STUDENT LOANS: THE GOVERNMENT IS NOW OFFICIALLY IN THE BANKING BUSINESS

The government is now officially in the banking business. On March 30, 2010, President Obama signed the reconciliation “fix” to the health care reform bill passed by Congress last week. Slipped into it was student loan legislation the President calls “one of the most significant investments in higher education since the G.I. Bill.”

Read more here –
http://www.webofdebt.com/articles/student_loans.php

16 Responses

  1. That’s a god way to put it, Ellen. We have exhausted all other options!

    Because we do not recognize money as a public utility, but a value that is created through private enterprise, ie, something over which a private person or entity has exclusive rights of ownership, we have given the rich the exclusive right to control the financial system. After all, through their manifold virtues, they have created the wealth, providing jobs and investment opportunities for the rest of us, so it properly belongs to them! One day we may hope to be so virtuous ourselves and get a seat on the board, too!

    Sounds ridiculous, but this is what most people believe, even poor people. Money is not a public utility. It is a reward bestowed by the Almighty on private individuals and entities in recognition of their virtue.. Money is a sign of God’s favor in a free market.

    To people on the right, the Ron Paul faction, the Tea Baggers & etc, money is not a neutral social utility, like water, electricity, air, food, it is a special substance with intrinsic value, it is precious, it is “sacred”. Gold, silver, diamonds, platinum! It is not given to everyone, but only to those who deserve it.

    So if government displaces the private sector and takes over the control of money, everybody is going to get easy access to money: perverts, colored people, Muslims, drug addicts, poor people, and other riff raff God did not intend to have money. That ain’t Christian!

  2. Good write-up, Ellen.

    And the sooner the government starts issuing the currency – including the electronic and accounting book kind – the sooner our economy will recover. As for the “Christian” values, I think Jesus would be condemning most of our nation’s bankers, lobbiests, polititians, and right-wing talking heads for putting unneccesary burdens upon the populace — just like he did to the leaders and teachers of the law in his own day!

    • You know what they say, Zarepeth: Jesus was not a Christian.

      I’m just trying to point out the nature of the resistance to a public financial model. To those of us who support government as banker, the private financial system is transparently unjust, inefficient, and an abysmal failure. We often cannot see why such a system has broad public support, just as we cannot see the sense of private health insurance and for-profit hospitals. The CEO of a health care provider can tell the Congress that he or she earned 12 million last year and no one finds fault with that, even though thousands went to their cold graves for lack of the ability to pay insurance premiums. Why?

      I feel it is important to understand the American character, because that character is destiny. What is it in Americans that prevents them from using their government power to promote the general welfare? When government intervenes in the market in the public interest, why is the cry of “socialism” raised across the land? Why do Americans worship the “invisible hand” of the “market”? Why did the public rally to Ronald Reagan when he said government is not the solution, government is the problem?

      What is it with my fellow citizens, these clueless, heartless, boneheads who call themselves Christians? Part of it is religion, and not just an old Calvinist doctrine of “election”, the idea that some are chosen for salvation and others aren’t, but also the “Transcendentalist” Emersonian doctrine of self-reliance which is at the core of HD Thoreau’s appeal to those who hear the distant drummer. We are a free people, we are sovereign individuals, with unalienable, god-given rights.

      So who the hell are we, and what do we think money is? A glance at the current system tells the story. The government will start managing our money as a public utility according to rational and humane principles when and if we stop being who we are, that is, a rowdy crowd of free market fanatics and religious zealots.

      • I think the “american character” and public opinion are easily formed by education, entertainment and media.

        Now – whose message do these institutions spread?
        The message of money as a goal (not as means to the goal).

        Whose interests does this message serve? The interests of the current establishment – which is incorporated capitalism.

        Everything else follows from that.

      • Ya, I think this country has seen it’s share of how well governments control systems. I can’t seem to find any country or group that has lasted a significant amount of time… like several hundred years, and it’s people enjoy a great amount of freedom. Maybe I’m wrong, however, please give me at least three examples of governments in the past that controlled all the money, incentive to create, and did not oppress it’s citizens and end in a bloody mess.The cry of socialism is being spread because the free market created this country, and will be what allows us as a people to continue to thrive.

        • There are no examples where the government controlled all the money and incentive to create for centuries. Your query makes no sense. Local governments created their own money supply in the American colonies for about one century, before King George forbade them to do it; but they did not control the incentive to create. In fact, the colonists were extremely creative, BECAUSE of their publicly-issued (as opposed to private-banker-issued) money supply. Today the government does not control the money supply; it is 99.99% issued by bankers as loans. All the government creates today are coins.

