Good news! Student loans as crappy as ever, with even less time to pay them down.

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal 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.
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In today’s world, where jobs are based less on strong backs and more on strong minds, our nation benefits when Americans receive a college education, just as it used to benefit when Americans received elementary and high school educations.

To compete, America needs educated people. Period. So it makes sense for the federal government to support education at all levels. Unfortunately, it is the cash-poor, monetarily non-sovereign, local governments that are forced to support grades 1-12, and the equally cash-poor citizens who must support college.

The cash-unlimited, Monetarily Sovereign, federal government — the one entity in America that never can run short of dollars — pays relatively little.

Washington Post

Senate deal would freeze student-loan rates for year
By Rosalind S. Helderman, Published: June 26

More than 7 million college students could be spared higher loan rates under a deal reached Tuesday by Senate leaders. The agreement would freeze the interest rate for a year, preventing it from doubling from 3.4 percent to 6.8 percent on July 1, making college more affordable for students as tuition costs are rising.

Translation: In government-speak, making no change in interest rates, while tuition costs are rising, somehow makes college “more affordable.”

Although leaders in both parties said they favored the rate freeze, they argued about how to cover its $6 billion cost.

Translation: We don’t want the public to realize the federal government has the unlimited ability to create dollars. Next thing you know, these poor fools will demand things like Medicare for all and Social Security that actually provides a living benefit.

So, we put on a fake debate about how to “cover” costs, when we know the government can “cover” any cost.

The House had approved a GOP-backed bill to pay for the rate freeze by eliminating a preventive-care fund created by Obama’s health-care law. That measure did not receive the 60 votes necessary to advance in the Senate. But neither did a competing Democratic proposal to pay for the student loan item by closing a tax loophole that allows some small-business executives to avoid payroll taxes.

Translation: We know this is all slight-of-hand. Eliminating preventive care always costs more in the end, because people get sicker. And whenever people don’t give all their money to the government, we call that a “loophole.”

The extension would be paid for by raising premiums for federal pension insurance, an idea acceptable to businesses because rules on how companies calculate their pension liabilities would be changed. A senior Democratic aide said the pension proposals, which came from Reid, would generate $5.5 billion.

Translation: Here’s the logic: The government pays banks to keep interest rates at 3.7%. However, real rates have dropped so low, banks essentially pay 0% for money. So, banks make more than ever, especially because these loans are risk-free. And by the way, did we mention that some student loans cost as much as 8.5%!! (No one knows why).

To keep interest rates the same, costs many billions more (No one knows why). And, although the federal government can create unlimited dollars, it must increase its income (No one knows why). So we must raise the premiums federal workers pay for pension insurance (No one knows why). There will, however, be no additional cost to Congresspersons (Everyone knows why.)

Meanwhile, students would be limited in how long they could receive a federally subsidized loan to 150 percent of their program length — so, six years for a four-year undergraduate degree — a suggestion from Republicans. The aide said that proposal would raise $1.2 billion.

Translation: As if it already weren’t hard to pay off your loan, your government is going to make it harder. You better get a really good job in a hurry, because “According to figures from the Federal Reserve Bank of New York,(Yahoo News) 37 million Americans hold student loan debt. And:

The total amount of student loan debt in the United States is estimated to be between $867 billion and $1 trillion dollars, and default rates for student loans continue to rise.” And:

The average student loan debt totals between $23 thousand and $27 thousand. Imagine students paying that off (plus interest) in six years or less — in this economy.

Senators said they must decide whether to link the student-loan deal to a two-year measure that would extend highway funding, which also will expire July 1.

Translation: Seems reasonable. Student loans. Highway funding. Same thing, right? Your Congress working for you.
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Now I have a couple questions for Congress and the President:

1. Why does our Monetarily Sovereign government need to search for dollars to support college loans? Why the charade about taking dollars from the public, when the government doesn’t need to ask anyone for dollars?

2. Why are monetarily non-sovereign states, counties and cities forced to support grades 1-12? Poor local governments support poor school systems. Why doesn’t the Monetarily Sovereign federal government support all grades 1-12 on a per capita basis, for greater quality and equality among educational opportunities?

3. If it benefits America for elementary and high school education to be free, why isn’t college education also free? See: Government should offer free college education

And at long last, may we please, please stop the lies about our federal government running short of dollars. Please.

Rodger Malcolm Mitchell
Monetary Sovereignty

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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

#MONETARY SOVEREIGNTY

What will be the legacy of the Roberts Supreme Court?

In two days, the Supreme Court is expected to hand down its decision regarding “Obamacare.”

