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●Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive, and the motive is the gap.
Despite the misguided hand-wringing of the debt hawks, we repeatedly have recommended that the federal government pay for grades K-16 and beyond (Step #4 in the “Ten Steps to Prosperity.”) See: “How to eliminate college student loan debt.”
The fundamental purpose was not debt relief, but educational. Poor kids have difficulty paying for college. Even scholarships and other benefits don’t suffice. America need to educate all its children, not just the rich.
Because poor families need income, they often discourage their children from attending college, preferring them to find jobs. That is why we also recommend Step #5: “Salary for attending school.”
In summary, there are at least five reasons why the federal government should pay for K-16 and beyond:
1. Being Monetarily Sovereign, the federal government can afford such payments far better than can the states and cities, which currently pay for K-12. Paying for K-16 and beyond, would remove a huge burden from the states and cities, allowing them reduce local taxes (which mostly are regressive) and use tax dollars for local needs: Infrastructure, police and fire, etc.
2. Help improve the quality of education, by attracting better teachers, principals and superintendents.
3. Increase upper high school and college attendance by poor students.
4. Reduce the Gap between the rich and the rest.
5. Eliminate the disastrous student loan program.
This last is the subject of an article in Reason.com:
Student Loan Debt Skyrockets—and So Do Delinquencies
J.D. Tuccille|Oct. 6, 2014
Last week, President Obama boasted, “We’ve helped more students afford college with grants, tax credits, and loans, and today, more young people are graduating than ever.”
What he didn’t add is that “we’ve” also piled a growing load of crippling debt on young college student that they’re increasingly unable to bear.
As Ericka Davis writes for the Federal Reserve Bank of Dallas, “Over the past decade, student debt has skyrocketed and delinquency rates have nearly doubled to levels much higher than for other consumer lending products.”
In 1983, average tuition, fees, room and board at private, nonprofit colleges added up to $18,143 in 2013 dollars. This year, that number has risen to $40,917.
Clearly, the need for tuition money has increased dramatically, while:
Starting pay for recent college graduates has definitely not kept pace. Lots of recent college grads are underemployed, many in gigs that don’t require the degree they have yet to pay for.
Part of the problem is that student loans, unlike all other loans, are not based on credit or ability to repay.
As Ericka Davis writes for the Federal Reserve Bank of Dallas:
*”Student loans are often originated when borrowers earn little income.
*”Many borrowers have only a vague idea of their future earnings potential and ability to repay.
*”Borrowers can defer payment of unsubsidized loans while enrolled in college, which results in an even larger debt burden.
*”And many borrowers do not understand the structure and repayment options associated with student loans.
*”Moreover, with the exception of certain programs or an undue hardship petition or death, student loans are rarely forgiven.”
Large loans to people who have no current income and an unknown future income, no collateral, a deferred payment schedule, misunderstood terms and no discharge in bankruptcy — what could possibly go wrong with that??
While deliquencies in all other loans are on the decline, student loan deliquencies have been rising.
Since 2008, 30 year olds with student loans have, on average, seen their credit scores slide relative to 30 year olds free of such debt. That means add-on financial problems across their lives, in addition to the load they carry.
Those owing student loans are burdened their entire lives, even after they somehow manage to pay off their loans.
The Fed report says “more research” is needed of the growing debt problem.
Oh, gimme a break. “More research”? There is no way to make this pig look like a swan.
You probably will hear about “refinancing” and “easier terms” and all sorts of Band Aids on cancer, but the only solution is to give everyone — rich and poor — the same shot.
That is why we have had free K-12 education for decades. We just need to make K-16 and beyond, similarly free.
Typically, the government will try every wrong solution, before it finally is dragged to the right solution: Free schooling for all.
Rodger Malcolm Mitchell
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports
THE RECESSION CLOCK
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.