A shameful graph

Education is important to America.

Of the many investments the federal government could make, few would have a greater positive impact on the American economy than education.

When you visualize the things that make America special compared to other large nations, like China and India, advanced education is one of the first things that comes to mind.

So it is sad that Americans believe making advanced education difficult to afford, somehow is normal or acceptable.

Steps #4 and #5 of the Ten Steps to Prosperity (below) tell why the federal government can and should fund college educations for all those who want them.

Instead, we have the following shameful graph.


In case you wonder why we intentionally put our students into debt, the answer is quite simple: Student loans widen the Gap between the rich and the rest.

Gap widening, rather than mere income, is the primary motivation of the rich. It is the Gap, not just their own incomes, that makes them rich (Without the Gap, no one would be rich; we all would be the same). The wider the Gap, the richer they are.

Thus, keeping the non-wealthy down is just as important to the rich as lifting their own incomes up. Either way, the Gap is widened.

Every wealth stratum wants the Gap between them and those lower, to be widened. That is why so many lower-to-middle-income people resent aid to the poor. Such aid narrows the Gap, bringing the poor uncomfortably closer to those in the middle.

When the federal government lends to students, interest payments remove stimulus dollars from the economy,  and all loan repayments punish borrowers, who primarily are middle-income (The rich don’t use student loans).

The federal government, being Monetarily Sovereign, neither needs nor uses any form of income. To pay its bills, the government creates dollars ad hoc. There is no economic purpose for student loan payments to a government that has no use for the money.

When the lender is a private bank, the bank is enriched by a loan that is difficult to discharge in bankruptcy.  It is a “forever” loan, passed down through the generations — perfect for Gap widening:

Business Insider: America’s crushing surge of student debt, now at $1.2 trillion, has bred a disturbing new phenomenon: School loans that span multiple generations within families.

Weighed down by their own loans, many parents lack the means to fund their children’s educations without sinking even deeper into debt.

  • School loans increasingly belong to Americans over 40. This group accounts for 35 percent of education debt, up from 25 percent in 2004
  • Student loan balances average $20,000 for Generation X adults — those from 35 to 50 years old.
  • Gen-X parents who carry student debt and have teenage children have struggled to save for their children’s educations. Many of their children will need to borrow heavily for college, thereby perpetuating a cycle of family debt.
  • Student debt is surpassing groceries as a primary expense, with the gap widening most for younger families.

And if the above weren’t shameful enough, consider this graph, also supplied by Business Insider:


Student loans are listed on the government’s books as its largest financial asset. Millions of American families are in debt to the federal government for educating children.

In reality, this is all just record-keeping. The federal government has no need for financial assets, because as mentioned earlier, it creates all the dollars it needs, ad hoc, when it pays its bills.

Thus, the government has discovered yet another, powerful Gap-widening device, designed to keep millions of families in financial bondage for many years, even for generations.

(Among such Gap-widening devices are federal sales taxes, FICA, and high-end income taxes on 401k mandatory distributions.) 

State and local governments are monetarily non-sovereign. They need income in order to pay for K-12 education.

The federal government is Monetarily Sovereign. It needs no taxes or loan repayments to fund a college education for every American who wanted one.

All those additional educated minds would greatly benefit America. No one knows how many potential Nobel winners America has lost lack for of the finances to attend college.

Even the time away from work is too expensive for many people. The federal government should pay for that, too.(Step #5)

But the rich don’t want federal funding for college; it would narrow the Gap. Despite what Presidential and Congressional campaigning may indicate, the rich, not the politicians, run America.

College debt is another destgructive result of The Big Lie, the lie that federal taxes fund federal spending.

Rodger Malcolm Mitchell
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.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) 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.


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