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Thread: debt forgiveness question

  1. #1

    Question debt forgiveness question

    At ~9 minutes in this vid, RP argues that heavily indebted nation-states like Spain (and the US) should simply write the debt off. I noticed that many folks on these boards were totally opposed to student loan forgiveness when that subject came up. I am curious as to what you think of RP's suggestion and if this changes your opinion on student loan forgiveness.

    Thanks.

    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
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  3. #2

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    bump in hopes of more expert opinions.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
    Quote Originally Posted by Anti Federalist View Post
    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
    I carry my man purse for fashion, not function.

  4. #3

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    Quote Originally Posted by heavenlyboy34 View Post
    bump in hopes of more expert opinions.
    Far from expert but I do have an opinion.

    When it comes to student loan debt I fully understand the scam perpetrated. However, I think those that have the ability, gained through their degree, should repay them. Those that can't should take the measures they need to declare themselves insolvent. I don't believe in an across the board forgiveness.
    Something, something, something...Whatever my rage for the day.

  5. #4

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    Quote Originally Posted by phill4paul View Post
    Far from expert but I do have an opinion.

    When it comes to student loan debt I fully understand the scam perpetrated. However, I think those that have the ability, gained through their degree, should repay them. Those that can't should take the measures they need to declare themselves insolvent. I don't believe in an across the board forgiveness.
    Fair point. However, all the indebted nations RP mentions made gains while going into debt just as college kids did. The currently bankrupt States, for example, blew money on all sorts of worthless "stimulus" type spending. Could you elaborate on why student loan debt is significantly different than "sovereign debt" (national debt)?
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
    Quote Originally Posted by Anti Federalist View Post
    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
    I carry my man purse for fashion, not function.

  6. #5

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    Back in the day like in the caveman days if you loaned somebody money or tools or whatever and they physically couldn't pay you back then you and others in the community might decide to stop or curtail loaning them shit until they could prove themselves more capable or trustworthy. At some point, people decided that when you loan somebody something of your own, they may happen upon unfortunate circumstances or they may just act foolishly. Non-repayment didn't make them a bad person or criminally neglegent, necessarily, it didn't make the person who made the loans a bad person, necessarily, it was simply a personal decision that these groups and individuals decided on.

    Nobody forces you to make a loan so people decided that non-repayment didn't mean that the person who made the loan could make any sort of demands they wanted on them because making the loan was 50% their decision and so failure of payment was 50% their fault.

    Banks aren't community members so they participate in the credit score system so they can determine people's credit worthiness. But the system is pretty much morally and economically the same. If you CAN pay somebody back, you should, but if you can't that doesn't make you a bad person, necessarily. That is why we forgive people who can't pay back their loans. That is why people aren't FORCED to make loans. All loans come with risk and lenders must be aware of the inherent risk in lending their money. Loaning people money for profit isn't noble, it is a business. Even when it isn't for profit, it doesn't mean that the person can lay any claim they want, it was still voluntary.

    It doesn't matter if it's the state borrowing from people, people borrowing from the state, whatever.. all of the morals and ethics from the original situation apply. Students should be able to declare bankruptcy and discharge their student debt. The people who vote for politicians who give loans to students should be aware of the risk they are making and probably shouldn't be electing people who make such risky loans. OR maybe people shouldn't have the ability to loan out money that belongs to others.
    Last edited by dannno; 07-24-2012 at 06:21 PM.
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    It's apples and oranges. On the one side, you have a nation declaring bankruptcy. On the other, you have a nation stealing people's money to repay debt by force.

    Two very different things. Declaring yourself bankrupt... that has a legitimate purpose. Declaring someone else bankrupt, and then banging on that person's neighbor's door with 10 men with AR-15's and demanding that they give their neighbor money so he can repay his debt.... does not have a legitimate purpose
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  8. #7

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    Quote Originally Posted by bxm042 View Post
    It's apples and oranges. On the one side, you have a nation declaring bankruptcy. On the other, you have a nation stealing people's money to repay debt by force.

