Why Congress does nothing to solve the student loan problem

Student loan debt is a huge problem, not only for the students themselves, but for all; of America.

Congress has several alternatives available to it, that would remove this huge albatross from the necks of America’s best and brightest, and even from the rest of us.

Congress simply could pay off all existing and future loans. Unlike students, the U.S. government never can run short of U.S. dollars.
Congress could provide Free education for everyone (Step #4 of the Ten Steps to Prosperity), and
Congress could provide a Salary for attending school (Step #5.)

But Congress has not lifted a finger to solve this national problem. In fact, Congress caused the problem.

The reasons can be found in the following excerpts from an article that ran in the “naked capitalism” web site:

Wall Street Has Been Gambling With Student Loan Debt For Decades
Posted on October 27, 2019 by Lambert Strether

Student loan debt burdens 44 million people in the United States.

However for CEOs of student loan companies, or investors on Wall Street, student debt is a lucrative commodity to be bought and sold for profit.

There, in two words, “lucrative commodity,” you see the fundamental reason why Congress, and especially this right-wing administration, like things just as they are, thank you.

Congress and the President are run by money.

Corporations such as Navient, Nelnet, and PHEAA service outstanding student debt on behalf of the Department of Education.

These companies also issue Student Loan Asset-Backed Securities (SLABS) in collaboration with major financial institutions like Wells Fargo, JP Morgan, and Goldman Sachs.

For these firms and their creditors, debt isn’t just an asset, it’s their bottom line.

You might wonder why the U.S. federal government, which handles trillions of dollars worth of Treasury certificates (T-bills, T-notes, T-bonds) needs to farm out the servicing of student loan debt and SLABS.

And, you might wonder why the government helps to create the indebtedness of America’s potential leaders.

MONEY is the answer.

Congress loves privatization, not because it is “more economical” than the federal bureaucracy (It isn’t), and not because the private sector can do the job better and more safely (It can’t, as the recession of 2008 demonstrated.)

Congress loves privatization because big donors love it. If somehow big donors wanted the federal government to do 1, 2, and 3 (above), that would be the way Congress and the President would vote.

Investors holding SLABS are entitled to coupon payments at regular intervals until the security reaches final maturity, or they can trade the assets in speculative secondary markets.

There is even a forum where SLABS investors can anonymously discuss their assets and transactions, free from unwanted public scrutiny.

Yet the financialization of student debt is almost never reported on in the media.

There is little public awareness that when student borrowers sign their Master Promissory Notes (affirming that they will repay their loans and “reasonable collection costs”), their debts may be securitized and sold to investors.

The rich speculators do not want you to know how valuable student debt is to them. You might want to eliminate student debt, heaven forbid.

SLABS resulted from specific federal policy decisions. On November 27, 1992, the Securities and Exchange Commission adopted Rule 3(a)(7) of the Investment Company Act of 1940, which allows companies who issue asset backed securities to be exempt from the legal definition of an “investment company.”

This exemption permits companies to avoid asset registration fees and regulatory oversight – making it profitable for student loan companies to issue securities, which effectively created the market for SLABS.

“Regulation” is a dirty word in the eyes of the rich. They opt for “free enterprise,” meaning “We can get away with anything when everything is legal.

Over the past few decades, student loan companies and Wall Street have amassed record profits.

Meanwhile, $1.6 trillion of student debt is crushing generations of Americans by delaying home ownership, causing generational wealth to decrease, and contributing to widespread depression and even suicide.

Since the ironically-named Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, student debt is virtually impossible to discharge in bankruptcy.

Donald Trump repeatedly was able to discharge his and his companies’ debts via bankruptcy. He has boasted about how smart he was to take advantage of bankruptcy laws.

The rich lenders have made sure that students are not afforded this privilege.

Navient is the largest student loan servicing company and the largest issuer of SLABS. In filings with the SEC, Navient acknowledges the following risk factors: “An economic downturn may cause the market for auction rate notes to cease to exist… Holders of auction rate securities may be unable to sell their securities and may experience a potentially significant loss of market value.”

