the grains of poverty downward.

You painted a realistic economic picture that I was completely avoiding till few years back. The more I know about the debt abyss the more concerned I am with my individual situation. I am not an extravagant spender but I am still worried how things will play out in the next 10-15 years. Saving and resisting the fueled consumption is one way to reduce my vulnerability. But, I am still worried by not knowing how to insulate myself from this upcoming massive economic problem.

I wish I had studied economics or finance to better understand the situation early on in my life :P

Posted Using LeoFinance Beta

Saving and resisting the fueled consumption is one way to reduce my vulnerability.

Add in some investing too :)

But, I am still worried by not knowing how to insulate myself from this upcoming massive economic problem.

I am unsure how well most people including myself will survive and I hope that having a little crypto will at least soften the blow - although it might just be prolonging the inevitable death and extraction. The 0.1% are like value reapers, except they are crueler than the Grim.

Posted Using LeoFinance Beta

Yes, investing is something I started after the March crash. It is not a significant portfolio yet but better than nothing.

That is very scary. After the awareness that I had in the past couple of months I am much more worried about the future society we will live in. Cryptos may help as you said but something revolutionary must happen to end this loop. I am concerned to be honest.

I am concerned too, but there is no use in being frozen in fear by it - life goes on until it doesn't - best try to make something of the one we have, even if we fail.

In Nigeria where I'm from people don't actually owe loans, they systematically find a way to borrow, from the rich to the poor because they can't provide commercial banks with collateral, so the best thing they do is collect from cooperatives and then start paying up huge interest on monies that didn't even serve any purpose. The government are the ones that mostly borrows and the truth is despite how rich we are, we're wallowing in debt and poverty and there's no plan on how to pay back

Posted Using LeoFinance Beta

Nigeria has oil industry still, right?

I think no matter the country now, people behave largely the same - buy now, pay later - there is no thought to actual value, just instant gratification.

Posted Using LeoFinance Beta

Side not completely unrelated... what markdown are you using to cross out the words?

Posted Using LeoFinance Beta

Saw this and figured I'd chime in. Two of these immediately before and after the word you're crossing out: ~~

:)

~~strikethrough~~

strikethrough

Posted Using LeoFinance Beta

It seems to me that this essay is related to your essay on imagination

Technically, it is their fault, but it is also the way they have been programmed to behave. If we consider that it is apparently hard to change one's own culture, childhood programming is a far larger problem to solve for than just saying "use your will power". Factor in the incessant drive of marketing messages through every digital pore possible to encourage the failure of willpower and it is a recipe for systemic behavior and in this case, economic collapse of monumental proportions.

When we are trapped like this, we must focus on sustaining the trap. Some of us manage to pay off debt (as I have). But I have heard several recent college graduates tell me that they were told they were not financially healthy unless they carried 16% of the amount of their income in debt. Taught this in college.

I've told my kids whatever you do, do not borrow money. Luckily they graduated from college with no college debt and a car. They save a lot of money, even though they make quite little. They've learned how to be resourceful with what they already have, to use their imaginations, and require quite little other than to buy excellent food for themselves.

As for what's coming, I believe those of us who will try to maintain the financial system we have now will have the toughest time adjusting. The best place to put your money is in tangibles: real estate, instruments, jewelry, and art to name a few. Of course, if you've borrowed money to accumulate those things, then you have nothing.