The Money Trap: Student loans

There is no better way to own a person than to force him into a Money Trap. It works like this:

1. Find a person who is significantly short of money
2. Dangle the lure of a seeming solution, the so-called “light at the end of the tunnel.”
3. Trap the person into even greater financial difficulty and/or slavery. The “light” grows ever further away.

1. Indentured servitude: a labor system in which people paid for their passage to the New World by working for an employer for a fixed term of years.It was widely employed in the 18th century in the British colonies in North America and elsewhere.

It was a way for the poor in Britain and the German states to obtain passage to the American colonies.

After the term expired, they became free to work for themselves.Indentured servants could not marry without the permission of their master, were subject to physical punishment (like many young ordinary servants), and saw their obligation to labor enforced by the courts.

To ensure uninterrupted work by the female servants, the law lengthened the term of their indenture if they became pregnant.

They were lured here for freedom and financial success, then were trapped into slavery.

2. Numbers game and lotto: The numbers game, also known as the numbers racket, the policy racket, the policy game, the Italian lottery, is an illegal lottery played mostly in poor neighborhoods in the United States, wherein a bettor attempts to pick three digits to match those that will be randomly drawn the following day.

Desperate for money, and dreaming of a better life, the poor were lured into buying tickets they hoped would bring them salvation.

Instead the cost only trapped them deeper into poverty.The Lotto is the state-run version of the numbers game, in reality, a tax on the poor and middle classes.

3. Loan shark: A loan shark is a person or body who offers loans at extremely high interest rates.

The term usually refers to illegal activity, but also may refer to predatory lending such as payday or title loans, or credit card loans.The poor, who live hand-to-mouth, and who cannot qualify for standard lending, are desperate to pay immediate bills for food and lodging.

They are most susceptible to such loans. They are lured by their own desperation.
The terms of such loans often are physically and financially punitive. Low income results in lack of funds to pay off such loans, and the need continually to roll them over, leaving the poor entrapped in a deeper and deeper well of debt.

These examples bring us to the most insidious and damaging of all Money Traps: The student loan.

Americans are taught that a college education is a ticket to success, and in fact, having one’s children attend college is a central part of the “American Dream.”

A college degree is seen as the light at the end of the low-wage, low-wealth tunnel.

But college costs have skyrocketed, rising much faster than has inflation.

monetary sovereignty

Thus, even with some availability of scholarships for the poor, these often are inadequate. So families, strain to escape their dark existence, and hope to emerge in the light of American prosperity. They grasp for the student loan — the ultimate Money Trap.

So enticing and effective is this trap, student loans have become the largest asset on the federal balance sheet.

monetary sovereignty

Impoverished students now owe the federal government nearly a trillion dollars, plus interest. (This does not include the $300+ billion owed to private lenders).

monetary sovereignty

The situation for the poor is dire. As they enter the work world, their income is insufficient to pay the principal and interest on college loans.

Meanwhile, more affluent students begin building a huge lead in the economic race. They save and invest their incomes, eventually using their savings to buy or create businesses, that will employ the lagging poor.

The ironies are clear:

  1. The federal government has no need to collect money for loans — no need to recover capital and no need to assess interest.
    Being Monetarily Sovereign, the federal government creates unlimited dollars, ad hoc, when it pays bills.All dollars sent to the federal government, whether they be tax dollars, loan repayments, or interest, disappear from the money supply. Effectively, they no longer exist. They are destroyed.(This differentiates the federal government from the monetarily non-sovereign states, counties, and cities, whose income [taxes and fees] remain in the money supply, and are spent.)
  2. Having to repay principal and pay interest impoverishes the recipient, putting him/her even further from that “light at the end of the tunnel.”
    Wealthy people pay for their children’s college, allowing the children to start working life with a clean slate (plus the other advantages of wealth). The poor enter the “real world” in a hole – a Money Trap.Climbing out of that Money Trap can take years, or a lifetime, and can prevent less-blessed students from ever reaching their goals.

Because educated students support American competitiveness, you might wonder why our Monetarily Sovereign government — a government that never can run short of dollars — simply does not pay for college. (See Steps #4 and #5 in the Ten Steps to Prosperity, below.)

After all, monetarily non-sovereign state and local governments — which can and do run short of dollars — pay for grades K-12.

The reason, as always, is the desire of the rich to distance themselves from the not-rich, and to maintain a willing, even desperate, corps of low-wage, dependent workers.

And as college costs continue to grow, the “light” grows dimmer, and people become more desperate, more willing to risk entering the trap.

And, in a classic case of nose-cutting, the workers themselves do not push for free college, partly because they don’t understand why it could and should be available, and partly because they resent anyone else receiving aid.

(“I paid for my college. I paid for my children’s college. Why should they get it free?”)

It’s the same story, oft-told. The rich convince the rest that taxpayers pay for federal spending, and that the less affluent are lazy and stupid, so do not deserve aid.

The rich convince the non-rich to build their own Money Traps.

Remember that the next time a politician boasts about his own wealth and the brilliance of his well-educated children. The race already is being run, and your children have not even arrived at the starting line.

They are held back by the Money Trap.

Rodger Malcolm Mitchell
Monetary Sovereignty

Ten Steps to Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-tranferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be an good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

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


Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip – the familiar pre-recession pattern.
Recessions are cured by a rising red line.

Monetary Sovereignty

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.


Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

•No nation can tax itself into prosperity, nor grow without money growth.
•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)
•Deficit spending grows the supply of money
•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
•The limit to non-federal deficit spending is the ability to borrow.

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 single most important problem in economics is the Gap between rich and the rest..
•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.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..


2 thoughts on “The Money Trap: Student loans

  1. It is not by accident that people are poor; it is by design.

    This successful project to divide or polarize humanity (rich and poor) is congruent or in accord with the nature of the dominant force in the universe today : the still yet mysterious repulsive dark energy.

    Physicists are puzzled by its composition but they agree that it is a repulsive force responsible for the accelerating expansion of the universe which will, in due time, even break atoms apart leading to the the deep void.

    The religious and the spiritual might just want to call it evil.


  2. Many countries offer free college and free medical care, including countries that are not are not monetarily sovereign (e.g. France, Finland, and Germany).

    Americans, however, have been programmed to regard these things as “socialist,” and therefore evil. Hence average Americans fall ever-deeper into the debt trap.

    Twenty-two states will revoke your driver’s license and / or professional license if you fall behind on your student loan payments to the banker-thieves:

    Alabama, Alaska, California, Florida, Georgia, Hawaii, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Montana, New Jersey, New Mexico, North Dakota, Oklahoma, Tennessee, Texas, Virginia, Washington

    Student loan default trashes your credit, and the interest and fees continue to grow as long as your student loan remains unpaid.

    This is what most Americans want, since most Americans think that anything else would be “socialist.” Many Americans have been programmed to think that if college became free, the USA would become Zimbabwe (i.e. there would be hyper-inflation). Or else their taxes would have to be quadrupled.

    Endless trillions for endless wars? Fine. Endless trillions for Wall Street bailouts? No problem. Endless trillions for weapons makers? You got it. Spending for Single Payer health insurance? ZIMBABWE!


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