Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
●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.
●Austerity is the government’s method for widening the gap between rich and poor.
●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.
●Everything in economics devolves to motive, and the motive is the Gap.
Last week, Suze Orman of CNBC, wrote an article for USA Today, titled: Biggest economic threat? Student loan debt
I believe the biggest economic threat is the public’s stubborn ignorance about Monetary Sovereignty, and it is that stubborn ignorance which allows the rich and powerful to impose truly horrible laws and initiatives like FICA (the most regressive tax in America).
But, I do agree the student loan debt is a huge economic threat, which directly is attributable to the above-mentioned public’s stubborn ignorance.
Here is what Suze Orman says about it.
We have more than $1.2 trillion of student loan debt. About 10 million federal students loans are taken out annually, and then there are the insanely dangerous private student loans on top of that staggering number.
More than $1.2 trillion! Way more. Let that roll around in your brain.
And while 6.7 million borrowers in repayment mode are delinquent, the sad fact is that many lenders aren’t exactly incentivized to work with borrowers.
Unlike all other forms of debt, student loans can’t be discharged in bankruptcy.
Moreover, lenders can garnish wages and even Social Security benefits to get repaid. A new report by the Consumer Finance Protection Bureau details just how bad the situation is for private loan borrowers.
(From Oct. 1, 2013, through Sept. 30, the agency handled about 5,300 private student loan complaints, an increase of nearly 38% from the previous year.)
And private student loans aren’t the only problem. Do you know that from 2007 to 2012, the government made $66 billion in profit on federal student loans?
Our Monetarily Sovereign government, which has the unlimited ability to pay any bills of any size, instead deliberately chooses to impoverish the middle- and lower-economic groups and to discourage higher learning for Americans.
We can all debate how our government should generate revenue to support federal spending programs, but doing it on the backs of young adults who need an education to compete in the increasingly competitive global workforce is just appalling.
What’s even more appalling is that Suze Orman is completely clueless about Monetary Sovereignty. She believes the federal government’s finances are like state and local government finances, wherein revenue must be “generated” (aka. “tax”) to pay for things.
Wrong, Ms. Orman. The federal government does not need to tax to pay for federal spending programs. Even were all federal taxes to drop to $0, the federal government could continue to support all federal spending programs, forever.
Anyway, to demonstrate the abject ignorance of the American public, here are some verbatim comments about Orman’s article:
[Ignorance #1] I have medical school debt, but if I can’t pay back my student loans it’s my own fault. Even if I’m going to be paying them off for 30 years they will be paid off. I may not have an Audi or Mercedes but I have a job that I love and enough coin to drive a used Toyota, insure it for cheap and take care of my family. I’m sorry that I’m not sorry that the average American can’t have a luxury vehicle.
[Ignorance #2] With exceedingly rare exception children do not attend college, adults do. They may be your offspring but they are not children. When you agree to a contract it should be binding. Raise your offspring to use their heads. Teach them to read and understand agreements before signing. Teach them to honor their word. Teach them that the college bound are NOT necessarily the most intelligent. The above article should be evidence enough of that.
[Ignorance #3] College is a privilege, not a right. There are many good, affordable schools in this world (online as well) so the debt you take on is your choice. If you look at average incomes of college graduates vs. high school graduates, you’ll realize that the college grads have ample additional income to pay off their loans over time. Look at the data. Avg. college grad debt in 2013 is $32k. Avg. starting income $60k. High school grad? $30k avg. income, no debt. You choose. I think we all know the correct answer.
[Ignorance #4] Other than the massive 18 trillion dollar Federal debt the next worse threat is from the 5 trillion dollar state debt due to state public employee pensions and post-employment benefits.
[Ignorance #5] my plan is to treat student loans as an asset. and if you default you have to return it, just like a foreclosure or a repo or a bankruptcy..
cancel your degree in exchange for cancelling the debt, which means you have to give up on your career choice. If the job requires a VALID 4 year or post grad degree and you dont have one you cant sue for discrimination
although a lot of jobs one step below doesn’t require the degree such as give up your JD and be a paralegal, or give up your dentist degree and be a highly qualified dental assistant. you lose the ability to open your own business but then no debt over your head.
I am fully against writing off the loan in BK without some serious penalties, i paid mine off and so should you.
[Ignorance #6] The greatest threat to our economy are people who demand everything be risk-free like this pathetic author.
[Ignorance #7] What a strange article…what do you propose, forgiving their debt like we did in housing crisis, creating even more of a deficit? They got their degree, they will now be earning more than otherwise, they have a marketable resume..yes they will need to buckle down and budget and live within their means for a while…that is the price they pay for securing their degree in short order and without breaking their parents retirement savings!
[Ignorance #8] Suze takes shots at the government for making a profit on the money it lends out, conveniently forgetting that from 2017 onward there will be a huge number of people having all debt discharged by the government under the ten year public service loan forgiveness program. They are gonna need a lot more money than what they’ve been bringing in to offset that.
[Ignorance #9] Americans have this mindset that they don’t have to save for college. They just expect to get a loan and then complain about how they will repay it. Student loans should be limited to less than 50% of college costs to force students/parents to plan for college and save. If a student graduates and gets a job then the interest rate should be lowered since there would be less risk of default.
[Ignorance #10] If you reduce the burden of student loans, the price of college will go up just enough so that the burden returns to the same level. There already is scant restraint on the price that can be charged, debt forgiveness will make this explode.
It goes on and depressingly, on. Hundreds of comments and not one commenter understands that the federal government neither needs nor uses tax dollars.
Nor do they even ask, “If state and local governments pay for grades K-12, why can’t the federal government afford to pay for advanced education?”
K-12 was O.K for an agrarian economy. The U.S. no longer is an agrarian economy. We compete worldwide with sophisticated economies. We need our young people to be educated beyond grade 12. (See Steps #4 and #5 in the “10 Steps to Prosperity,” below.)
But if you try to explain it, you will be met with hostility.
Yes, the biggest threat to our economy is the public’s stubborn, aggressive ignorance.
Sometimes, this feels like trying to tell an obstinate child, “Don’t stick the fork into that electric outlet, ” knowing he will refuse to listen, and so, get burned.
Should we just accept that it serves him right? Or should we keep trying?
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. (Refer to this.)
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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.
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.