Serfdom via student loans – Lenders going after Social Security and saddling college graduates with a debt albatross. Modern day debtor’s prison comes with a University degree.
The sharp attention being pointed toward higher education is important for a variety of reasons including the grim reality that we are facing another extraordinary bubble. Instead of blindly following into another credit fueled bubble we should probably pause as we cross the $1 trillion student loan threshold. The cost of education is becoming onerous and student loans are littered with financial landmines. Many are given to students to attend for-profit schools that will yield very little return on investment in the market aside from stockholders and corporate leaders. The uglier side also includes the inability to discharge student loans in bankruptcy. Americans have the ability to discharge mortgage debt if they are unable to pay their home payment. Businesses have the power to renegotiate contracts and loans with banks. Yet we somehow have managed to recreate debtor’s prison except it comes in the form of a student loan. Another dirty secret comes from the financial institutions gouging students with additional fees on top of the original loan balance. The higher education bubble is popping and the long-term implications loom large for our struggling economy.
The financial avarice of the global banking system – U.S. banks insolvent to the tune of $3 trillion. FDIC pretends to have funds to support over $7 trillion in banking deposits.
Part of the big delusion in our banking system is the reality that debt has become a large source of money flowing through the economy. This is why housing made the perfect vessel for Wall Street and banking speculation. Banks create money by issuing loans and there is nothing larger to loan on than a home. Think about the fact that banks were giving out $500,000 for trashy run down homes overrun with rats and this was something that they were booking on their balance sheet as an asset. The FDIC and other regulators simply sat back and watched as the wolves ate the financial chickens at the roost. Many Americans think that banks actually have the money in a vault when they make a loan. They do not. Just like Houdini the illusion is what is powerful. In fact, the FDIC has an insurance fund that is close to negative and this institution is supposed to back up over $7 trillion in saving deposits. How is that even possible? Only when a world is blindly accepting to a banking system and believe the media jargon that banking is too complicated for them to understand. This is what the central and investment banks want because it makes the theft easier.
The secretive workings of the central banking syndicate – Federal Reserve balance sheet reaches another record. Fighting monetary inflation by creating it.
Central banks provide a mystical approach to solving economic problems although they were initially created to solve short-term financial panics. The first central bank was the Bank of England which was established in 1694. It started out as a private institution but eventually took on a monopoly over all banks in England (all private banks either joined or were forced out). The allure of the system is to even out the panics by centralizing power in one place. The central bank of the United States came over two centuries later in 1913 as the Federal Reserve. The Fed has a mission to help moderate inflation and keep unemployment in check. But what happens when the central bank goes from main protector of the economy and becomes a large reason for the financial problem itself? There is little debate that monetary policy at the hands of Alan Greenspan led to the housing bubble. The subsequent bust is leading to our current financial problems. What people forget is that the Fed is designed to protect the banking system even if this is contrary to the overall success of the economy and most people.
The brittle financial American middle class – 50 percent of Americans would be in financial trouble if $2,000 of expenses came up in 30 days. By 2020 the world’s richest households will control $202 trillion in wealth, 4 times current global GDP.
This economic recovery has excluded working and middle class Americans which begs the question, what really defines a financial recovery? In past and distant recoveries the economic gains were widely distributed amongst all Americans. Most realize that income gains will never be equal simply because in a market based economy those with certain desirable skills will be rewarded more than others. Yet in the last decade the banking sector has co-opted the government to turn it into a welfare state for the large banks. Desirable qualities are now replaced by predator diseased qualities of ripping off the taxpayer for bad market based bets. That is why recent data showing that nearly 50 percent of Americans are unable to come up with $2,000 in 30 days if an emergency came up is startling. $2,000 for most is the basic monthly expenses on food, home, and other little items. So half our country is living one paycheck away from financial collapse. 44,000,000 Americans are living with food assistance from the government already. Keep in mind the recovery has been going on now for close to two full years. According to the NBER the recession was over in June of 2009. The fact that $2,000 is enough to bankrupt half of American households tells you about the new state of our economic recovery.