On March 4 1933 FDR in his inaugural address to the American people said,

“…the only thing we have to fear is…fear itself….”

And it’s true. It is fear more than anything else that prevents people from turning away from what has failed them and stays their hand from picking up the tools which would allow them to build what would work better. And precisely because it is true, every politician, banker, judge and general has realised that if they wished to stop change from weakening their grip on power and wealth, then what they need above all else is …more fear.

As FDR went on to say, it is

“…nameless, unreasoning, unjustified terror which paralyzes….”

So if you want to control a people and contain their desire to replace the system which benefits you, with one that benefits them, then you need to feed them fear and the more of it and the more slippery and inscrutable it seems to them, the better.

A looming, shadowy foreign power lurking just beyond the borders is always good. Russia, China, Communists in general, or if they are too far away, then any kind of socialist will do at a pinch. In 1983 Margaret Thatcher famously branded British miners and their union as ‘The enemy within.” Terrorists are a wonderful new fear. They are everywhere, much like Red’s used to be under every bed.

All these are good and have been used, still are used, to good effect. But there is a new fear, one closer to the fear FDR was talking about. And the currency of that fear is Debt. Here is a very short history, in just a few sentences, of how debt became the currency of fear.

In the era of Clinton in the US and Blair/Brown in the UK there was a sea change in the ‘left’. I think Clinton, Blair and Brown had all decided that the traditional left dream of redistributing wealth from the richest to the less well off, was no longer politically viable. Reagan and Thatcher, they felt, really had shifted the political ground. What to do? The answer, I think, was fed to them precisely by those whose wealth the left had traditionally been trying to ‘redistribute’. Why try to prise wealth from us, the wealthy, they whispered, when instead we wealthy people will be delighted to give the poor debt instead? Instead of being at war with the wealthy and the managers of our wealth, why not work with us? Leave wealth with those who ‘have earned it’ they would say. Leave it with those who know how to manage it, how to make it grow and give a healthy return. Instead, give the poor debt. Or to paraphrase the obvious, “Let them eat debt.”

And so Clinton and Blair and Brown re-launched the left, or murdered it, depending on your point of view, with their new idea. Leave wealth with the wealthy and give the poor debt. Free the financial world from silly FDR-era restraints and irksome, stupid regulations and allow a rising tide of debt to float all boats.

And so long as you could convince others, and believe yourself, as that arch fool Brown declared, that he had left behind boom and bust, then all was good. The rich were no longer assailed for being rich nor asked to give any of it up, to those less well off. In fact the new politics needed their wealth and was in fact tailor made for them to become much more wealthy. The poor would be given debt as a substitute for wealth. They would feel wealthier, and would indeed have more to spend. And as long as house prices grew faster than their debt payments, and the stock market made every GDP figure larger and more endlessly fabulous than the last, then the debt machine would churn on and on. Debt was sugar without the calories. You could gorge without getting fat. What could go wrong? House prices were never going to go down again! Remember that?

And then it popped and fear bloomed. And a lesson, I think, was learned .

People knew that in the good times Debt kept poor people quiet. Like any drug it could take away the fears and worries of being poor. For as long as their high lasted they would feel better, happier and politically calmer. Debt drugged the poor into happy passivity. Why should they listen to those who argued for the old, hard, political struggles, when the politics of debt was so seductive and easy? People encouraged you to have debt. They fell over themselves to give you as much as you wanted. More in fact. Much more. More than you needed. More than you could every really pay back. But who cared? This was true for the poor but also for the entire system of banks and traders and funds that made the system work.

The political lesson learned, was that when the bad times came, far from being useless or harmful, debt worked new wonders. In the bad times debt created fear. Fear of losing your house, your job, your future. Debt, in the last ten years has created a powerful, pervasive, global narrative of nameless fear. Debt is a fear that is everywhere. Not just over there, a weapon pointing at you from afar, but right here at home. It could reach in to your house and take it from you. And there was no one who would prevent it. It was not a foreign invader but a new force of nature. This was the new narrative. It was just the way things were and are. You can yell about austerity but debt does’t care. You are in debt and your whole nation is in debt. And debt is a faceless, unknowable, uncontrollable, supranational, almost supernatural force which you cannot tame or defeat. So proclaimed the new debt-backed narrative of fear and insecurity.

The political lesson is that in the good times, use debt to drug and pacify. In the bad, use it to create fear and insecurity. The same debt that floated their boats can be used to drown them. And it might just be that the fear and insecurity of the bad times can be maintained for longer than the drugged euphoria of the good times. All you need to make it last and last and last some more… is more debt. It’s simple, if you need more fear, create more debt. Raise that debt ceiling. Expand your lending criteria. Embrace sub-prime. They are not your enemies! They are you allies. Through them you create the debt that creates the fear that creates the supine acceptance of the system that has enslaved them.

It’s perfect.

Almost.

But not quite.