Student Debt Slavery: Bankrolling Financiers On The Backs Of The Young

[DamianTV]

https://www.zerohedge.com/news/2017-...rs-backs-young

Authored by Ellen Brown via Web Of Debt blog,

Higher education has been financialized, transformed from a public service into a lucrative cash cow for private investors.



The advantages of slavery by debt over “chattel” slavery – ownership of humans as a property right – were set out in an infamous document called the Hazard Circular, reportedly circulated by British banking interests among their American banking counterparts during the American Civil War. It read in part:

Slavery is likely to be abolished by the war power and chattel slavery destroyed. This, I and my European friends are glad of, for slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led by England, is that capital shall control labor by controlling wages.

Slaves had to be housed, fed and cared for. “Free” men housed and fed themselves. For the more dangerous jobs, such as mining, Irish immigrants were used rather than black slaves, because the Irish were expendable. Free men could be kept enslaved by debt, by paying them wages that were insufficient to meet their costs of living. On how to control wages, the Hazard Circular went on:

This can be done by controlling the money. The great debt that capitalists will see to it is made out of the war, must be used as a means to control the volume of money. . . . It will not do to allow the greenback, as it is called, to circulate as money any length of time, as we cannot control that.

The government, too, had to be enslaved by debt. It could not be allowed to simply issue the money it needed to meet its budget, as Lincoln’s government did with its greenbacks (government-issued US Notes). The greenback program was terminated after the war, forcing the government to borrow from banks – banks that created the money themselves, just as the government had been doing. Only about 10% of the “banknotes” then issued by banks were actually backed by gold. The rest were effectively counterfeit. The difference between government-created and bank-created money was that the government issued it and spent it on the federal budget, creating demand and stimulating the economy. Banks issued money and lent it, at interest. More had to be paid back than was lent, keeping the supply of money tight and keeping both workers and the government in debt.

Student Debt Peonage

Slavery by debt has continued to this day, and it is particularly evident in the plight of students. Graduates leave college with a diploma and a massive debt on their backs, averaging over $37,000 in 2016. The government’s student loan portfolio now totals $1.37 trillion, making it the second highest consumer debt category behind only mortgage debt. Student debt has risen nearly 164% in 25 years, while median wages have increased only 1.6%.



Unlike mortgage debt, student debt must be paid. Students cannot just turn in their diplomas and walk away, as homeowners can with their keys. Wages, unemployment benefits, tax refunds and even Social Security checks can be tapped to ensure repayment. In 1998, Sallie Mae (the Student Loan Marketing Association) was privatized, and Congress removed the dischargeabilility of federal student debt in bankruptcy, absent exceptional circumstances. In 2005, this lender protection was extended to private student loans. Because lenders know that their debts cannot be discharged, they have little incentive to consider a student borrower’s ability to repay. Most students are granted a nearly unlimited line of credit. This, in turn, has led to skyrocketing tuition rates, since universities know the money is available to pay them; and that has created the need for students to borrow even more.

Students take on a huge debt load with the promise that their degrees will be the doorway to jobs allowing them to pay it back, but for many the jobs are not there or not sufficient to meet expenses. Today nearly one-third of borrowers have made no headway in paying down their loans five years after leaving school, although many of these borrowers are not in default. They make payments month after month consisting only of interest, while they continue to owe the full amount they borrowed. This can mean a lifetime of tribute to the lenders, while the loan is never paid off, a classic form of debt peonage to the lender class.

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Full article and sources on link.

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This is similar to our Healthcare Problem in that we ask the wrong questions. Our "elected" leaders sit there and try to figure out ways to make sure people "pay the bill" while we sit here and are ignored when we ask "why does an aspirin cost $88 when given in a hospital"? Which question should we be asking? Maybe we should be asking why the cost of education to the average person is so high instead of how we pay for it.

The Hegalian Dialectic comes into play here. Problem, Reaction, Solution.

-Problem: I need an education but I cant afford it
-Reaction: OMG! Wont someone just loan me the money?
-Solution: Sure, you can borrow ALL the money from us, but, you have to pay it back.

The Hegalian Dialectic is used so the only solution that most people come to is a Solution that benefits those who caused the problem to begin with.

[r3volution 3.0]

The student debt problem is obviously very real, but this article is leftist propaganda: greenbacker propaganda in particular.