    Two very different things. Declaring yourself bankrupt... that has a legitimate purpose. Declaring someone else bankrupt, and then banging on that person's neighbor's door with 10 men with AR-15's and demanding that they give their neighbor money so he can repay his debt.... does not have a legitimate purpose
    That kind of depends on your worldview, though. You and I agree on that, but there are plenty of people who are either indifferent or like the State's power to act this way.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
    Quote Originally Posted by Anti Federalist View Post
    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
    I carry my man purse for fashion, not function.

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    Quote Originally Posted by heavenlyboy34 View Post
    That kind of depends on your worldview, though. You and I agree on that, but there are plenty of people who are either indifferent or like the State's power to act this way.
    Which is a shame, because as it happens, what's morally right, and what's economically effective, tend to go hand in hand 100%. And of course the opposite is true.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
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  10. #9

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    Quote Originally Posted by heavenlyboy34 View Post
    At ~9 minutes in this vid, RP argues that heavily indebted nation-states like Spain (and the US) should simply write the debt off. I noticed that many folks on these boards were totally opposed to student loan forgiveness when that subject came up. I am curious as to what you think of RP's suggestion and if this changes your opinion on student loan forgiveness.
    How would you feel about deductions from your paycheck to reimburse all the people who did pay tuition? With interest? With inflation?

  11. #10

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    As I think my last reply wasn't 100% fair, I will amend.

    If the government got 10000% out of the education loan business - I'm talking one-hundred and ten percent here - then it wouldn't bother me so much. There is a cost to debt collection. I would insist on other reforms too like an end to state-mandated licensing of ALL professions. My demands would be a devastating blow to the education racket as it exists today.

    Under some limited conditions, I would join hands with you and say, "fuck that debt!". As is, not yet - not a chance.

  12. #11

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    Quote Originally Posted by The Free Hornet View Post
    I would insist on other reforms too like an end to state-mandated licensing of ALL professions. My demands would be a devastating blow to the education racket as it exists today.
    +1

    And it is a racket, just like its ugly conjoined twin, the accreditation racket.

  13. #12

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    Are you sure Ron is suggesting that? He could be meaning by "writing off" that they pay it down.

    I see no reason why monetizing the debt is any more harmful than putting the taxpayers on the hook by virtue of debt forgiveness.

  14. #13

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    Quote Originally Posted by GeorgiaAvenger View Post
    Are you sure Ron is suggesting that? He could be meaning by "writing off" that they pay it down.

    I see no reason why monetizing the debt is any more harmful than putting the taxpayers on the hook by virtue of debt forgiveness.
    I'm quite sure it's what he's suggesting. You can listen to his own words at ~9 minutes in the OP vid. Like I said, I'm far from an expert.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
    Quote Originally Posted by Anti Federalist View Post
    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
    I carry my man purse for fashion, not function.

  15. #14

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    Student loans should be able to be discharged through bankruptcy. I think those who have filed for bankruptcy, but at the time couldn't discharge their student loans, should be able to do it again even if the 10 years hasn't expired.
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    Quote Originally Posted by jllundqu View Post
    god damn vipers, all of them.

  16. #15

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    He's suggesting it because he like everyone else should realize by now there is a 0.000% chance that we're paying back the $17T we owe. Same goes with Europe, write it off take the pill and get it over with.

    As for student debt, WHY shoud you get your education written off while others paid and worked for theirs? There is a very big difference between an individual and a nation. As far as I'm concnered you can have your education for free, but you then need to go through the pain that will be caused by a national default. No job, no food, no house. If thats what you want go for it.

    Quote Originally Posted by GeorgiaAvenger View Post
    Are you sure Ron is suggesting that? He could be meaning by "writing off" that they pay it down.

    I see no reason why monetizing the debt is any more harmful than putting the taxpayers on the hook by virtue of debt forgiveness.