No, actually that isn’t true. Let me rephrase:

In two days, the five right-wing, extremist majority of the Supreme Court is expected to hand down its decision regarding “Obamacare.” No one knows what the “originalists-only-when-it-suits-the-wealthy” will do. (These are the men who were against judicial activism before they were for it.)

If past performance is any indicator, they will do whatever it takes to increase the gap between the rich and the poor, i.e reject much or all of the plan.

Nevermind that the vast majority of legal scholars say the plan is Constitutional. When you have the likes of Scalia, Thomas and Alito running the show — men who never fail to find excuses for voting against the public good and for the wealthy — anything is possible.

It remains to be seen whether the extreme right wing of the Supreme Court will add to its anti-lower-classes legacy. Actually, we already know the legacies of Scalia, Thomas and Alito, and they aren’t pretty. So it all boils down to this: What will be the legacy of Justice John Roberts?

In this regard, I recommend to you the following article: With Health Care On The Line Again, Morality Matters Most

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARY SOVEREIGNTY

–How you can help close the gap. (No, writing to politicians and newspapers won’t do it.)

Though Monetary Sovereignty can be complex, its fundamental concept is simple: A Monetarily Sovereign government has the unlimited ability to create its sovereign currency. That is why a Monetarily Sovereign government never needs to ask anyone else for that currency. It never can run short of money.

Think of owning a dollar-creation machine. Your machine allows you to create endless dollars. Would you ever need to ask anyone to give or lend you dollars? The U.S. is Monetarily Sovereign. It can create endless dollars. It never needs to ask anyone for dollars.

Could anything be simpler?

Yet, there are educated people who claim not to understand that simple concept. Congress and the President fret over the federal debt. Surely, anyone with even modest intelligence, can understand that a nation with the unlimited ability to create dollars, doesn’t need to borrow dollars. I am certain Congress and the President know this.

Yet the Speaker of the House, John Boehner, famously lied, “America is broke.” A nation owning a dollar-creation machine is “broke”???

Both political parties feign concern about the “unsustainability” of the debt, though no one seems to know what “unsustainable” means. The hundreds of editors of all major newspapers pretend we are in a debt crisis, though no one seems to know what that crisis is. The Federal Reserve publishes articles indicating none of their executives understands that the U.S. owns the money-creation machine.

Meanwhile, adherents to Modern Monetary Theory (MMT) and Monetary Sovereignty (MS), write books, articles and blog posts, trying to simplify the concept enough for all these college-educated people. It’s a fools mission.

We cannot force someone to “understand” something they do not want to understand. So the real question becomes, “Why do these people pretend ignorance, when even the least intelligent among them, understands perfectly?” The answer is money and power.

The politicians and the media are paid not to understand. Their jobs depend on their not understanding.

Money is comparative. Owning $1 million might make you the richest man in the room. Everyone in the room would admire your “wealth.” You not only would have their admiration to stroke your ego, but you would have the power to encourage or even force people in that room to do things, say things or even believe things.

Or, owning $1 million might make you the poorest man in the room. No one in the room would admire your wealth. Your power would be negligible.

Your power and admiration would be based on something called the “gap.” Whether a wealth gap or an income gap, the size of the gap, rather than the absolute value of your dollar holdings, is the key to your power.

The gap can be widened either by increasing the dollar holdings of the rich, and/or by decreasing the dollar holdings of the not-rich. Either approach will accomplish the same end.

Reducing the federal debt demands that federal spending be decreased and/or taxes be increased. The vast majority of federal spending benefits the not-rich more than the rich: Social Security, Medicare, Medicaid, aid to education, food stamps, disability care – all have far more meaning for the middle and lower classes. So cuts in federal spending, which reduce the federal deficit, widen the gap.

Many taxes also hurt the less affluent: FICA, income taxes on Social Security benefits, tolls, sales taxes, all reduce the deficit and widen the gap.

Clearly, telling the populace that federal deficits and debt should be reduced, is in the best interest of the wealthiest among us, and it is to the detriment of those less wealthy. Is it any wonder then, that the politicians who owe their jobs to rich donors, and the media, which are controlled by rich owners, repeatedly decry the federal debt?

What can be done? Trying to educate the politicians and the media is hopeless. They already know. But, in essence, they have put their hands over their ears, and are yelling, “I CAN’T HEAR YOU..”

I believe we must educate the public, directly.

We have been blessed with a medium the rich can’t control: The Internet. You users of Facebook and Twitter should direct your friends and followers to appropriate postings about Monetary Sovereignty. You need to build an ever-branching tree of fact. When enough people understand the basic truth, the politicians and the media will jump on the train.

