It has become highly evident to me, as time rolls on, that the current banking system in the United States is completely and totally without coincidence, designed to keep people as poor as long as possible.
It is high time we stop using the outdated “pull yourself up by your bootstraps” and “it’s your fault that you are poor” bullshit. This is a division tactic and how many people were honestly told this during the great depression as people killed themselves due to poverty and bankers leapt off the tops of buildings? Honestly? Probably very few.
It has become increasingly harder since the 1970’s to make a living for yourself.
This is not your fault. You have factors within your control, and many factors that are outside of your control. During a depression, it is simply harder to make a living, or even make any money at all. There are many, many things that have a direct impact on your future. Even your parents play a role. People who are born into extreme wealth will have a much easier time to maintain their own wealth because their parents will usually do things like buy them a car, pay for their college, and of course leave them a tidy some of money when they pass. Some people are born into such wealth, they don’t have to work a single day in their life.
But, focusing on right now, more and more people have to put their future in the hands of the banks through debt.
It should be glaringly obvious that the more people who are “well off” or middle class, the less money they have to borrow. The banks honestly hate this. The more people they can keep poor, the more money they will make, especially at a time when borrowing rates are low.
If more people are well-off, and rates are high, they have no trouble lending money at rates that are two to three times as high as they are now. But with historically low rates, the banks have to find a way to make money.
Lets look at the most glaring feature of this, the overdraft fee. Even if you overdraft your bank by $10, the bank comes along and tacks on a fee, usually $35.
So now, not only are you poorer, you now have to come up with $45 instead of $10. While the personal finance circle jerkers would love to smear you and say it’s your fault, many millions of people are poor in the US and live paycheck to paycheck. They may simply have no other means to avoid an overdraft. Their paycheck might be $600 but they have $610 worth of critical expenses including rent, food, electric, etc.
Anyone who sees the overdraft fee as an honest fee, is in my opinion, criminally insane and morally bankrupt. People are charged $35 for being short $10. Banks run out of money all the time, and are allowed to borrow through the intrerbank system at less than 1%.
There is no valid excuse to charge people almost $40 for simply being poor. The overdraft fee came out at a time when the middle class was at a much higher percentage than it is today. It was simply a fee for not balancing your checkbook better, and many people never needed to worry about said fee. The fee for overdraft during the 80’s used to be about $10, but banks soon kept charging higher and higher fees when they realized they could make a killing as a extremely high priced short-term borrowing “service”.
Banks make somewhere around $30B a year in overdraft fees. This is about $90 collected from every man, woman and child every single year.
But moving on from this, and as I said earlier, the poorer the average person is, the more money the banks can make.
There was a time in America when you didn’t need a degree to make good money. While many blame the exodus of “good paying American jobs” on President Clinton, it actually started much earlier than that. I buy and sell a lot of stuff on eBay, and find quite a bit of goods including consumer electronics that were made in China or Japan during the 80s and even late 70’s. While there were a lot of jobs lost to other countries during NAFTA, this practice had been going on for well over a decade.
Anyway, it is very hard to make decent money without a college degree anymore thanks to this. I’ve talked to many older people in my family who were making the inflation-adjusted equivalent of $20-$25 per hour during the 60’s 70’s and 80’s working at a factory, out of high school and of course with no college degree.
If they wanted to go to college, it was entirely possible to work part-time during the summer and pay for an entire year of college, without loans, federal grants, etc.
But banks soon realized if people can do this, they can do so without borrowing. My dad bought a brand new car with his factory job in 1970, and paid cash. He bought a home to rent out as well, and paid for it in cash. Try doing that today at a factory. Oh..did I mention most factories actually pay less now than they did 30 years ago, accounting for inflation? My father made $16/hr in the year 1999 before he retired. That is $24.79 today, and the same factory is surprisingly still open. They start people out at $14 an hour. Go figure.
So very soon, college degrees became barriers of entry into good paying jobs. A lot of jobs that didn’t even require degrees before soon did. A lot of jobs that required associate degrees 20 years ago now require a bachelors, and for the bachelor graduates of 20 years ago, more jobs require master degrees.
Of course, the longer you stay in college, the more money they can make off you, and the cost of attendance rises quite a bit EVERY YEAR, despite wages barely increasing with inflation over a 20 year time span.
Now people are graduating and possibly getting a good paying job, but not everyone does. There simply aren’t enough to go around. Av average job can sometimes see almost 200 applications.
People love to brag that only 4% of college graduates are unemployed. This is true, but the real figure is close to 41% of college graduates are currently working in a job that does not require a degree.
So while 96% of college grads are in fact working, nearly 45% of them are working in a dead end job. You can go to Walmart or McDonalds and see many people working there that have bachelors degrees.
This is because they were sold a lie. A lie of “if you go to college, you will get a good paying job”. This lie is a trap, a trap to keep people in upwards of $100,000 in debt.
The next biggest thing you will purchase is a house, which is now much harder to purchase than your parents or grandparents bought one for.
The median home price in 1970 was only $17,000. $113,091 in today’s money.
The median home price today is $248,857, 2.2 times the cost of a home in 1970.
Now, not only does it cost a recent college grad a lot more to buy a house, their $500-$600 a month student loan payments are factored into their debt to income ratio, which can mean a higher borrowing rate, or a longer term, thus trapping people for even longer. When you factor in the double cost of buying a home today, trying to do so on 15 year terms is nearly impossible, so now banks are pushing for more and more 30 year mortgages.
Using the median home price of today, you will have paid a bank over $100,000 more in interest than picking a 15 year term.
But as I said earlier, some factors are in your control, some are not. You obviously have no control over why the median price of a home has doubled and then some since 1970. You have no control over the price of college going up more and more every year.
The home of today is much larger than the home of 1970. According to the US census, the average home in 1973 was 1660 square feet. Today it’s 2679 square feet.
Which makes no sense, unless of course you are the bank. The bank fronts money to the construction company that builds a new home. Bigger home, more interest. Then of course the same trick when you buy the home. More interest, less chance of affording a 15 year term.
It also makes no sense that the home of today is 1000 square feet larger than a home in 1973. The average family size is smaller, there are more single parent families and people are having fewer children.
Now I’m going to stop here, as I could go on for pages on end. But my main point is this: anyone who uses the “your fault your poor” is full of shit. They are brainwashed and the banks and other lending institutions in this country LOVE IT when people spout this BS.
It absolves them (the banks) of all fault. It pushes the problem away from the real problem and gaslights it onto other people.
You have a small amount of control on your finances, the economy and the banks have a much larger bearing on your financial success than you will EVER realize.
The thumb-grip of the bank tightens every year. If you told people in the 70’s there were vacation and wedding loans, they would laugh at you at such an idea. But they are very true today.
Should we be punished for trying to maintain the same standard of living your parents or grand parents had in the 70s? Should we all just continue to live farther and farther below our means because achieving their standard of living today is nearly impossible without going into debt?
If you answered “yes”, then congrats, you are one of the few people right now who understand just what the hell is going on. If not, then congrats, the banks have successfully brainwashed you into repeating “its your fault your poor”.