Buy now, pay forever

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 ]