  17. #16

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    Only if they get to reposes the degree. Don't want to pay for school, don't get to say you're a graduate of.

    Quote Originally Posted by ShaneEnochs View Post
    Student loans should be able to be discharged through bankruptcy. I think those who have filed for bankruptcy, but at the time couldn't discharge their student loans, should be able to do it again even if the 10 years hasn't expired.

  18. #17

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    If I did not pay off my credit card debt then it is very likely that other credit card companies along with the companies I owe would not every give me credit again.


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  19. #18

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    Here are a few bottom lines I see:

    1) Aggregate debt cannot be repaid, primarily because the interest required to pay it can only be created by more debt.
    2) The exchange value of the currency that was loaned was siphoned out of the currency that was diluted to make the debt.
    3) Interest repaid on debts does not go back to the currency holders, who will NEVER be remunerated for what was taken from them. That goes to the banks.

    Nothing short of a catastrophic (and impending, inevitable) implosion is going to change that, and when that happens, it's not a question of who is going to "write off" debt. The whole world is, because finally the truth will be realized that the monetary ponzi system itself is bankrupt, and everyone in it by extension. The debt was already written off, ponzied off as promises of required indebtedness to the future generations who were buried in it a long time ago.

    Ideally, and only if you had a sound competing monetary system to take up the slack, you'd leave the banks only holding the bag, as they are the LEAST contributors, next to the Fed. They're the ones loaning out something they themselves don't possess, and are being rewarded for it. If we were going to allow anything to be written off "Ron Paul/Spain style", it should be the interest only. Not the principle. On all ALL student loans, private personal mortgages, and anything else, especially as it affects individual livelihoods. Not the principle, just the interest. The principle must be repaid AND SUBSEQUENTLY DESTROYED as it is repaid, as a reverse of the original value siphoning effect. That returns once-siphoned value, without interest, to the currency itself. In other words, deliberately DEFLATIONARY (to that currency).

    It won't happen, of course. The only way out this Keynesian nightmare is total catastrophic implosion -- which is inevitable even if our money-debasing global braniacs figure out a way to get a little more debauching in with some new global fiat currency -- a Fed/IMF/Euro Fiat Debt Credit On Crack, with a renewed illusion of backing from gold to keep the "Currency Faith" engines intact.

  20. #19
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    Quote Originally Posted by GeorgiaAvenger View Post
    Are you sure Ron is suggesting that? He could be meaning by "writing off" that they pay it down.

    I see no reason why monetizing the debt is any more harmful than putting the taxpayers on the hook by virtue of debt forgiveness.
    Two conficting bits I saw- he said that continuing to print money to reduce debt (this doesn't actually make the number of the debt any lower- it just lowers the percent of the total supply of money the debt uses) would cause a loss in confidence in the US and the dollar. But if you were to default, that would lead to the exact same thing. If you don't pay your bills and instead write them off, people will be less willing to lend you money again in the future (or to do other business with you).
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  21. #20

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    Quote Originally Posted by GeorgiaAvenger View Post
    I see no reason why monetizing the debt is any more harmful than putting the taxpayers on the hook by virtue of debt forgiveness.
    They are quite different.

    Scenario A: Government defaults on 1 trillion dollars in debt. 'Investors' (mostly central banks, speculators gaming the open market, and big institutions) would be hurt.