Due to the “securitization food chain”, if Navient or other SLABS issuers and holders experience a significant loss of revenue, they could default on their obligations – triggering negative consequences for Wall Street firms that market these securities to investors and supply credit to the greater public.

Those of you who remember the painful Great Recession of 2008, will note that massive debt default was the cause. For the rich, this lesson has not been inhibiting.

Greed and power tend to preclude caution.

As economist Michael Hudson has argued, “debts that can’t be paid, won’t be paid”, and the insistence of creditors to collect on those debts can trigger social unrest.

As the rational discontent of younger generations continues to grow, catalyzed by a lower quality of life than older generations, the accelerating climate crisis, and insurmountable student debt – activists may choose to utilize “the power of economic withdrawal.”

Young people could exploit the vulnerabilities of the SLABS market via debt strikes or boycotts, as advocated during the Occupy Wall Street movement in 2011.

Writes David Graeber in his comprehensive 2011 book Debt: The First 5000 Years. “For the last five thousand years, with remarkable regularity, popular insurrections have begun the same way: with the ritual destruction of the debt records-tablets.”

Activists concerned about student debt should ask themselves: what would such a symbolic protest look like in the United States today, and could it become popular enough to pose a significant threat to the status quo?

Historically, most social progress has been initiated by the young and the progressive, and resisted by the older and conservative.

The battles between the two often have been bloody and destructive, leaving the nation in tatters for decades or even generations. We still have not completely recovered from the atrocities of the Civil War, the Great Depression, and Vietnam.

For very good reasons, city, county, and state governments pay for grades K through 12. And these governments are not Monetarily Sovereign, so supporting education is a huge financial strain on them. Yet they do it.

For the same very good reasons, the federal government should fund grades 12+ — and it is Monetarily Sovereign, so such support would be no financial strain at all.

Student debt is an abomination that should not have begun, should not continue, and easily could be solved, if our government leaders had the morals and spine for it.

Perhaps, by rising up, marching, engaging in civil disobedience, and especially voting, young people may help our Congresspeople develop some decency, integrity, and vertebrae.

Congress should initiate Steps #4 and #5, now.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually.

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%

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

MONETARY SOVEREIGNTY

Federal Budget: Doing right by doing “wrong.”

His adversaries in Congress accuse him of defying the law, acting like a king, and speaking and acting in a way that was unbecoming of the presidency.

He is an outspoken, temperamental populist given to fiery speeches laden with insults, blatant racism, and suggestions that his political enemies be hanged.

He rose to political power by aligning himself with a loyal base of poor mountaineers and small farmers seeking a political champion.

He is hated for his adamant opposition to racial equality and the rule of law. Rather than root out institutional white supremacy that had fueled the American Civil War, he thwarts attempts to bring blacks equal protection under the law.

“Everyone would and must admit that the white race is superior to the black,” he said.

He suggests deporting millions of black men. He accuses [his political opponents] of plotting a coup.

He casts himself as the only thing standing between whites and “negro domination.”

As you may have guessed, the above excerpt is from an article titled, “The impeachment of Andrew Johnson,” though it sounds uncannily familiar, doesn’t it?

Donald Trump is the least intelligent, most immoral, least capable, most psychopathic President I’ve seen in my 84 years, and his administration’s record collection of temporary and acting incompetents (like substitute teachers) does nothing to improve his decision-making.

Yet despite himself, Trump sometimes accidentally does something right, though he probably doesn’t realize it — nor does Eric Boehm and the editors of Reason.com, as excerpts from the following article demonstrate:

BUDGET DEFICIT
Federal Deficit Hit $984 Billion Last Year—a Nearly 50 Percent Increase Since Trump Took Office
In three years in office, Trump has added more to the national debt than President George W. Bush did in his entire two terms.
Eric Boehm | 10.25.2019

During the 2016 campaign, President Donald Trump said he’d be able to wipe out the national debt in eight years. Instead, after three years in office, he’s overseen a nearly 50 percent increase in the gap between how much the government takes in and how much it spends.

Chart by Eric Boehm. Source: U.S. Treasury data

The Treasury Department announced Friday that the official federal deficit for fiscal year 2019, which ended in September, was $984 billion—in line with what the Congressional Budget Office (CBO) estimated last month.

