Mitchell’s laws: The more budgets are cut and taxes increased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
It’s difficult to imagine many factors more vital to the growth of the American economy than education. Yet our President and Congress seem incapable of understanding this need.
The federal government, which is Monetarily Sovereign, and so has the unlimited ability to pay its bills, pays for only 10% percent of total elementary and secondary education.
Source: New America Foundation
Grades 1 through 12 are financed at the 90% level by local governments. The reality of monetarily non-sovereign (local) governments is they are limited in their spending ability. So, in most communities around the nation, teachers are under-paid, under-supervised and often under-trained, classrooms are under-serviced, and physical plants are under-constructed and under-maintained.
Considering the importance of education, why does our infinitely wealthy federal government contribute only 10%, while cash-strapped local governments are forced to pay 90%? As with so many questions in economics, our political leaders and the public do not understand the differences between Monetary Sovereignty and monetary non-sovereignty.
Obama warns of congressional inaction on student loan bill
By Rosalind S. Helderman and Amy Gardner, Published: June 7
LAS VEGAS — With a July 1 rate increase on education loans approaching, President Obama told students here on Thursday that it is Congress’s job to move swiftly to prevent the rise, even as Republicans in Washington accused him of ignoring their most recent proposals and refusing to negotiate.
Speaking at the University of Nevada at Las Vegas, Obama delivered a new broadside against Congress for not passing key pieces of his job creation plan and warned of the consequences of congressional inaction on the student loan issue: an increase of $1,000 on the average federally subsidized Stafford loan for more than 7 million people. He urged students to call, e-mail and tweet lawmakers to force action.
“How many people can afford to pay an extra $1,000 when you’re a student, just because Congress can’t get its act together?” Obama said. “This is a no-brainer. . . . Get it done.”
Leaders in both parties insist that they want to find a way to prevent subsidized Stafford loan rates from jumping from 3.4 percent to 6.8 percent next month. But they’ve been unable to agree on how to pay for the $6 billion cost of extending the lowered rates for another year.
Congress and the President claim that the U.S. federal government needs a source of dollars in order to pay for federal spending, when exactly the opposite is true. Federal spending creates dollars
The fact that our schools are in such poor shape is a national disgrace.
The fact that college students must slide deeply into debt, just to obtain an education that not only benefits them, but benefits America — is a national disgrace.
And these student loans, unlike all other loans, cannot be discharged in bankruptcy (unless you are so impoverished you can’t even afford cable, Internet or a cell phone — even without paying your student loans — and your finances are unlikely to improve.) In short, you must take a vow of perpetual poverty — another national disgrace.
“We are starting to see the first big wave (of students going bankrupt on other debt, so to focus on student loan debt),” says Christina Henry, a bankruptcy attorney at Seattle Debt Law.
Unlike most debt, student loans cannot be discharged through bankruptcy, so Henry is working with students to pay off other loans so they can focus on the student debt. “In my opinion, we are going to see a whole generation of people where standard of living is going to be diminished because they can’t find a job to keep up with payments,” she said. “Most people don’t understand the terms on these student loans are inflexible.”
Total student loan debt just reached $1 trillion this year in the U.S. That’s higher than total credit card debt. About two-thirds of college graduates have some student loans to pay off, and their average debt is about $25,000 to $28,700, according to estimates by education experts and organizations.
(One student said, “Interest accrues faster than I thought. It’s scary.)
(At today’s rates, even 3.4% is no bargain. But why does our federal government, with the unlimited ability to create dollars, need to ask students for any dollars? Completely senseless.)
The United States has fallen from first to 12th in the share of adults ages 25 to 34 with postsecondary degrees, according to a report from the College Board — yet another national disgrace.
To prepare America to compete in the 21st century — a century that will see increasing technological advancement — American young people must be educated. We cannot rely on impoverished school boards to carry the load. We cannot rely on impoverished students to carry the load. The federal government must carry the load.
Here is how:
1. Local governments now pay for grades 1-12. Instead, the federal government should pay for grades 1-16 and beyond. Every person in America, not only should have a free lower education, but a free higher education, unlimited by local budgets.
2. The federal government should pay students a salary for attending school. [See: Salary for attending school.] Even with a free education, many students leave school because they and their family need to work for a living. Going to school is a time-consuming job that benefits America. Students should be paid for doing this job.
While Congress and the President dither about whether to charge students 3.4% or 6.8% for college loans that should be unnecessary, America falls behind. Ignorance of Monetary Sovereignty will be the undoing of our once great nation.
One day, as our children look back and wonder how we allowed our country to fall so far, the answer will be the lack of a progressive educational policy, combined with economic ignorance.
It’s a national disgrace.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports