Fiscal Feudalism: The Lords Of Debt

There's a mechanism at the heart of our economy that most people never think about, yet it quietly transfers wealth from your pocket to the already-wealthy elite. It's perfectly legal, operating in plain sight, and it explains why your taxes never seem to go down while the rich keep getting richer.

Bonds. The not-so-secret lever of control.

It’s through government bonds that the elite charge you for their luxuries and hold nations hostage.

It's through government bonds, the Lords of Debt dictate the course of policy itself.

And it's you who pays the bill.

How Government Funding Actually Works

Let's start with the basics. Governments need money to function; to maintain roads, run courts, fund the military, provide services. These things cost money, and that money traditionally comes from taxes.

Simple enough, right?

But here's where it gets interesting: What happens when the government doesn't have enough money to pay for everything it's committed to providing?

The government goes into debt. But unlike you or me taking out a bank loan, governments issue something called bonds.

The Bond Mechanism

A government bond is essentially an IOU. You give the government money today, and they promise to pay you back that amount plus interest after a certain period. It could be a few years, or it could be decades.

It sounds like a reasonable system on the surface. The government gets money it needs now, and investors get a safe, guaranteed return later. Win-win, right?

Not quite.

Who Actually Holds The Debt?

Here's the critical question: Who owns all these bonds? Who holds the government's debt?

It's not China, despite what you might hear in political rhetoric. It's not some shadowy cabal of international bankers, although this isn't too far from the truth. The majority of US government debt is actually held by American citizens.

But here's the catch: you and I, the average people of the world, we don't have hundreds of thousands of dollars lying around to purchase significant amounts of government bonds. We're not the ones lending money to the government at scale.

The wealthy are.

Pension funds, investment firms, high-net-worth individuals, they're the ones with the capital to buy government debt in meaningful quantities. And they do, because government bonds are considered one of the safest investments available.

A Big Beautiful Scam

Now watch how this all comes together, because this is where the system reveals its true genius.

The wealthy consistently advocate for (and successfully achieve) lower taxes on themselves. Through lobbying, campaign contributions, and political influence, tax rates on the highest earners have been slashed repeatedly over recent decades.

This means the government collects less revenue from the people who have the most money.

With less tax revenue coming in, the government still needs to fund its operations. It still needs to pay for military contracts, infrastructure projects, financial bailouts, corporate subsidies; many of which directly benefit the wealthy.

So what does the government do? It issues more bonds. It goes deeper into debt.

Debt to whom? To the very same wealthy individuals and corporations who just got their taxes cut.

How To Bill A Government

Let's be explicit about what's happening here:

1. The wealthy push for and receive tax cuts,
2. This creates a budget shortfall for the government,
3. The government issues bonds to cover the shortfall,
4. The wealthy buy these bonds,
5. The government uses this borrowed money to fund services, subsidies, and bailouts that benefit the wealthy,
6. The wealthy collect interest on the bonds.

The wealthy are charging the government interest in order for the government to give them money and services.

It's an extraordinary arrangement when you think about it. They've effectively privatised the profit from government operations while socialising the cost. (Something that happens quite regularly, who'd have thought that Socialism is acceptable in America when it benefits the wealthy?)

So Who Actually Pays?

Here's the part that should make you angry: Where does the government get the money to pay back these bonds with interest?

From taxes. Your taxes.

Because while taxes on the wealthy have been steadily reduced, taxes on working and middle-class people have remained relatively stable or even increased when you account for payroll taxes, sales taxes, and fees.

You're funding the interest payments on debt that was created because the wealthy won't pay their fair share in taxes. You're paying the wealthy to lend money to a government that's short on funds specifically because the wealthy aren't contributing adequately.

And yes, you might say, but don't the wealthy already pay a substantial amount of tax? Sure. On paper. Which goes right back into their pockets when the governments pay off their bonds with added interest.

A Cycle Of Stolen Wealth

This creates a self-perpetuating cycle:

Lower taxes on the wealthy → Government budget shortfall → More bonds issued → Wealthy buy bonds → Government pays interest to wealthy → Need more tax revenue → Burden falls on everyone else → Government still short on funds → Cycle repeats

Each iteration makes the wealthy wealthier while the rest of us shoulder more of the burden. Seems fair, right?

It becomes more and more nefarious with each cycle, but we'll get to that.

The Illusion Of Necessity

Proponents of this system will tell you that government bonds are necessary, that they provide stability to financial markets, that they're a safe investment for retirees.

And there's some truth to that. But here's what they won't tell you: This system is only "necessary" because we've structured our tax policy to create the debt in the first place.

If the wealthy paid taxes at rates proportional to their wealth and income, rates that existed in living memory, during periods of tremendous economic prosperity, the government wouldn't need to issue nearly as much debt.

If you aren't already aware, once upon a time the richest of our society were taxed at above 90%. This was a marginal rate tax, that only applied to the highest earners. In 1955, the top rate was 91%. This only applied to income made over $200,000 (or the equivalent of $2.3 million in today's currency).

This is also one of the reasons that the Baby Boomers were afforded so much social mobility. But that's a conversation for another day.

The bonds aren't solving a natural problem. They're solving a problem we deliberately created through policy choices that benefit the already-wealthy.

The Terrifying Truth

This is why your taxes will never actually go down in any meaningful way. This is why, despite promises from politicians of every stripe, the tax burden on working people remains stubbornly high.

Because the system isn't broken. No, it's working exactly as designed.

The wealthy have found a way to turn government into a profit centre. They've created a mechanism where they can extract wealth from the public purse while simultaneously reducing their contributions to it. And the beautiful part, from their perspective, is that it's all perfectly legal and largely invisible to the people funding it.

You.

You're not just paying for government services. You're paying interest to the wealthy for the privilege of them not paying their taxes.

What This Means For You

Every time you hear about tax cuts for the wealthy, understand what's really happening: the burden is being shifted to you, either through higher taxes now or through debt that you'll pay interest on indefinitely.

Every time you hear about the national debt being unsustainable, understand that it's unsustainable by design. It's designed to create a permanent income stream for the wealthy at everyone else's expense.

And now we reach the nefarious part I was talking about. If you weren't already concerned, you should be.

The government has been purchased, not through some dramatic hostile takeover, but through the slow, methodical process of buying its debt while refusing to fund it through taxation. The elite own the policy makers, they own the government officials, they own it all. And it's through blackmail they exercise their power. The government cannot function without the private investors who own it: the Lords of Debt.

The government is being held to ransom.

And you're the one paying it.