Credit — Blog — Healy Chen

New opiate of the people

It’s wild to see the protests going on in France. Driven largely(?) by the younger generations and their dissatisfaction of their immediate future prospects. France, like most mature Western democracies, is in lots of debt, high inflation, with no chance to austere their way out of it due to entrenched obligations that largely benefit the older generations. A financial quagmire that is robbing Peter to pay Paul. Peter - the younger generations - is not having it any longer.

This leads to the question: can similar protests happen here in these United States? The same combustible factors certainly exist here. Just this year our national debt crossed the 40 trillion mark, an unfathomable level of indebtedness. There’s fewer and fewer workers to support an increasing aging population dependent on social security. Inflation remains high thanks to that Strait of Hormuz business. The prospects here don’t look all that difference from France.

I think a big buffer against potential small-scale anarchy that exists in America is the ease of credit. I would say easy credit is the new opiate of the masses. As social media can attest, it’s rather easy to attain the finer trappings of life entirely on debt. That lever is as large as it can comfortably fit inside a monthly balance statement. A new BMW M3 is imminently affordable when it is financed for 10 years at an enormous interest rate. The $1,000 Disney vacation is only really $250 when Klarna allows you to split that payment into four.

Should that lever become too burdensome on the other end, there’s bankruptcy to discharge all of it. A reset button like spawning anew in Call of Duty.

Now imagine if credit isn’t so freely available - if at all, and bankruptcy requires more vigor than writing a check to an attorney. The imbalance in our so-called K-shaped economy would be felt acutely. A whole class of people who cannot attend a Taylor Swift concert because there’s not mecahnism to put that $1,000 on a credit card. There’s going to be some disgruntlement! Perhaps violently like the ones in France currently.

Free-market capitalism cannot survive a lower class that feels completely neglected. I gesture at the various revolutions in history. Good news for the US is that we’ve implemented just the thing to satiate the lower rungs of the economic ladder: widely available credit, and bankruptcy back-stop. Mix in with all the gambling-adjacent products like prediction markets and the actual stock market, there’s enough hope and facsimile of abundance to temper any pitch-fork fantasies.

Did you get got?

Is your Social Security number amongst the billions of personal information records that were hacked from National Public Data, a background check service? Apparently a hacking group stole all of that information, and has been offering them for sale on the dark web. You can go here to check if your very own personal information is a part of that data breach.

I am lucky: there were no matches found for my information. Unfortunately, I have friends and coworkers who were not so lucky. They now have to freeze their credit at the three major credit bureaus, and keep a hawkish eye on their Credit Karma accounts.

It’s crazy to think that back in the day - well before my time, San Francisco State University ID numbers were people’s Social Security numbers! Either that was the stupidest thing ever, or indeed it was during a time when the Internet isn’t what it has become today. Back then, even if you know a person’s Social Security number, using it for nefarious stuff isn’t so easy. To open lines of credit, you would have to physically visit a bank. Pro tip for those looking to commit fraud: best not do so in-person, at places with security cameras.

Obviously it’s whole new world these days. A name with a matching Social Security number is a gushing gold mine for opening credit cards. Some ill-gotten spending power is just a few clicks on a banking website away.

You know what they should do? Invoke a second factor authentication whenever Social Security number is used. Something that only the actual person would know, or have access to that information. Perhaps the total gross income from a specific tax return year. The bank should be able to verify this with the IRS. It’s a hassle, sure, but I would definitely want that safety when my credit identity and worthiness is at stake.