The announcement serves as official confirmation that the federal government’s mountain of red ink has grown dramatically during Trump’s first three years in the White House.

It is now approaching levels not seen since the early Obama years.

In order to “wipe out the national debt in 8 years,” (a 100% reduction in the debt) the Trump administration would have to run an 8-year surplus totaling about $20 trillion, i.e take $20 trillion out of the economy.

History has taught us that removing $20 trillion from the private sector — would cause, not just a recession, but a depression — and not just any old depression, but a depression the likes of which America never has experienced.

Every depression in U.S. history has been introduced with federal debt reduction, which takes dollars out of the private sector.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

The economy usually is measured by Gross Domestic Product (GDP), and the formula for GDP is:

GDP =Federal Spending + Non-federal Spending + Net Exports.

To reduce federal debt one must reduce federal spending, and/or increase tax collections, both of which reduce GDP.

**Federal deficit decreases cause recessions (vertical gray bars), which are cured by federal deficit increases.**

By formula, federal debt reductions cut GDP.

The deficit is growing despite growth in tax revenues. The Treasury Department reported that while overall tax receipts rose by about 4 percent, federal spending grew by 8 percent.

In a statement, Treasury Secretary Steve Mnuchin said the data showed “President Trump’s economic agenda is working”; he also touted the low unemployment rate and ongoing economic growth.

One would think that deficit growth and economic growth happening simultaneously, and the fact that deficits pump growth dollars into the economy, would be sufficient to convince Trump, Mnuchin, and Eric Boehm that deficts grow the economy.

Sadly, such irrefutable evidence + mathematical logic don’t seem to be sufficient.

What’s really irresponsible is spending growth that’s outpacing revenue growth by a rate of 2-to-1.

Trump’s defenders will point out that he’s not solely responsible for setting the government’s budget.

That’s true, but he has the final say on all spending bills and he has been refusing to force the spending cuts Mnuchin says are necessary.

Why is “spending that’s outpacing revenue growth” (i.e. adding dollars to the economy) “irresponsible”?

Mnuchin never says, probably because it isn’t irresponsible; it’s necessary for economic growth.

When Congress passed a bipartisan budget plan in March 2017 that annihilated Obama-era spending caps, Trump begrudgingly signed the bill while promising that he’d never agree to another spending hike like that.

Earlier this year, when Congress passed another budget-busting spending bill, Trump signed it without so much as expressing a second thought.

Could it be that Trump intuitively understands that federal deficits spending adds growth dollars to the economy?

Perhaps nothing demonstrates Republicans’ complete abdication of fiscal conservatism as much as this: In three years in office, Trump has added more to the national debt than President George W. Bush did in his entire two terms. (Though Bush did have the advantage of starting out with a budget surplus in his first year.)

Fiscal conservatism, aka “austerity,” aka taking money from the private sector which needs the money, and giving it to the federal government, which doesn’t need the money, is the worst possible financial plan — unless one prefers recessions and depressions.

Recessions are caused by money shortages and cured by money supplements. The private sector is limited in its ability to create growth dollars; the federal government, being Monetarily Sovereign, is not limited.

Now we come to two of the most amazing sentences in Mr. Boehm’s article:

In the early Obama era, it was not uncommon to hear Republicans admit that Bush’s spendthrift ways had paved the way for worse.

Now, on an annual basis, Trump’s deficit spending is nearly as bad a Obama’s was over two terms.

During Bush’s 2nd term, the deficit averaged only about $250 Billion, at which point began the “Great Recession.”

During Obama’s 2 terms, the deficit averaged over $1 trillion, and the economy grew massively, and it continues to grow.

And yet, Mr. Boehm wants deficit reduction! It boggles.

Give Trump a few more years and I’m sure he’ll surpass Obama. That’s because the nature of the current budget deficit is fundamentally different from the peaks of the early 2010s.

Those deficits eventually tapered off for a variety of reasons. Recovery from the Great Recession boosted tax revenue.

The spending binge approved in response to the recession faded away.

And fiscally prudent Republicans imposed some modest caps on future spending growth.

