There Is One Way Out of Debt-Serfdom: Fanatic Frugality

If we accept that our financial system is nothing but a wealth-transfer mechanism from the productive elements of our economy to parasitic, neofeudal rentier-cartels and self-serving state fiefdoms, that raises a question: what do we do about it?

The typical answer seems to be: deny it, ignore it, get distracted by carefully choreographed culture wars or shrug fatalistically and put one’s shoulder to the debt-serf grindstone.

There is another response, one that very few pursue: fanatic frugality in service of financial-political independence. Debt-serfs and dependents of the state have no effective political power, as noted yesterday in It Isn’t What You Earn and Owe, It’s What You Own That Generates Income.

There are only three ways to accumulate productive capital/assets: marry someone with money, inherit money or accumulate capital/savings and invest it in productive assets. (We’ll leave out lobbying the Federal government for a fat contract or tax break, selling derivatives designed to default and the rest of the criminal financial skims and scams used so effectively by the New Nobility financial elites.)

The only way to accumulate capital to invest is to spend considerably less than you earn. For a variety of reasons, humans seem predisposed to spend more as their income rises. Thus the person making $30,000 a year imagines that if only they could earn $100,000 a year, they could save half of their net income. Yet when that happy day arrives, they generally find their expenses have risen in tandem with their income, and the anticipated ease of saving large chunks of money never materializes.

What qualifies as extreme frugality? Saving a third of one’s net income is a good start, though putting aside half of one’s net income is even better.

The lower one’s income, the more creative one has to be to save a significant percentage of one’s net income. On the plus side, the income tax burden for lower-income workers is low, so relatively little of gross income is lost to taxes.

The second half of the job is investing the accumulated capital in productive assets and/or enterprises. The root of capitalism is capital, and that includes not just financial capital (cash) but social capital (the value of one’s networks and associations) and human capital (one’s skills and experience and ability to master new knowledge and skills).

I cover these intangible forms of capital in my book Get a Job, Build a Real Career and Defy a Bewildering Economy.

Cash invested in tools and new skills and collaborative networks can leverage a relatively modest sum of cash capital into a significant income stream, something that cannot be said of financial investments in a zero-interest rate world.

Notice anything about this chart of the U.S. savings rate? How about a multi-decade decline? Yes, expenses have risen, taxes have gone up, housing is in another bubble–all these are absolutely true. That makes savings and capital even more difficult to acquire and more valuable due to its scarcity. That means we have to approach capital accumulation with even more ingenuity and creativity than was needed in the past.

Meanwhile, we’ve substituted debt for income. This is the core dynamic of debt-serfdom.

As Aristotle observed, “We are what we do every day.” That is the core of fanatic frugality and the capital-accumulation mindset.

For your amusement: a few photos of everyday fanatic frugality (and dumpster-diving).

The only leverage available to all is extreme frugality in service of accumulating savings that can be productively invested in building human, social and financial capital.

Debt is serfdom, capital in all its forms is freedom. Waste nothing, build some form of capital every day, seek opportunity rather than distraction.

Debt = Serfdom (April 2, 2013)

How Frugal Are You? (August 7, 2010)

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

This entry was posted in Uncategorized. Bookmark the permalink.
  • Dr Mindbender

    Your article is not realistic. You cannot live on 1/2 or even 2/3 of $30,000., or so, annually. Most Americans make sad amount this or less. Additionally, all the cost for Education, Tools, and Equipment will put you in the POOR HOUSE, eternally. Now, I know you want to worship at the alter of capitalism, but capitalism was a lie ( by rich bankers) to make the poor “think” they could be rich if they worked hard. Thereby, the slave drivers no longer had to pay to feed, shelter,clothe, and police the slaves; because they were Freed and Given Capitalism with their new Title, Employee.

    All governments and “ALL” systems seek to enslave those who are not in the nepotism click.

  • Dr Mindbender

    Before, You fools denigrate yourselves further by dumpster diving for AMERICA! You should delete that NYSE “BS” on Wall Street with 1-Million People, “If We do not Profit they do not Profit!” Only then, will the people be able to change things. So long as you think like a Slave, You will be a Slave!

    Afraid … “Give Me Your Lunch Money!” – Your Master, USG.

  • jadan

    Your idea of frugality would destroy this economy, Smith. If everyone would suddenly begin saving half their incomes ( no one can do that except in your fantasy) and repairing their .99 flip flops, what consumer demand now drives the economy to grow at less than 1%, would disappear. The investor class which calls itself capitalist would have to move away from Easy St. Unearned income would evaporate. The great money machine would break down more profoundly than it did in 07. The world we live in is quite different from the world of Poor Richard’s Almanac. This is a consumer economy built on planned obsolescence. Growth means we buy shit we don’t need and trade in cars for new models we don’t need. Although it is possible for razor blades to give many more shaves than they do, they are manufactured to give just one or two really smooth shaves and you throw them out so you can buy more. Consumer society means wasteful society, not frugal. Your advice is dumb, Smith. What you are saying is that the smart ones are the frugal ones who save all their money so they can invest in some enterprise that produces shit people don’t need. All the unenlightened masses out there who don’t save will spend their money so you can move to Easy St and build yourself a money bin where you can romp naked in your savings, because you are Uncle Scrooge, Smith! That’s who you are.

