How Wall Street Monetizes Misery - by Charles Epstein
The Progressive Investor
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How Wall Street Monetizes Misery<br>Perpetual borrowing and indebtedness is an essential part of capitalism to deflect attention for the widening wealth gap.
Charles Epstein<br>Aug 21, 2026
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Need money for rent? How about student loans? Or pay a car loan, or an electric toothbrush?<br>No problem.<br>Just become a slave to the credit-industry Gestapo and get a loan, extended payment plan, or trade in an insurance policy or car, or take out a second mortgage.<br>Capitalism is very creative, and unregulated capitalism in the stage of monopoly capitalism is even more unethical and aggressive in monetizing anything with real value.<br>The loan and credit industries prey on the desperate who need to buy essentials, and even luxuries to satisfy some desire.<br>These people, average Americans struggling to replace a broken refrigerator, repair an air conditioner, or pay for groceries, are easy prey for lenders of all stripes in the most advanced consumer and advertising-driven society in history.<br>Every year, consumers have an estimated $18.77 trillion in consumer debt, with net new borrowing increasing total debt by roughly $200 billion to $400 billion annually. This is broken down to $105,444 in total debt per household, according to the Federal Reserve Bank of New York and Experian.<br>Of this per-household total debt, 70% is from mortgages, with the average mortgage of $272,628; 9% from car and student loans; 7% from credit cards; and 5% from miscellaneous loans.<br>American consumers are in a constant state of indebtedness. Consumers are constantly cycling through debt. Non-mortgage consumer credit grows at a seasonally adjusted annual rate of roughly 2.6% to 3.3%. “This means that even after Americans collectively pay off hundreds of billions of dollars in auto loans and credit card bills every year, they still net-borrow tens of billions more than they did the year before,” according to the Federal Reserve’s G.19 Consumer Credit Release.<br>This means consumers are on the debt-repayment treadmill and many will never get off. They will be working for the credit industry Gestapo for their entire lives.<br>This is because the individual credit rating agencies—Equifax, Experian, and TransUnion—control a person’s financial destiny. These agencies- Equifax, Experian, and TransUnion—generally have net profit margins ranging from 10% to 18%, while major credit card companies (like Visa, Discover, and Mastercard) see net margins exceeding 50%. Subprime lending companies that target the poor are largely unregulated, and charge high upfront fees and interest rates.<br>A low credit score (in the 500s and below) means an individual will pay higher interest rates on anything they purchase on credit, from cars to mortgages, and may not even pass an employer’s requirements to get a job.<br>An academic report in Science Direct found that “There is a significantly negative relationship between household debt and wealth accumulation for poor households but a significantly positive relationship for wealthy households. Wealthy households can benefit more from investment debt, but poor households cannot. In short, poor people borrow to pay basic expenses, while wealthier people borrow to pursue positive investment returns.<br>Being poor in a society driven by consumption and expanding debt widens the wealth gap. Poor people face greater credit risk, so they pay higher interest rates. This depletes their ability to invest (what economists call “wealth extraction”), producing the rat-wheel analogy of a “negative feedback loop” when poor people cannot escape their indebtedness. This sad state can continue for generations.<br>So, when Trump downplays the “affordability crisis,” Republicans should consider the trend line in borrowing and compare it to the wealth inequality gap. How wide can the wealth gap expand before it explodes? This picture captures the dire circumstances of the average American consumer.<br>The Contradictions of Capitalism
The current perpetual indebtedness of average consumers is no accident. It is part of the system. It is much more than becoming a victim of incessant advertising and being enticed by new online borrowing opportunities.<br>Being an American wage slave is an essential part of the current economic model. In the seminal book, Monopoly Capital, by the Marxist economists Paul Baran and Paul Sweezy, U.S. evolutionary economic history of capitalism was laid out in terms described by Polish economist Paul Kalecki.<br>According to Kalecki, “Workers, the vast majority of the population in the rich countries, had little or no access to economic surplus in the forms of profit, interest, and rent. Workers’ income was almost exclusively wage income. Most working people lived from paycheck to paycheck (though sometimes made large purchases on credit) and had no savings to speak of. Workers therefore spent what they got on necessities, or what economists...