    Scenario B: Government through fed funds targeting (or more concerted efforts) buys up the 1 trillion dollars in debt. (rough figures) They issue 1.2 trillion and use it to buy 1 trillion worth of securities from the market. Why would they create more MB than needed to buy up the debt? Two reasons... The first is that primary dealers only sell t-bills to the open market for profit. So they profit on every repo they sell to the Fed and furthermore because the Fed engages in fed funds targeting, they constantly under and over-shoot the target fed funds rate...which results in a lot of churning. Image if you bought and sold your 200k house repeatedly...think you would end up with 200k when you were done?? Sometime in the future (perhaps after an audit) there will be a revelation that the primary dealers have been manipulating the fed funds rate in a manner much worse than LIBOR was manipulated...big time tail wagging the dog. Then phase two of evil commences...the banks take the monetary base and create counterfeit deposits on top of this...so the 1.2 trillion becomes a LOT MORE through the money multiplier and this results in a lot of inflation. But at least we no longer have that 1 trillion dollar in debt, right? Not so fast... We still have to pay interest on that debt...which goes through an operational black-hole at the Fed...and they hand over what is left after they expense whatever they want out of the t-bill interest revenue to congress. It's a sham.

    Scenario A is best.

    A possible Scenario C is to do a hybrid solution. Default on the time value of the treasury securities and repay directly to the security holders at face value (you're only supposed to do this with callable bonds so it would be a partial default). No messing around with parasitic middlemen. The money would be created from the Fed as new MB...but new rules would have to be put in place to ensure that banks didn't blow this money up and create mega-inflation. (perhaps stronger reserve ratios)

    Defaults are not the end of the world. Iceland let its private banks default on their debts in 2008 and has made one of the strongest economic recoveries of any nation to date.

  22. #21

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    Quote Originally Posted by jbauer View Post
    Only if they get to reposes the degree. Don't want to pay for school, don't get to say you're a graduate of.
    Sounds acceptable to me.
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    Quote Originally Posted by jllundqu View Post
    god damn vipers, all of them.

  23. #22

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    Quote Originally Posted by jbauer View Post
    Only if they get to reposes the degree. Don't want to pay for school, don't get to say you're a graduate of.
    That doesn't make any sense because let's say you have two Electrical Engineers you want to hire who both went to VERY prestigious and expensive schools... One of them graduated with a 2.9 GPA and their parents paid for their school. One of them graduated with a 3.9 GPA but their parents weren't rich so they had $130k in education expenses, had a part time job during school that paid for $30k of that, then had to take out over $100k in student loans. Then one of their parents fell ill after they graduated so they decided to move home, couldn't find a job good enough to pay off the loans and so they go bankrupt. Now you are deciding who to hire, which one would you rather have? The purpose of the degree is to communicate skill sets to employers. The prospective employee could say, "well, I don't have the degree because I couldn't pay the loans because.......but I graduated from this school with this degree.." Then the employer has no way of knowing the truth, has a harder time making hiring decisions and this adversely affects the economy.

    You can repossess a car and a house, you can't repossess a vacation or an education, yet people can still go bankrupt from credit card debt where they paid for extravagant vacations.
    Last edited by dannno; 07-25-2012 at 06:49 PM.
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    "Each of us must choose which course of action we should take: education, conventional political action, or even peaceful civil disobedience to bring about necessary changes. But let it not be said that we did nothing." - Ron Paul

    "Paul said "the wave of the future" is a coalition of anti-authoritarian progressive Democrats and libertarian Republicans in Congress opposed to domestic surveillance, opposed to starting new wars and in favor of ending the so-called War on Drugs."

    [SIGPIC][/SIGPIC]

  24. #23

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    Quote Originally Posted by dannno View Post
    That doesn't make any sense because let's say you have two Electrical Engineers you want to hire who both went to VERY prestigious and expensive schools... One of them graduated with a 2.9 GPA and their parents paid for their school. One of them graduated with a 3.9 GPA but their parents weren't rich so they had $130k in education expenses, had a part time job during school that paid for $30k of that, then had to take out over $100k in student loans. Then one of their parents fell ill after they graduated so they decided to move home, couldn't find a job good enough to pay off the loans and so they go bankrupt. Now you are deciding who to hire, which one would you rather have? The purpose of the degree is to communicate skill sets to employers. The prospective employee could say, "well, I don't have the degree because I couldn't pay the loans because.......but I graduated from this school with this degree.." Then the employer has no way of knowing the truth, has a harder time making hiring decisions and this adversely affects the economy.