It’s our only hope.

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARY SOVEREIGNTY

–Who, in the world of economics, is asking for that next super-computer?

First question: How much economic data is there? The Federal Reserve Bank of St. Louis’s “FRED” service lists the following data categories:

Money, Banking, & Finance (3,812)
National Accounts (704)
Population, Employment, & Labor Markets (2,234)
Production & Business Activity (1,331)
Prices (1,613)
International Data (5,046)
U.S. Regional Data (31,376)

That’s about forty five thousand categories, with each category having thousands of individual data points – many millions of individual pieces of data – and that’s just from FRED alone.

Now add all the economic data from every nation on earth. Add all the data from every stock, commodity and financial exchange. Add all weather data from around the world. And all patent data. And all river/lake/ocean data. All geographical data. Add the compositions of the atmospheric layers. Add every position of the moon and the sun.

The list goes on and on, trillions upon trillions of individual data points — more than the number of water drops in the ocean (that too, is a data point).

Second question: Which of these data and combinations of data, has zero effect on the U.S. economy? There is reason to believe economics is a chaotic system, in which small changes can have large effects. In meteorology, which is a chaotic system, they call that the “butterfly effect,” whereby a butterfly flapping its wings in Africa can cross a tipping point that causes a hurricane to hit the New Orleans.

If economics is indeed a chaotic system, then all data – all trillions upon trillions of data points – affect the U.S. economy.

I again thought about that when I saw an article in the Global Economic Intersection describing The Conference Board’s Leading Economic Index (LEI) and Coincident Economic Index (CEI). They look like this:

The LEI has 10 categories and the CEI has 4 categories — at most a few thousand data points between them — an infinitesimal fraction of the data that affects the current status and the future status of the the U.S. economy. And because that tiny data is insufficient, the best the users can hope (emphasis on the word “hope”) to do is predict some generalizations about the economy, perhaps a couple months in advance.

In meteorological terms, this is like predicting the possibility of rain, two minutes in advance — virtually useless.

The problem is not a shortage of data. We have the data. We have the communications systems that can assemble the data. We have the ability to plug all this data into a multiple regression formula:

MULTIPLE REGRESSION ANALYSIS
by Amit Choudhury (2009)

Multiple regression analysis is a powerful technique used for predicting the unknown value of a variable from the known value of two or more variables- also called the predictors. More precisely, multiple regression analysis helps us to predict the value of Y for given values of X1, X2, …, Xk.

For example the yield of rice per acre depends upon quality of seed, fertility of soil, fertilizer used, temperature, rainfall. If one is interested to study the joint affect of all these variables on rice yield, one can use this technique.
An additional advantage of this technique is it also enables us to study the individual influence of these variables on yield.

In multiple regression analysis, adding variables generally increases accuracy. That is why the federal government is spending many millions of dollars to build a huge super-computer (100 racks of servers and 72,000 core processors, so many parts that they must be delivered in the back of a 747. It will be capable of performing 1.5 quadrillion calculations — a quadrillion is a 1 followed by 15 zeros — every second).

Unfortunately (for economists), the supercomputer will be used my meteorologists.

The Jun 12 2012 post titled, “Which is more important to our lives: Meteorology or Economics?” ended with this: “Considering its affect on human lives, economics is the most important science of all. So where are the super computers? We want that next machine. We need that next machine. The American people need us to have that next machine. My question is: Who in the world of economics, is asking for that next machine?”

Today, the science, most immediately to our lives, science uses a prediction system based on ten categories. Ten categories! It’s pitiful.

By its dollar allocation, the federal government seems to tell us, “Predicting the economy isn’t all that important. Understanding the future effects of present day Congressional decisions isn’t meaningful. The President really doesn’t need to know what his signing or vetoing of a bill will do to the economy, now or in the future.”

Wearing blindfolds, Congress and the President play darts. Their speeches assure us, they know exactly where their darts will land. Because of political considerations, they toss their darts in all directions. When the public complains that the darts have missed their target, Congress and the President, still wearing blindfolds, tell the Fed to move the dart board, somewhere. Then they throw again.

And this is how our economy is managed: Blindfolded.

The great nation of the United States of America needs to evaluate the future economic effects of present-day decisions. Just as with weather prediction, evaluating a handful of data won’t do it. We need to evaluate millions, even trillions, of data points.

So I ask again, “Who in the world of economics, is asking for that next super-computer?”

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

#MONETARY SOVEREIGNTY

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