“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford

Do you feel a change on the wind? People of the nation are beginning to understand our banking and monetary system.

You can find it in articles in the New York Times, “When Debtors Decide to Default“, that tell about consumers who can get a credit card company’s attention only after they quit making payments.

You can read about it in Mish’s Global Economic Trend Analysis blog where he writes about “Preemptive Defaults“.

There’s a lot of anger in our society being directed at big banks and credit card companies that were bailed out by the U.S. Government, because they continue to refuse to act reasonably with consumers (aka “taxpayers”) who are paying for the bail out of Wall Street. In fact, Wall Street seems to be rubbing taxpayers noses in it with renewed reports of excessive bonuses.

It’s a crazy financial world, but I think consumers are beginning to look for the points in the system where they do have power and leverage.

Unfortunately, for many consumers, the issue of morality is no longer part of their financial world. By that I mean we should remember that no one has a credit card who didn’t apply for it and agree to the terms … including the terms that stipulate the credit card company can change the terms by increasing the interest rate at will.

Credit card holders agreed to be taken advantage of.

The moral issue is that consumers have agreed to the terms of their credit card accounts.

(Note: if you’ve lost a job and income and cannot afford to make payments, that’s a crisis. Missing payments in a situation like that is unavoidable. Talk to creditors and explain your situation.)

Otherwise, is it right to refuse to do what one has agreed to do? There seems to be two arguments many consumers are hearing in their heads:

The first, “The banks have been bailed out by tax payers. I’m a tax payer. I’ll be paying and my children will be paying and my grandchildren will be paying for this bailout for decades. Therefore, we’re even. I’m paying no more.”

And the second, “I’m a victim of a global crisis. I have no choice. The bank understood the risk they were taking and jacked up the interest rate because of the risk. They knew I couldn’t pay. My refusal to pay is a ’self-fulfilling prophecy’. They got what they wanted.”

Of course, if an individual refuses to pay his or her debts, there are consequences. Credit scores plummet, the bad debt is sold to collection agencies who harrass until paid, etc.

The change on the wind is the number of people who seem to be angry enough at what they perceive to be financial injustice (29% interest rates?) to quit paying en masse. For many, there seems to be only one point of leverage consumers have left in a financial system gone haywire: mass defaults.

You can read about it in the New York Times, Bank of America’s June default rate was at 13.8%. Things do not look good.