You Are Getting Stiffed
The Myth of Debt-Free Living
by Gary North
I have set up a free website for people who are deep in consumer debt.
I am a great believer in getting out from under the burden of consumer debt. But I am not a believer in getting out of debt. There is a reason for this. The only way to get out of debt is to die.
Here are two great myths of the American dream: (1) financial independence; (2) debt-free living.
Why are they myths? Because life involves both.
Finances require money. Money involves the division of labor. We are all interdependent. Even a hermit is dependent on others: the owners of the land he secretly lives on and secretly poaches on.
People say “financial independence” when they really mean “no dependence on a salary.” They can achieve this if they own lots of income-generating assets. They do not have to show up at a job. But they are not financially independent. They are dependent on all those people whose productivity enables companies or governments to keep paying on the assets that the job-free people have invested in. This is not financial independence. It is independence from a salaried job. Let’s keep our terminology clear.
Trust fund kids are not financially independent. They are dependent on the decisions of their trust funds’ managers, who are in turn dependent on the productivity of the companies whose shares and bonds they have purchased.
In a division of labor economy, there is no independence.
Second, what about debt-free living? Why is it a myth? Let me offer an example.