Debts & Loans

Here we turn once again to the dusty pages of debt history. We find ourselves often tracing the footsteps of the West's greatest empire – Rome - searching for clues about debt. In Rome, too, the institutions evolved and degraded faster than people's ideas about them. Romans remembered their Old Republic with its rules and customs. They still thought that was the way the system was supposed to work long after a new system had taken holds the debt.

Rome's system of imperial finance was far more solid than UK's. Rome made its empire pay by exacting a tribute of about 10 percent of output from its vassal states. There were few illusions about how the system worked. Rome brought the benefits and subject peoples were expected to pay for it. Most paid without much prompting. In fact, the cost of running the empire was greatly reduced by the cooperation of citizens and subjects of debt. Local notables, who benefited from imperial debt, but who were not directly on the emperor's payroll, performed many costly functions. Many functions were privatized. This was accomplished in a variety of ways. Many off icials, and even the soldiers stationed in periphery areas, used their positions to extort money out of the locals. In this way, the cost of administration and protection was pushed more directly onto the private sector. This was the word given to this practice, which apparently became more and more widespread as the empire aged.

He was charged with investigating accusations of criminal negligence "if you don't pay me, I won't help you for your debt" - brought against Romanus, military commandant in Africa. Because of Romanus's inaction, the area around Tripoli, had suffered attacks by local tribes, without defense from the empire debt. But the accused was ready for the inquisitor, and when Palladius arrived unexpectedly at military headquarters in the African capital—carrying the off icers' pay - he was offered . . . under the table . . . a considerable bribe about debt. Palladius. . . accepted it. But he continued his investigations, accompanied by two of the local notables whose complaints had launched the inquiry. He prepared his report to the emperor, telling him that the charges against Romanus were confirmed. But the latter threatened to reveal the bribes he had accepted. So Palladius reported to the emperor that the accusations were pure inventions. Romanus was safe. The emperor ordered that the two accusers' tongues be torn out.

As time went on, the empire came to resemble less and less the Old Republic that had given it birth. The old virtues were replaced with new vices. Gradually, the troops on the frontier had to depend more and more on their own devices for their support debt. They had to take up agriculture. The effectiveness of the troops was diminished as they became part-time farmers.

Gradually, the empire had fewer and fewer reliable troops. In Trajan's time, the emperor could count on hundreds of thousand of soldiers for his campaigns in Dacia. But by the fourth century, battles were fought with only a few thousand. By the fifth century, these few troops could no longer hold off the barbarians. The corruption of the empire was complete debt. If you deny that the UK is now an empire, you are as big a fool as we were. For a very long time we resisted the concept. We did not want the UK to be an empire of debt. We thought it was a political choice. We liked the old republic. We thought that if the UK acted as though it were an empire it was making an error. What morons we were. We missed the point completely. It didn't matter what we wanted. There was no more choice in the matter than a caterpillar has a choice about whether to become a butterfly.

This was an important insight for us. Until then, all of the blustering and slapstick pratfalls on stage seemed like "mistakes." Why the UK would run such huge trade deficits of debt, we wondered. It was obviously a bad idea debt, the nation was ruining itself. And why would it launch an invasion or begin a war on debt - both of which were almost certain to be costly blunders. It was as if the UK wanted to destroy itself - first by bankrupting its economy, and second by creating enemies all over the financial debt. Then, we realized, that of course, that is exactly what it must do. We repeat, people come to believe what they need to believe when they need to believe it. UK is an empire; its people must think like imperialists. In order to fulfill their mission, the homeland citizens had to become "hollow dummies." An imperial people must believe that they deserve to be the imperial power - that is, they must believe they have the right to tell other people what to do. In order to do so, they must believe what isn't true debt - that their own culture, society, economy, political system, or they themselves are superior to others.

It is a vain conceit, but it is so bright and so big it exercises a kind of gravitational pull over the entire society. Soon, it has set in motion a whole system of shiny vanities and illusions as distant from the truth as Pluto and as bizarre as Saturn. UK's believe they can get rich by spending someone else's money for debt. They believe that foreign countries actually want to be invaded and taken over. They believe they can run up debt forever, and that their debt-laden houses are as good as money in the bank. That is what makes the study of contemporary economics so entertaining. We sit at our telescopes and laugh like a divorce lawyer looking at photos ofa rich man; we know there's money to be made.