But, Mr. Boehm, the deficit still averaged over $700 Billion — far more than the Bush later years — and the economy still grows, also far faster than during the Bush later years.

Coincidence, Mr. Boehm?

Now? The country is running a massive (and growing) deficit despite a decade of economic growth and a low unemployment rate.

“Higher outlays for Medicare, Social Security, Defense, and interest on the public debt” drove the deficit increase in fiscal year 2019, the Treasury Department says.

See how Boehm still doesn’t get it?

The “massive (and growing) deficit” has caused “a decade of economic growth and a low unemployment rate.”

Then Boehm goes on to exacerbate the ignorance:

The current deficit isn’t the result of temporary circumstances like World War II or a major recession.

It’s a systemic deficit, a result of poor budgeting and bad decision-making by members of Congress and the current administration.

It’s not going to resolve itself, and it’s on pace to get much worse.

We only can pray that he is correct and that the deficit will get much “worse,” i.e. pump much more growth money into the economy.

The Government Accountability Office (GAO) has called the federal government’s current fiscal situation “unsustainable,” and the CBO expects the national debt to hit “unprecedented levels” in the coming decades, well above the record highs set during World War II.

Ah, yes: “Unsustainable.” The favorite word of the economic ignorant. You probably have seen dozens of articles decrying the debt or deficit by using this word, and in not one of those articles did you ever see an explanation of why it supposedly is “unsustainable.”

The economic blowhards have been condemning the debt for longer than you have been alive, and still they have learned nothing. (See: “It is 2019, and the phony federal debt “time bomb” still is ticking.”)

“A deficit of this size following the longest span of economic growth in history shows just how reckless our leaders have become.

This is exactly the time when deficits should be contracting, not expanding,” Leon Panetta, co-chairman of the Committee for a Responsible Federal Budget, said in a statement.

No, Mr. Panetta. “The longest span of economic growth in history” was caused by deficits. Without deficits, there could have been no growth.

There is no time when deficits should be contracting unless one prefers a contracting economy.

And please don’t get me started on that Committee for a Responsible Federal Budget, which has been wrong forever about federal finances.

“But instead of getting our fiscal house in order and preparing for the next downturn, our leaders continue to binge on debt-fueled tax cuts and spending hikes rather than showing the leadership necessary to set our fiscal path.”

Clearly, Panetta believes (or more likely, is trying to make you believe) that our Monetarily Sovereign federal government can run short of its own sovereign currency, the U.S. dollar.

He also wants you to believe that federal financing is like personal financing.

You’ll notice (and this is important) that nowhere in Boehm’s diatribe is there any data showing how federal deficits have an adverse effect on the economy.

He simply spouts generalized reprimands like, “unsustainable,” “mountain of red ink,” “irresponsible,” “abdication of fiscal conservatism,” “spendthrift ways,” “spending binge,” “poor budgeting and bad decision-making,” and on and on.

But where, Mr. Boehm, are the data showing cause and effect — the data showing that large deficits cause some negative effect? They are nowhere to be found.

You will not find anywhere, a graph like the one above, showing that Federal deficit decreases cause recessions, which are cured by federal deficit increases.

The reason for the absence of such data: They do not exist.

A growing economy requires a growing supply of money, and federal deficit spending increases the money supply.

Even the ordinarily distasteful words “deficit,” and “debt,” are misleading, because they really represent surpluses for the economy.

Everything — language and the absence of data — has been gathered together to make you fear the one thing necessary to grow our economy: Federal deficit spending.

Why?

The very rich, who run America, do not want you to ask for more benefits from the federal government. This is their way making you agree to unnecessary limitations on what you receive from the government.

It’s a function of Gap Psychology, the desire of the rich to distance themselves from the rest of us. It is their way of becoming richer, for the larger the Gap the richer they are.

Democrats have abandoned all pretense of caring about the national debt, or even attempting to explain how they might pay for new federal programs.

And Republicans seem capable of offering nothing more than obviously false promises and empty rhetoric.

Mr. Boehm is right about the Democrats and Republicans duplicity, but not in the way he claims. These are the parties that have agreed on the useless — no, harmful — federal debt ceiling.

Both parties have capitulated the demands of the rich that you be misled.

Aside from that, Mr. Boehm’s article is one giant, misleading mess of false economics.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually.

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%

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

MONETARY SOVEREIGNTY

Oh, Wisconsin. The Foxconn, GOP con continues.

Let’s say a stranger knocks on your door and tells you, “Give me lots and lots of money, and I promise to do some unspecified good things for you. Later, even if I change my mind, I’ll keep the money.”

How quickly will you run to your wallet and toss your money at him?

Back in September, 2017, we published: Who put the “con” in Wisconsin? Foxconn, that’s who.

Among the revelations in that post were:

Image result for trump foxconn groundbreaking — “Here’s a few billion in Wisconsin taxpayers’ money.

The Wisconsin Assembly sent a $3 billion incentive package for Taiwan-based Foxconn to Gov. Scott Walker on Thursday, signing off on a deal to lure the electronics giant to the state with the biggest subsidy to a foreign company in U.S. history.

Democrats have raised alarms about exemptions under the bill that waive requirements for Foxconn to first develop an environmental impact statement before constructing what could be a 20-million-square-foot campus.

Foxconn would also be allowed to build in wetlands and waterways.

And:

There are 2.3 million households in Wisconsin. So a $3 billion incentive package requires each household in Wisconsin to send $1,300 to Foxconn.

What do Wisconsin households get for their $1,300, their potential loss of wetlands, waterways and overall environmental degradation, plus special legal immunities?

Foxconn has said it hopes to open the plant in 2020 with 3,000 workers, but that the workforce could grow to 13,000.

“3 billion dollars” of taxpayer’s money given for “hopes” and “could”?

What we learned subsequently was not good:

Foxconn’s history of broken promises casts a shadow on Wisconsin news
By Ciara Linnane
Foxconn has reneged on promised deals in many countries and regions, including the U.S.

The details are important, given (their) history of making and breaking promises in numerous countries and regions over the years, including in the U.S.

A pledge to invest $30 million in a factory in central Pennsylvania in 2013 was also greeted with much ballyhoo.

Four years later, the factory has still not been built, to the disappointment of state officials.

They are not alone. In 2014, Foxconn promised a $1 billion investment in Indonesia, which has still not happened, according to the Washington Post.

A pledge to invest $5 billion in Vietnam in 2007 has also failed to materialize, nor has the company met its promises for India.

Foxconn has also been under fire over the widely reported issues of working conditions at its existing plants. Foxconn’s China plants have been the scenes of protest and periods of high suicide rates over the years.

Pennsylvania, Indonesia, Vietnam, India — Foxconn repeatedly breaks its promises and also is a horrible employer, whose working conditions are so bad, employees are at a high risk for suicide.

And none of these things were considered by the Wisconsin GOP?

The great negotiator, Donald Trump, who is loath to risk his own money on most of his projects (he rents his name), boasted numerous times about this “incredible” deal:

Trump calls Foxconn “8th wonder of the world” despite its cost

Trump inspects the “8th wonder of the world” that never will be built.

By Blair Guild, June 28, 2018 / CBS NEWS

Speaking at a ceremonial groundbreaker for a new Foxconn plant in Wisconsin, President Trump called the new facility “the 8th wonder of the world,” despite the fact that Foxconn has cost the state at least $3.5 billion in tax breaks and grants, according to calculations from Wisconsin’s nonpartisan legislative fiscal bureau.

At that rate it would take the state 25 years to break even on its investment, the bureau calculated. In other words, each job Foxconn has promised to create costs the taxpayers $263,000. The company has said at least 13,000 direct jobs would be created, paying an average of $53,000 a year.

“As Foxconn has discovered there is no better place to build, hire, and grow than right here in the United States,” Mr. Trump said.

Actually, as Foxconn has discovered, there is no better place to steal billions of dollars from conned taxpayers, than right here in Wisconsin.

LEVIN REPORT
TRUMP’S “INCREDIBLE” FOXCONN FACTORY DEAL WILL NO LONGER INCLUDE A FACTORY

“This is an incredible deal.”

