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Rich people are broke.

Updated on February 9, 2015
Halloween last year.
Halloween last year. | Source

The reason they called it a 'Debt Crisis'

The problem is, so many rich people don’t actually have any money.

Why is Betty White still working, and what was that Charlie Sheen crisis really about, and why... oh, I get it. They're all broke.

The Bernie Madeoff story shows how one person with no money at all can make it seem as though hundreds of people have millions of dollars. And celebrities, many of them are actually flat broke. Not so long ago, a very popular singer had broadcast info-mercials from her home, while pregnant, all the way up to the day she went into labor. This is not what rich people do. This is what people do when they are broke. Broke, as in total assets minus total liabilities equals a negative number.

Most people fall into this category. Most people are in debt for five year’s take home pay or more. But as time goes on, more Americans are living debt-free and that is putting pressure on the posers who pretend to be rich. The age of substance is upon us.

There was a time when a person could rent a suit and a car for a couple of days and then, based on their wealthy appearance, buy a mansion in Beverly Hills. Then they’d rent it to a celebrity and declare themselves rich because they own a mansion occupied by a celebrity and move on to bigger and better demonstrations of wealth. With any luck at all, they might actually achieve a positive net worth. And the wise among them would then start paring down the assets slowly, pay off the accumulated debts and settle down to a comfortable debt-free retirement. But too few were wise. Perhaps none of them. The euphoria of tossing around seven and eight figures is addictive, great fun on the grandest scale. Entire groups of socialites, all of them actually flat broke, slinging borrowed money at one another for decades.

Then Gen X comes along and screws up the whole thing. They don’t want to borrow any money. The money supply contracts. Without new debts to fuel the charade, old debts get liquidated. Those without positive net worth get exposed. Like Bernie Madeoff, like Lehman Brothers. Like Allen Stanford. (He’s the fund manager who put investor’s money in offshore banks, safely out of the reach of US regulators. But when he went to withdraw the money, the offshore banks beyond the reach of US regulators shrugged and said, “What money?”)

And there would have been more. The entire palace of lies, house of cards, prosperity of debt, whatever it’s called, was crumbling fast. All the fake-rich, not rich at all, were about to find themselves in bankruptcy. And the debt-free were on the brink of becoming kings, lording over the land they once toiled. They went so far as to elect a food-stamp, only son of a single welfare mother to the highest office of the land, the most powerful office in the world, the office of the President of the United States of America.

But the US congress stepped in and gave the Banksters 750 billion dollars of taxpayer money so that the fake-rich could keep pretending to be wealthy. Congress also extended tax cuts for the wealthy. (It’s near impossible to juggle debt and pretend to be wealthy when it’s also necessary to come up with actual money to pay taxes.) The Fed also stepped in and printed bazillions in more dollars to fill the void of non-existent money, and pinned interest rates down to zero. Imagine that, negative real interest rates while the real money supply is growing. I used to think that was impossible.

And that’s supposed to be okay. I suppose it is. In theory, if we had no fake bazillionaires to bow to and grovel before, society as we know it could collapse. Or not. I personally would like to give it a try to see how things turn out.

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    • sheila b. profile image

      sheila b. 

      6 years ago

      Donald Trump says he's making money. Soros is making money. The Congress is making money. It's the middle class who are paying more for less. And sure, we don't have good choices, but here's how I see it - we know what Obama will do - more of the same until we can't afford gas for the car and heat for our homes, rules and regulations galore... but if Romney gets in, there's a chance he'll go in a good direction because there will be so much pressure for him to downscale government, etc.

    • Jed Fisher profile imageAUTHOR

      Jed Fisher 

      6 years ago from Oklahoma

      Sure, the ruling elites are broke but I'm not. Electing O'Bama was a dumb move but now we at least know his game. Now we'll see if America is dumb enough to elect a Corporate Raider as President. The choice we face now is between becoming Communists or Suckers. Either way, the Gub'met will come and take our chickens.

    • profile image

      Aimee 

      6 years ago

      Gen X got burned early; unable to declare bankruptcy on student loan debt as baby boomers did, and handed credit cards on campus with free baseball caps. Gen X entered adulthood over educated, underemployed, and in debt before we got our first paychecks! Bankers failed to understand the new generation. I guess they didn't see the tee-shirts with "Die Yuppy Scum" or understand that grunge style meant you could shop at Goodwill and be as cool as Kurt Cobain. Gen X found out early that the debt game was rigged to enslave them. Credit is no better than script for the company store.

    • The Frog Prince profile image

      The Frog Prince 

      6 years ago from Arlington, TX

      You make a lot, you spend a lot. Been there and done that but the fact is the whole nation is broke.

      The Frog

    • Jed Fisher profile imageAUTHOR

      Jed Fisher 

      6 years ago from Oklahoma

      I could live in a world where Kardashains stand in soup lines.

    • amillar profile image

      amillar 

      6 years ago from Scotland, UK

      Good idea Jed; let's call their bluff.

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