The Daily Exploitation of the Masses – And the Great Silence
In ancient times, slaves, around 30-40% of the population, had to work for other people for free and could not defend themselves against it because of the injustice that existed. Anyone who thinks that this is thankfully something of the past is very much mistaken. It is much worse today, but cleverly concealed.
In the established interest system, around 90% of the people are forced to pay around half of their own income for the interest costs that are included in all products and services and that ultimately flow to the lenders. Although people are no longer legally slaves, half of their awake time they have to work for others who provide nothing in return, but only sit like maggots in their piles of money, which multiply all the time, even during the worst crises.
Most people are hardly aware of this exploitative interest system, because it is covered up by a terrible silence, and habit makes it seem like an unalterable matter of course. Strangely enough, even at universities it is one of the topics that is not discussed at all as being a problem, apparently in the interests of the owners of capital, as if it were a law of nature, not one created by man.
In one of his recent publications, the Waldorf teacher Dr. Valentin Wember draws attention to this enormous instrument of exploitation, which Rudolf Steiner described as a social cancer.
The particularly explosive nature of the interest system is compound interest. As a rule, a simple interest rate is not calculated and paid out or requested from the respective savings capital or loan capital, but the interest is always added to the capital that increases in this way. As a result, compound interest and capital grow exponentially to unimaginable heights, initially slowly but increasingly faster over longer periods.
Lending money
Dr. Wember first uses an example to illustrate the elementary process of lending money. Mr. M. has already saved up a lot to build a house, but still needs €400,000.
He has a very wealthy friend who is prepared to lend him the money, which he should pay back within 20 years. That means €20,000 a year, in monthly instalments of €1,666. When asked about something in return, the friend answers: “No, I’m not doing anything by lending you something, just as I wouldn’t do anything if I were to lend you a pair of hedge trimmers.”
Now, in contrast to this strangely beautiful assumption, imagine another answer from the friend. After 20 years, Mr. M. should have paid him back the €400,000 and a further €300,000 in return. When Mr. M. looks shocked, the friend says that he can ask a bank how much he would have to pay in interest.
A loan calculator on the Internet provides the result quite easily:
With a fixed interest rate of 6.5% per year, €400,000 will cost in 20 years:
– Monthly rate (repayment and compound interest): €3,222.37
– Total of all interest (and fees) after 20 years: €315,750.21.
With a fixed interest rate of 4.5%, the interest would ultimately be around €200,000, making the house 50% more expensive than without interest; with an interest rate of 7.5%, it would be around €370,000, almost twice as expensive. With a longer term, the interest costs add up even more.
If Mr. M. wants to sell the house after 20 years without making a loss, he would have to sell it for twice the construction cost.
If he doesn’t want to live in it himself but wants to rent it out, he would have to add the interest costs to the rent.
The consequences for society
This means, continues Dr. Wember, that all housing costs, regardless of whether they are property or rental costs, generally include interest costs.
“Due to the bank loan interest rates included in the price, rents are on average 50% higher than they would have to be for a society that lived without the principle of interest. A huge difference. Let’s assume that you have to pay €1,200 in rent for an apartment, for example. If the prevailing interest principle no longer exists, it would only be €600.”
But the matter is much more comprehensive than most people realize.
“Most people think that they only pay interest when they take out a loan. Wrong. We pay interest all the time. In every product we buy or rent, in every bread roll, in every bicycle, in every liter of water from the kitchen tap, in every bus or train ticket and in every haircut.”
For an apartment, the average is 50%. But the tenant thinks that he pays no interest because he does not have to take out a loan for the co-payments. He pays it with each monthly rent transfer. The cost of a house does not just include the interest on the bank loan that the builder had to take out. The construction costs themselves also include interest on the loans that the construction company had to take out to purchase the construction cranes, excavators, cement mixers, etc. The price of the bread rolls includes the interest costs for the bakery and the dough and baking machines; in the car, the interest on the loan that had to be taken out to set up the production line; in the train ticket the interest costs for all railway facilities, bridges and tunnels, etc., etc.