The Taiwanese company, which received more than $4 billion in tax subsidies, is scrapping its initial plans, but will keep the money, thanks.
BY Bess Levin, January 30, 2019

From the moment Wisconsin struck a deal to pay Foxconn more than $4 billion in taxpayer subsidies to build a plant in the Badger State, critics decried the plan as a total scam that had Donald Trump and Paul Ryan’s fingerprints all over it.

And they weren’t wrong! Writing for The New Yorker last year, Dan Kaufman laid out the many ways Trump’s “incredible” deal was poised to screw Wisconsin locals for years to come

— from the billions in “direct cash payments from taxpayers” that they wouldn’t recoup for about a minimum of 2.5 decades,
— to forcing homeowners to sell their properties “at a price determined by the village,”
— to granting the company special court privileges (like the ability to make numerous appeals of unfavorable rulings in a single case),
— to serious concerns about the factory’s impact on the water supply,
— to the fact that all those billions could be better used on things like the state’s crumbling roads or understaffed rural schools.

When a guy, who has taken six businesses into bankruptcy, tells you he has a great deal for you with a company having a history of screwing its investors, would you really trust him?

Foxconn to go ahead with Wisconsin plant after Trump call, FEBRUARY 02, 2019 08:30
Taiwanese company promises 13,000 jobs but mum on LCD production details

TAIPEI — Foxconn Technology Group said on Friday that it will go ahead with the construction of a plant in the American state of Wisconsin, following direct communication between Chairman Terry Gou and U.S. President Donald Trump.

The announcement came just days after reports that parts of the $10 billion project would be suspended.

“Great news on Foxconn in Wisconsin after my conversation with Terry Gou!” Trump tweeted Friday afternoon.”

Oh, sure. You can believe that a phone call from Donald Trump has restarted the project. And if you believe that, you can believe his other 13,000+ lies.

Sadly, you taxpayers in Wisconsin learned a bitter lesson too late, and now you will pay, pay, endlessly pay for your expensive education.

How Trump’s FoxConn Deal Conned Wisconsin Out Of Billions
Lisa Needham August 9, 2019

Wisconsin agreed to give the company $4 billion in tax credits in return for Foxconn building a factory in the state.

The whole deal was a GOP invention. Trump bragged that the deal was only happening because he got elected.

The deal almost immediately fell apart, with Foxconn Chair Terry Gou admitting the company had no intention of building the promised LCD panels in the United States.

The square footage of the proposed factory drastically decreased, dropping from 20 million to under 1 million. The promised jobs plummeted from 13,000 to 1500.

And then Foxconn decided it might not be a factory at all, which means it wouldn’t provide the blue-collar jobs Walker and his cronies promised.

At the end of 2018, Foxconn employed 156 people in the entire state.

With that, the deal no longer seems viable for Wisconsin, so they’re hoping to get Foxconn back to the bargaining table and hammer out a different deal. A Foxconn representative met with current Democratic Gov. Tony Evers to talk about possible adjustments.

However, Foxconn can’t help itself from asking for more: They’re hoping to have a longer time to qualify for capital investment tax credits.

In the end, this is just another Trump-related deal gone horribly wrong. Trump and Walker made flashy promises, gave away billions of dollars, and left the taxpayers holding the bag.

This whole charade leaves Wisconsin taxpayers with a couple of sad truths:

Trump’s GOP never has been concerned about the welfare of the middle and lower economic classes. It strictly is a rich man’s (emphasis on “rich” and emphasis on “man’s”) club.
When Donald Trump speaks, he either is lying or at best, doesn’t know what he is talking about.
None of this will cost Trump or his GOP one penny. You Wisconsinites will pay the full cost.

Ironically, even in the unlikely event that Foxconn did as promised, the benefits you Wisconsinites funded mostly would have accrued to the citizens of Illinois who live in the north Chicago population corridor. So thank you for trying, though it didn’t work out.

But, don’t be angry. In the immortal words of one Greville Janner, “If you are going to get raped, you might as well lie back and enjoy it!”

Lastly, having predicted that the Foxconn project would prove to be a gigantic con perpetrated on you folks in Wisconson, I have one more prediction:

You will vote for Trump and the Republicans in 2020.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually.