    • Dr Mindbender

      You are all slaves to your consumerism. He is correct about the frugality, ( if his plan was to BK the Slave System) as it would defeat the plans of those who enslave YOU, but mankind does not have the level of discipline.

  • Silverado

    It not only goes against our culture, it’s unamerican and anti-capitalist as well. As far as something to invest in that will actually increase in value and will prove to be a great store of value as the American economy and the dollar decrease in value, maybe catastrophically, I’d recommend buying silver bullion. Not gold, not stocks and Hell no for bonds, silver bullion will never and has never gone “off the board down to zero” not once not ever. Unlike every paper currency known to man eventually and always does. After all paper currencies have been used since antiquity first by the ancient Chinese and all the way up to modern times and yet not one, that’s NONE, nadda, zippo – not one has stood the test of time. Paper dollars (un-repayable debt instruments) created out of thin air and backed by nothing except more debt are not real wealth. Real wealth can’t be printed or folded and is measured with a scale and comes in grams, ounces and kilos. Even productive acres and paid for real estate is real wealth. Not govt approved and specially inked paper or worse yet, virtual digits credited to one’s account, based on debt, fraud, lies and illegal and unconstitutional banking schemes perpetuated by those higher ups both in govt and finance that should (and do) know better.

    • Dr Mindbender

      Culture … Capitalism, Patriotism … all tools to enslave the unwise masses.

      “Currency and Valuables” are only “Valuable” if people have Faith in them. People have faith in the US dollar. They actually kill for it.

      Silver is a Bad Idea, Gold too, because Government can print Billions of Dollars to short Gold and Silver with a Big Fat Hand. They have been doing it for Years. Stocks are under heavy manipulation and I would only Trade them with a Stop.

      QE= Welfare, for Bankers, Corporations and Stock Market, Capitalism does not even exist!

  • K. Chris C.

    Very valid argument, in the immediate term, but as the process of plundering and destroying America and Americans continues a change in the mindset of Americans toward the Khazarian grift-machine and their fiat-debt must come about:

    For Americans the Law of the Land, the Constitution, provides for no central bank–it is Unconstitutional and illegal. Additionally, be reminded that the grifting banksters fund their fiat via wealth stolen from their depositors, the people. These stolen deposits are conjoined with counterfeit and then fenced via unsuspecting debtors. This counterfeit is theft of purchasing power from all Americans. A theft that shows up as higher prices for food, clothes, shoes, electricity, etc.

    The Khazarian fifth-column and their instrument of plunder, the Khazarian grift-machine, backstop their thefts and scams with propaganda and brainwashing. The chief of which is that debtors to their fiat-debt owe them, the grifters. This is not the case. Both morally and legally it is the
    banksters that owe we, not we that owe them, as what they “loaned” to we was ours in the first place.

    Keep this in mind the next time you write a check to the banksters’ credit card company, and then later discover milk higher in price.

    An American citizen, not US subject.

    • I started freelancing over web-based, through doing various job opportunities which only required a laptop or computer and consequently having access to net and additionally Now I am happier than ever before… half a year get passed on when i began this and also i received profit total of 36,000 bucks… Normally I generate eighty usd each and every hour together with work for 3 to 4 hrs nearly all of the days.And wonderful thing about this is that one could organize valuable time when you work and also for how long as you like and you get a take-home pay weekly. —->>>LEARN MORE About This here->


  • Zartan

    A guide to poverty and living as a third world peasant! No Thanks. I thought this was the best country in the WORLD … I want a REFUND!

  • Todd Millions

    ” You yourselves have given these men power by loaning them your support, thus you are fallen into evil slavery….” Solon(the lawgiver)2700BP.
    The frugal starve the tapeworms approach-requires a community an actual one not a social media
    seek and suborn addiction tool.
    Such group actions can be very powerful but most of our high culture is based on seeking out and coopting such formations BEFORE they coalesce.
    The bill for hireing(permanently) the stupid, the viscous and the vain(in any combination) is never excessive. With proper documentation the compromising is effectively permanent and has a very long lever for any extortion or blackmail Ponzi.
    This is what current college grades refer too as =”A consensuses approach” ,when they set out to “Help people”.
    They got this from early Christian churches of course.

  • Jill

    This could be an excellent solution for some people. It cannot be a systemic solution to a systemic problem because it relies on individuals to do something many people simply cannot do. If you have an illness you may not be able to dumpster dive. You may be spending a lot on medical care. You may be supporting/caring for a sick person so they can simply live and possibly get treatment. If you have ever done this, you will know that the amount of time this care takes is incredible. I’ve seen this. My neighbor who actually had some money still could not afford in-home care for his wife. within a few weeks of no sleep and constant on the alert trying to keep his wife alive, he was a zombie. You can moralize that he didn’t go dumpster diving or you can realize that he was performing an act of love which just about ended killing him.

    This is advice for people who are healthy and do not need to concern themselves with certain realities which are in the lives of others. This is why we need a collective solution to a collective problem. For those who can do this, great. As others here have pointed out, for many people, probably, most, it is simply not going to work. We need to devise solutions which will help everyone.

    • Dr Mindbender

      nobody should be dumpster diving, because that is a good way to get an expensive trip to the emergency room. 1/3 of Americans, or so, do not have healthcare. The solutions are simple. However, they will not come easy; because government has been taken over by wall street gangsters and they are looting the treasury.

  • Jill

    P.S. Try finding your cancer meds in the trash!