For more details, V. Wember refers to the economic analyst Helmut Creutz. According to his well-founded calculations, the largest share of interest in prices is in apartment rents, at 60 to 80%. The figure for the prices of other products varies. The total average interest share in prices is, according to Creutz, 40 to 45%.
In truth, it is a never-ending story.
“Interest costs are in everything. And there is a huge veil of silence over everything.
It is still a controversial question in the literature as to what the average share of interest costs is in all products and services. For services with low capital expenditure, such as hairdressing, the share is lower than for tap water, for example, because the waterworks and pipes contain huge amounts of capital and thus interest costs.
But on average, the interest cost share for every product is now at least 50 percent. […] Just understand what that means: if you spend €2,000 a month, you have paid at least €1,000 in hidden interest without even realizing it. If you spend €50,000 a year, you can assume that at least €25,000 of that was hidden interest.
Now compare that with the income that some people might have from a savings account or other interest-bearing securities. As long as you don’t have annual interest income of at least €25,000 – with annual expenses of €50,000 – you are paying significantly more interest than you are earning. You are one of the losers in the interest system. That is the case for around 90 percent of the population.”
90 percent of the population are among the losers of the system. But they don’t fight back because they usually don’t know it. But when it is brought to their attention, they react with disbelief and even vehement denial. Or they react with resignation, saying that nothing can be done about it, and those with enough wealth often dismiss it with disinterest, saying that it doesn’t matter to them, that what they have is enough for them.
“However different each of these reactions may be, they all contribute to the continued existence of the system.”
“Money works”
Banks and savings banks are always promoting the idea of “investing” your money sensibly so that it grows in the best possible way without you having to do anything yourself: “Let your money work for you”, “More income without effort” or “Generate passive income”.
In addition to stock profits, which is a topic in itself, this mainly refers to the compound interest effect, through which the “invested” money miraculously grows all by itself.
But it is always other people who have to work for the compound interest.
Dr. Wember writes:
“The idea that money can work for you is widespread and is taken for granted. Anyone who doesn’t know that and doesn’t let money work for them is a fool.”
As one bank advertisement puts it, he is “throwing money out the window.”
V. Wember once again explains the principle of simple interest:
“If you have €100,000 in a fixed deposit account that earns 1% interest per year, you will receive €1,000 in interest at the end of the year. You have interest income that you didn’t have to work for. So, you think, the money has worked for you.”
And if you have €10 million in the bank for a year (at 1% interest), you will earn €100,000 per year without having to work for it. You could live comfortably on the interest income alone.
The cabaret artist Volker Pispers once said ironically: “Most people seem to believe that the money is somewhere in the bank’s vaults, banging away and then having children.”
But the question of where the money really comes from is generally completely ignored by most people. “Where does the miraculous increase in money come from?”
If a company has to pay €500,000 in interest to the bank in one year for a large loan, for example, it has to add these costs to the price of its products. This means that ultimately its customers have to pay the €500,000 in interest that it has secretly included in the product prices.
The interest would therefore be paid by the people who buy the company’s products and/or earned by the workers and employees who would receive a lower wage than they would have received without the interest obligation. The customers, however, would have to earn the additional interest themselves and work for it.
Other people would therefore generally be indirectly forced to earn the interest for the money lenders. But this is ignored.
Legitimate interest?
Of course, there are various arguments to justify the interest.
First of all: there is no justification for interest on interest that is constantly added to capital, compound interest. It is an absolute predatory absurdity in itself. If, for example, capital of €10,000 invested in a bank at a nominal interest rate of 7% has doubled to €20,000 after exactly eleven years due to the exponential function and after 70 years has grown to 106.5 times that amount, equal to €1,065,000, for the heirs, this is diabolical madness, the destructive absurdity of which becomes even more apparent the longer the term.