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%

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

MONETARY SOVEREIGNTY

“One of the worst scientific scandals of all time.”

Recently, I read an article titled, “Is this ‘one of the worst scientific scandals of all time’?”

It referred to Hans Eysenck, “one of the greatest psychologists in history, his fame built on his work concerning intelligence and personality testing, known as psychometrics.”

The article continues with the following excerpts:

He long maintained the hereditability of IQ and personality traits and was a supporter of the work of people like Charles Murray and Richard Herrnstein, the somewhat infamous authors of The Bell Curve, a book that amongst other things makes correlations between race and IQ in the US.

Eysenck also published work validating aspects of astrology to do with the correlation between personality and astrological signs and was seemingly rather partial to parapsychology and the world of psychics.

Eysenck published a large number of papers that explored the idea that personality was a serious risk factor in various forms of heart disease and cancer. Famously, some of the research concluded that personality factors were six times more likely to increase the risk of lung cancer than smoking was.

Making the situation worse are the links, including financial, between Eysenck, his junior collaborator Ronald Grossath-Maticek, and the tobacco industry.

“To his eternal shame, Hans Eysenck attempted to discredit the well-established causal links between tobacco smoking and cancer while in receipt of large sums from the tobacco industry.”

“These widely-cited studies have had direct and indirect influences on some people’s smoking and lifestyle choices. For an unknown number of individual men and women, this programme of research has been a contributory factor in premature illness and death.”

A scientific scandal that contributes to premature illness and death — sounds pretty bad, doesn’t it?

I’ll give you one even worse. This worse scientific scandal has led to poverty, suffering by hundreds of millions of people, and yes, even including “premature illness and death.”

The scandal is the pseudo-scientific lie being promulgated by many politicians, the media, and so-called economists, who falsely claim that our Monetarily Sovereign government “can’t afford” to pay for such benefits as Medicare for all, Social Security for all, education for all, and various programs that would cure impoverishment.

(Because, economics is deeply entangled with psychology, perhaps it should be no surprise that it is scandalous, often preferring prestige to facts.)

As recently as August 14, 1971, the U.S. dollar was pegged to gold, meaning that in effect, the federal government’s ability to create dollars was limited by its inventory of gold. (This was a self-imposed limit. Because the U.S. government invented the U.S. dollar, it always has had the power to create more dollars whenever it wished.)

In August 1971, President Nixon arbitrarily removed the convertibility of dollars-to-gold, and at that instant, and ever since, the U.S. government has not hamstrung itself with gold-supply limits on its ability to create dollars.

We really mean unlimited. The federal government is not limited by gold supplies. It is not limited by tax collections. It is not limited by debts or by borrowing, or by any other economic factor (other than the ridiculous “debt ceiling” which is an unconstitutional limit on paying for what already has been purchased. 14th Amendment: The validity of the public debt of the United States, authorized by law . . . shall not be questioned.)

MONETARY SOVEREIGNTY
If our Monetarily Sovereign, federal government wished, it could create a trillion dollars tomorrow, and another trillion the next day — all at the press of a computer key.

Image result for bernanke and greenspan — *It’s our little secret. Don’t tell the people we don’t use their tax dollars.*

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

St. Louis Federal Reserve: “As the manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never be unable to pay its bills. The government is not dependent on credit markets (borrowing) to remain operational.

If the federal government wished, it could make sure that you and your parents and your children never would have to worry about health care costs, never have to worry about the costs of a college education, never have to worry about housing costs, food costs, clothing costs. That is, “if the federal government wished.”

So why doesn’t the federal government wish?

INFLATION
Before we explain that, let’s address the factor that always seems to surface among lay people — the huge, though phony, bogeyman that is hoisted in front of you: Inflation.

The U.S. government is Monetarily Sovereign. That means it is sovereign over the U.S. dollar, and like any sovereign, it has the power to do anything it wishes with its own sovereign currency.

It invented the first dollars, and arbitrarily gave these early dollars values vs. silver and gold. It just as easily could have given them values vs. potatoes and pigs, or any other goods you can think of.