The greenbackers are a socialistic group that originated in the late 19th century. They're fairly typical of their brethren in most respects, favoring a big-spending welfare state, state regulation of the economy, etc; what makes them unique is their view of money (hence their name). They oppose central banking, not because it facilitates big government, but because it enriches the banks. They want to abolish the central bank, but only to hand over the printing press to Congress, so they can directly print the money to finance the welfare-state. Needless to say, they have a loose grasp of economics and don't understand the true source of the problem. They're politically dangerous, though, because their anti-Fed rhetorically is superficially appealing to libertarians. Today, you find greenbackers (though most wouldn't self-identify as such) among the Occupy crowd and the Bernie bros, who cut into our vote so badly in 2016. The author of the article, Ellen Brown, is one of the most prominent, self-identifying greenbackers.

From the article:

The government, too, had to be enslaved by debt. It could not be allowed to simply issue the money it needed to meet its budget, as Lincoln’s government did with its greenbacks (government-issued US Notes). The greenback program was terminated after the war, forcing the government to borrow from banks – banks that created the money themselves, just as the government had been doing. Only about 10% of the “banknotes” then issued by banks were actually backed by gold. The rest were effectively counterfeit. The difference between government-created and bank-created money was that the government issued it and spent it on the federal budget, creating demand and stimulating the economy. Banks issued money and lent it, at interest. More had to be paid back than was lent, keeping the supply of money tight and keeping both workers and the government in debt.

Now, what does this have to do with student loans? Just as the greenbackers mistakenly think that the problem with the Fed is that the banks benefit (rather than the money printing itself), so they mistakenly think that the problem with higher education is that the banks benefit (rather than the state subsidies and regulations that are actually driving up costs). It wasn't mentioned in this article, but I would assume that just as Brown's "solution" to the central banking problem is to let Congress printing the money, so her "solution" to higher education problems is to have universal, socialized education.

Higher education has been financialized, transformed from a public service into a lucrative cash cow for private investors.

See, once again, "public good, private bad," total misunderstanding of the situation..

[DamianTV]

Im glad you point this out. Hegalian Dialectic is used for intentional misleading of people to solutions that benefit a small group of people.

Sometimes, those people genuinely think they have a real, fair, and balanced solution, but it seems today more often than not, the proposed solutions always benefit the rich. Its just a matter of being able to sell the idea. Thing is, we still have the same problems, costs of student loans far exceed their benefits. I just dont think we can look to the solutions that are proposed by many groups and really need to come up with our own solutions.

[r3volution 3.0]

Im glad you point this out. Hegalian Dialectic is used for intentional misleading of people to solutions that benefit a small group of people.

Sometimes, those people genuinely think they have a real, fair, and balanced solution, but it seems today more often than not, the proposed solutions always benefit the rich. Its just a matter of being able to sell the idea. Thing is, we still have the same problems, costs of student loans far exceed their benefits. I just dont think we can look to the solutions that are proposed by many groups and really need to come up with our own solutions.

The real solution is fairly simple.

1. Stop artificially stimulating demand; eliminate all state loans and grants, both to students and to the schools themselves.

2. Stop artificially restricting supply; allow more schools to be created by eliminating all accreditation requirements.

In short, have a market (it's very similar to the situation with healthcare).

...unfortunately, these things are politically impossible to accomplish at the moment, because the free$#@! lobbies are too powerful.

[timosman]

The real solution is fairly simple.

1. Stop artificially stimulating demand; eliminate all state loans and grants, both to students and to the schools themselves.

2. Stop artificially restricting supply; allow more schools to be created by eliminating all accreditation requirements.

In short, have a market (it's very similar to the situation with healthcare).

...unfortunately, these things are politically impossible to accomplish at the moment, because the free$#@! lobbies are too powerful.

Not exactly. Our growth based economy entered the ponzi scheme phase a while back and needs new participants. Not sure where the next wave will come from, but so far we are doing quite well with dummies believing they can improve their economic posture by incurring tons of debt which can never be paid off. We really need to discover a new planet or two pronto or else the economy will have no room to grow. Did I mention diversity?

[AZJoe]

So government creates a student loan program that artificially distorts the market giving 18, 19 and twenty-somethings access to tens and hundreds of thousands of dollars to spend and bid up the costs of schools.
In response to this artificial demand and flood of available cash, Colleges and Universities and other schools respond with massive growth and massive ratcheting-up the tuition and other college costs at rates far in excess of inflation or nearly anything else in the economy. Who could have predicted that?
The loan funds directly line the pockets of the schools. The lenders get their money with profit at zero risk of any loss thanks to government distortion.
The federal government effectively plays the collector role, giving these loans special status different form any other consumer or business or investment loan, making them non-dis chargeable, and allowing garnishment of wages and tax refunds and social security and unemployment without any court action at all.
What a racket.

[AZJoe]