    You can repossess a car and a house, you can't repossess a vacation or an education, yet people can still go bankrupt from credit card debt where they paid for extravagant vacations.
    Incorrect. The degree requirement came to be after discrimination laws made it illegal to test for "intelligence". There are numerous incompetent yet degreed people in the prospective job pool. It is in fact possible for a totally illiterate person to bullshit their way through university. (Paul Krugman graduated suma cum laude from Yale and got a PhD from MIT)
    Last edited by heavenlyboy34; 07-25-2012 at 08:34 PM.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
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    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
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  25. #24

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    I never thought i'd say this, but I support worldwide debt forgiveness. It's probably the only solution to kicking out the system we have.

  26. #25

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    What was the consideration the bank offered you, HB?
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  27. #26

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    I intend to pay back every penny I owe on my student loans. I bought my car with cash, I have no credit cards, I have no other debts to speak of, but the greatest fear I have in my life is that I get sick or lose my job and I go into default on my student loans. My parents co-signed for my loans so the bank will go after my family. I would rather them take my life than destroy all my family has worked for. I would sleep more soundly at night knowing that I have protection, like all other debts, through bankruptcy. All I wish is to not be a debt slave. If, at 17, I had been aware that this debt was unique and exempt from bankruptcy, I would have thought twice about my options. As an economics teacher, this is a point I emphasize to all my students. Every student has a Right to know what they are getting themselves into. Sadly, the majority are never told by their teachers nor by their public school educated, financially illiterate, Mountain Dew drinking parents.
    "If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be." - Thomas Jefferson

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  28. #27

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    Quote Originally Posted by Gumba of Liberty View Post
    I intend to pay back every penny I owe on my student loans. I bought my car with cash, I have no credit cards, I have no other debts to speak of, but the greatest fear I have in my life is that I get sick or lose my job and I go into default on my student loans. My parents co-signed for my loans so the bank will go after my family. I would rather them take my life than destroy all my family has worked for. I would sleep more soundly at night knowing that I have protection, like all other debts, through bankruptcy. All I wish is to not be a debt slave. If, at 17, I had been aware that this debt was unique and exempt from bankruptcy, I would have thought twice about my options. As an economics teacher, this is a point I emphasize to all my students. Every student has a Right to know what they are getting themselves into. Sadly, the majority are never told by their teachers nor by their public school educated, financially illiterate, Mountain Dew drinking parents.
    So you're saying you didn't have full disclosure? (almost nobody does). Man this is easy.
    Quiz: Test Your "Income" Tax IQ!

    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of apportionment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  29. #28

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    Quote Originally Posted by Danke View Post
    So you're saying you didn't have full disclosure? (almost nobody does). Man this is easy.
    Literally, I was walked through the process by my old man's buddy. It was a, type your name here, sign here, type in the amount you want here type deal. I understand that I am still responsible for my actions but at 17 if I commit a crime it gets wiped at age 18 and sealed for life. I sign for student loans and I am a debt slave. It only makes sense once you understand that the bankers run the world.
    "If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be." - Thomas Jefferson

    "It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds" - Sam Adams

  30. #29

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    Quote Originally Posted by Danke View Post
    What was the consideration the bank offered you, HB?
    I got my loans via Sallie Mae and Direct Loans, not a bank.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
    Quote Originally Posted by Anti Federalist View Post
    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
    I carry my man purse for fashion, not function.

  31. #30

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    Quote Originally Posted by heavenlyboy34 View Post
    I got my loans via Sallie Mae and Direct Loans, not a bank.
    So...what was the consideration?


    At common law, the elements of a contract are offer, acceptance, intention to create legal relations, and consideration.
    Last edited by Danke; 07-25-2012 at 11:06 PM.
    Quiz: Test Your "Income" Tax IQ!

    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of apportionment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

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