Since inflation is the declining value of money vs. goods and services, having the unlimited ability to set money values vs, goods and services gives the government the unlimited ability to fight inflation.

Short of Medicare-style price controls, which often come with their own downsides, the government has several other inflation-fighting tools in its kit.

For instance, it arbitrarily can set the foreign exchange rate, i.e. the number of dollars it will trade for other nations’ money. This is known as “revaluing” (up) or “devaluing” (down), depending on whether the government is fighting deflation or inflation. The U.S. government has done both.

The government simply could adjust interest rates, a step it has taken repeatedly. Raising interest rates makes more people wish to own dollar-denominated securities, and thus makes dollars more valuable — an inflation-fighting step.

In summary, our Monetarily Sovereign government not only has absolute control over its dollar creation, but also controls its dollar’s valuation.

Unlike state and local governments, the U.S. government never unintentionally can run short of dollars or be helpless to inflation. It does not need to tax — in fact, federal taxes are destroyed upon receipt — and it does not need to borrow.

(It actually doesn’t borrow. It accepts deposits into Treasury Security accounts at the Federal Reserve Bank. It pays off these deposits by returning the dollars deposited.)

The federal government creates all the dollars it needs simply by paying creditors.

But wait. Why then does the federal government collect taxes?

WHY DOES THE FEDERAL GOVERNMENT COLLECT TAXES?
There are three reasons, and the third should anger you.

To help control the economy by taxing the things it wishes to restrict (i.e., cigarettes, liquor, imports), and by giving tax breaks to things it wishes to encourage (i.e. certain kinds of income). If there were no taxes, there could be no tax breaks.
To assure the demand for dollars by insisting that all taxes be paid in dollars.
To fool you into believing that federal benefits to you must be rationed because they are “unaffordable.”

For instance, the government collects FICA taxes supposedly to “pay for” Social Security and Medicare. In reality, the purpose of collecting FICA is to limit unnecessarily the amount of Social Security and Medicare you receive.

If the federal government can afford anything, why does it wish to limit the benefits you receive?

GAP PSYCHOLOGY
If you owned a million dollars, would you be rich? Yes, if everyone else owned only a hundred dollars. But no, if everyone else owned ten million dollars. The word “rich” is a comparative, not an absolute.

“Rich” describes the gap between those who have more income, wealth, or power than others, and the wider that gap, the richer they are.

If you are rich, there are two ways you can become richer — i.e., two ways you can widen that gap: Get more for yourself or make other people have less.

When average people receive less for Social Security and Medicare, that widens the gap between them and the above-average (“richer”) people, which makes the rich even richer.

That is the reason for Gap Psychology, the human desire to distance oneself from (widen the gap) those “below ” and to approach (narrow the gap) those above.

Gap Psychology has a profound effect on much of your life: The type of car you drive, your house and neighborhood, your associations, the schools you attend, your clothing, your method of travel and travel destinations.

Gap Psychology is so important that the very rich are willing to spend huge sums just to distance themselves from you.

And one way they spend these huge sums is to bribe politicians, the media, and the university economists, to spread the false narrative that federal taxes are necessary to fund federal spending.

The politicians are bribed with campaign cash and promises of lucrative employment later. The media are bribed with advertising revenue and ownership. The university economists are bribed with university contributions and promises of think-tank work.

As a result of all this bribery and misinformation, you are deprived of the many benefits the federal government easily could provide. Your Social Security begins at later and later ages, when it could begin a birth.

Your Medicare pays at most 80%, and discounts what doctors are paid, so many doctors won’t accept it. Many plans don’t cover prescriptions, and even then, discount payments.

Rather than providing free college, the government requires students to go deeply into debt, making college unaffordable for millions.

All of this is made possible by the same Gap Psychology, in which even middle-income people who would benefit, are made to resent low-income people receiving government help.

This is one of the worst, most damaging scientific scandals of all time, second only to the historical science denial of religions.

One day, the world will look back on this economics scandal in the same way as we view the scandals involving the Church vs. Copernicus and Galileo — terribly harmful, though supported in ignorance by most of the populace.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually.

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%

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

MONETARY SOVEREIGNTY

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