A hundred years ago to be a wealthy and rich man meant to have property. The rich had much buildings, factories, land... And the mid class had its own home, some acres of land, some horses and other useful animals. Everyone had some money reserves, i.e. some Gold and Silver. And against all this there was no any debt, or at least the debt was valued much less than the property. Generally the wealth was the property. Wealth=Property. And it had been so for centuries, even for thousands of years. The term "property" was created and implemented in laws since the times of Roman Empire. The property has always been protected, as it has always been the wealth. The property has been the main border between social classes.

And then the "economy of credit" appeared and changed everything. But does it changed it for good?

At current moment in most developed nations the property is de facto destroyed. Most of people have no serious property. Much people have their homes and cars, but have also enormous loans for buying them. This is not a real property, that is with no loans against it, and that is a symbol of stability and independence.

Instead of having property today the wealth is the salary. People have no property, but instead they have a big salary that allows them to buy everything on credit. Salary is everything. It replaced the property.

But in fact such a replacement is not ultimately profitable. In fact it is replacement of a real value (property) with a virtual value (salary, future expected income). It is a replacement of something stable with something very fragile.

In past if you lose your job, you could go to your home and have at least a basic security and have where to live. Today if you lose your job you can become an absolute pauper. You can lose your home, you car, your food. You can literally become a homeless street cur. Today most of people have no real property. They have a property under condition - mortgages, leased assets, etc. This conditional property can very easily be taken away from you. I.e. you are de facto a poor man living in an illusion of high salary.

The "economy of credit" has changed the meaning of the word "wealth". But not everywhere.

For instance in Bulgaria or in Serbia most of people have an apartment in a city and a villa in countryside. A real property with no loans against it. And these people with $500 monthly salary is said to be poorer than a German or American with $5000 monthly salary. Seemingly 5000 is more than 500. But the American or the German has no any property. They either live in a rented home, or have a 30-year mortgage. So let's look what happens if in both instances a job is lost. The American (German) will be with a zero income and no property. The Serbian (Bulgarian) will be with zero income, and an apartment + villa?

Who is really the rich man?

The illusion of high living standard, that is based only on salary, is working till the first serious crisis that sends much people in unemployment army. I.e. that makes them paupers. In this situation unemployment becomes a major problem that can literally explode the society. Because without a job a man loses everything. In more classic times, when property was the wealth, every crisis was less destructive.

In 1996-1997 a hyperinflation happened in Bulgaria. Money has lost its value. Monthly salaries has fallen to $5. Yes it is real - five bucks. But people had their property and it helped them survive. The property has kept its value. People had where to live. And people also had village gardens where to grow vegetables and eat them. Much people survived this way in the times of $5-salaries.

Can you imagine an American or a German surviving with $5 per month? It is not a joke, it is a real question...

The "economy of credit" has destroyed the classic fundaments of wealth that existed not only in capitalism, but in all previous social and economic systems before. This is a very dangerous situation as the "economy of credit" itself is very fragile and can crash very easy. So the "wealth-replacement" is very unstable. It is far away from the stability of private property. In fact, if qualified by the means of previous social systems (including capitalism), today's employees are not "free men". They are a type of better paid serfs, attached to corporations, states and enormous social institutions. The classic free man means really free - not dependent on someone else. Today's employees are dependent on almost everything.

We can see the risks of this system today in most troubled countries. With much unemployed Spain is at the edge of a revolution. And in fact Spain was not so deeply submerged in "economy of credit" as some other countries. In Spain much people are conservative and still have real property. Anyway for much other it is a disaster to be without a job and losing their homes.

If the same happens in USA, the crash will be enormous. And it is on its way to happen.

At current moment the "economy of credit" is crashing. It is being ruined by a combined influence of cascade defaults and devaluing the fiat money itself. Politics are worsening the problem by printing more and more money and ruining the confidence in money.

So the crash is obvious and it means a test of the new virtual wealth-system not based on property, but based of debt and salary. Salaries are devalued by the inflation. Debts are leading to losing homes. So what will happen with this propertyless people?

In Serbia and Bulgaria it is clear what will happen - they will live in their property and survive with low income. But what will happen in USA, as the crisis worsens?

I think this replacement of values and shifting the property from its position of being wealth is to become one of the largest falsifications in human history. The money-print experiment that created the "economy of credit" is near to its crash due to very bad management. And much people will have to ask the question: "Am I really free, and what do I really have as wealth..." The answer will not be pleasant...

Dobri
August 30th 2012