This is demonstrated by the well-known fictional story of Joseph’s penny. Let’s assume that in the year 1 of our era, Joseph and Mary had invested 1 cent at an interest rate of 5% in a bank in Bethlehem before their flight to Egypt and after 2,000 years an heir had taken the savings book to the bank to withdraw the money. It would be, as someone has calculated: €23,900,000,000,000,000,000,000,000,000,000,000,000,000.
The bank will not be able to deliver. If the heir demands 1 kg of silver bars for the money, that would be 23 trillion silver balls the weight of our earth.
With 5% interest, but without compound interest, one cent would have become €1 in 2,000 years.
This story is of course completely unrealistic over the long term. But it impressively demonstrates the destructive absurdity of compound interest.
But Dr. Wember also does not accept any justification for simple interest. He deals with four arguments that are often cited.
a) The classic argument is that interest payments are used to pay for “opportunity costs”. A well-run company always puts enough money aside to be able to make a quick purchase in the event of a favorable opportunity. If you forego this and lend the money, the interest compensates for this.
If it were wise and essentially a business duty for a company to set aside money for good opportunities, it would be a breach of duty to give the money away. And would you want to be paid for this negligent breach of duty?
If it is objected that one might get the impression that there will not be a good opportunity to shop in the foreseeable future, that means nothing other than that the company would not give up any money for a good opportunity. So this argument is not convincing.
b) A famous variant of the same argument is that when you lend money you forego your own consumption. This sacrifice is paid for by the interest.
This is comparable to the lender of hedge trimmers saying that he cannot use the hedge trimmer himself (and in this sense consume it) during this time and then asking for payment for this waiver.
Moreover, it is fundamentally a bizarre idea to ask for payment for a waiver. Because the moment you lend out objects or money for interest, the waiver is no longer a waiver. Rather, you are making the decision to use the money differently, namely in such a way that it earns interest.
c) A third argument is that interest is compensation for the lost income that could be earned with money on the capital market. In other words: one can demand interest income without having to work because one can earn income elsewhere for which one does not have to work.
So you could also use the money you borrowed on the stock market to make a profit there, or invest in shares to receive dividends. Because you forego these options, you compensate for the lost profits through interest payments. This argument assumes that the principle you want to justify already exists (income from profits on the capital market, i.e. without work). “In two words: circular nonsense.”
d) A fourth argument is that lending money means taking a risk. The project to which you lend money could fail. Therefore, if it is successful, you should receive interest as a reward for the risk you have taken.
If you rent a bike, it could be damaged by a fall. But then you will of course pay for the damage. If the lender needs security, you can take out insurance or provide a guarantor, just like when renting a car. In reality, the only thing behind the risk-reward through interest is the desire to make a profit in any case.
However, the reasons given for lending money for money are not only unconvincing, they also obscure and distract from the crucial point:
“Lending money is not work.”
If you get paid for it, you get money without having to work for it. That’s what it always comes down to. One person has to work, the other doesn’t. That has always been seen as a violation of the principle of justice and reciprocity.
Performance and consideration should be balanced. Otherwise, one of the contracting parties will be disadvantaged, harmed, even exploited. And that is what we are dealing with in the interest system.
Conclusion
About 50 percent of prices are constantly and imperceptibly paid to the money lenders in the form of interest costs. That is 10 percent of the population, for whom 90 percent of all people have to pay half of their income indirectly to these rich “elites”.
As the banker Maier A. Rothschild once said: “I do not know all seven wonders of the world. But I do know the eighth: compound interest.”
This systematic exploitation is a huge social cancer that is corroding the social organism from within. Even if most people are not aware of it, deep down in their souls they feel it as a permanent injustice and degrading to humanity.
If most people become aware of it, this interest rate system will have to collapse. And it is about time.
yogaesoteric
October 11, 2024