  3. Joseph

    You have more faith in Government than I do. Governments should not be trusted any more or less than non Government companies.

    The Green bank for example. Who do you think will get the money to solve a made up money making non problem.

    In my view Government should if possible be the referee not the player. The problem is the ref is often working for one of the teams.

    For me the only answer is for the average Joe to accept that the ruling class and money men and women are all potentially dishonest and all need watching closely.

    And when this happens (rather than thinking one side is good, the other bad) only then will mankind (or humankind) move forward.

    • well – theoretically it is possible to have democratic government that would watch out for public’s interests. Why not? If elections would be sponsored by the public (taxes) – and all candidates would get equal finances for election – the democracy could function.
      The problem with the current system is that wealthy private interests control the government and use it for their own gain. But that is only possible because politicians need their money for election.
      If you have democratic government – why not let it handle the money and banking? Why give this power and profit to a few wealthy individuals at the expense of all others?

  4. In the Bible the United States character is forecast to change from a Christian nation reflecting the principles of civil and religious liberty and separation of church and state, to a nation that will speak like the devil. Revelation 13:11
    It won’t necessarily be the common people but the leaders will speak like a dragon. The character will change from a religious tolerant country to persecuting intolerant country like the papacy of old. God has forecast it.

    • You probably mean Glen Beck?

  5. This is a step in the right direction. It is still a transfer of wealth to have the interest spread paid as an education subsidy to others. Get a loan, go to college, get a job, pay interest on your student loan that subsidizes someone elses’s education. You’re still a mule hauling someone else on your back. How does making a college grad pay that interest spread add to his ability get his or her own financial future started. I don’t mind paying my share for what I need or use, but where is the equlity in this arrangement? At least the bankers are cut out of the deal. Only god knows where the interest paid to them goes.

    • That’s an interesting point, and I think the system could be set up so that the loans were very low-interest, with the economy as a whole bearing the inflationary effect of defaults; but the cost and risk of lending is the defaults, and there is no telling which borrowers in that very risky class of students is going to default, so they’ve designed the system to bring in enough to cover their losses. It’s common banking practice to charge a higher interest rate for riskier borrowers without collateral. Higher education isn’t exactly a constitutional right; the government wouldn’t have to help students at all. If it didn’t, you’d be left to the private loan market, which would be more onerous for a student without collateral or a credit history; and in today’s climate you’d probably be denied altogether, since the private banks don’t want to take the risk without government backing.

  6. Interest income is essentially the free lunch we are told does not exist. What sense is there in allowing some people to live from investments, being dished out their free lunches of compounding interest while they are simultaneously lauded as society’s best people? They are the elect, those favored by God.

    Why is it that students, who are by definition learning the ways and means of making a living in this world, must pay their tithe to this elite group of free lunchers? Why must a student assume debt? Is that the lesson, how to be a successful debtor?

    Paying the cost of a student loan program does not require a 6% or 8% interest charge. All that is required is a loan program that balances its books. It does not need to make a profit, or pay lavish salaries to administrators, or become a cash cow for any other social purpose. Its only purpose is to provide a student the opportunity to be educated and to begin life without a gorilla on his or her back.

    A student is future social capital. We invest in his or her future productivity……………after they learn how to be productive. Collateral and credit requirements do not apply. We can pay for the elderly and all manner of expenses for retired military people, and we can provide free lunches for the Warren Buffets of this world.

    But we feel it is right to burden students.

    We still live in an Horatio Alger story when an impoverished student lives hand to mouth until some rich thief whispers into his ear the secret of compound interest and other legal thievery. The rich are the gatekeepers, God’s little angels.

    And that’s how it will be until we understand what democracy is and why our haloed founding fathers hated and feared it so much.

    • I agree. The education should be free to those who want to study and can handle the studying.
      The future will belong to countries that have the most educated people.
      I guess U.S. rely on weapons to ensure their future. But even to operate those weapons educated people will be needed.

  7. PS. Only Thomas Jefferson, among the founders, seemed to realize that real participatory democracy was vastly superior to the republican structure he had affixed his signature to.

    And they say that Jefferson had Asperger’s Syndrome!

  8. PPS. I did not mean that Jefferson literally signed the Constitution, which he did not, but if he had not been in France, he probably would have……

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