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发帖数: 38600 | 1 A Generational Storm Is Coming
http://bonnerandpartners.com/a-generational-storm-is-coming/
25 Years of Poverty
Under President Johnson, the government set up the Federal Direct Student
Loan Program to provide “low-interest loans” (back then, “low” meant 8%)
to students.
Private lenders make the loans, but they receive the full backing of the
feds.
The idea was to help you afford higher education… and earn larger salaries
as a result. And with your increased earnings you were supposed to be able
to pay off the loan.
But at over 11% of outstanding debt, the Student Loan Program now has the
highest delinquency rate of all forms of household debt (mortgage loans,
auto loans, credit cards).
And it will probably go much higher… as students take on more debt. Total
outstanding student debt is expected to bubble up to $3.3 trillion by 2025.
What do you do if you can’t pay?
Well, the feds have a solution for you. The trouble is, it turns you into
the very thing the program was meant to avoid.
Here’s how it works…
As long as your income is low, you are allowed to make small token payments
every month. Keep this up for 300 payments and your debt is considered
satisfied, no matter how little you paid.
In other words, the Student Loan Program encourages you to live in poverty
for a quarter of a century to get rid of your student debt.
Most likely, this will be easy for you to do anyway.
First, because most college degrees do little to make you more valuable to
employers.
Second, because your parents’ rigging of the economy will make it difficult
to make any financial progress anyway.
The median household income – after you account for inflation – has been
falling since the late 1990s. And good jobs are hard to get. There are fewer
“breadwinner” jobs today in America than there were in 1999.
And you can forget about starting your own business. The rate of new start-
ups is collapsing. (Remember from last week that the U.S. ranks 46th on the
World Bank’s list of the easiest countries in which to start a business.)
You can thank your parents for that, too. The system is designed to protect
them, their Social Security benefits, their health care, their stock market
portfolios, and their businesses.
Protect them against what?
Against you!
You are the future. You are the competition. You are the ones who should
want to shake things up and tear down the walls of bureaucracy, taxes,
paperwork, and regulation that make it so difficult for you to start new
businesses, get good jobs and build real wealth.
You should be talking revolution – overthrowing your parents’
multitrillion-dollar debts and pulling out of their wars on poverty,
illiteracy, Iraqis, Afghans… you name it.
You need to stop these silly, pointless, and expensive programs so you can
have the resources to pay for your own programs and launch your own stupid
wars.
You need to get rid of your parents’ zombies – the millions of
unproductive people who get money from the government – so you can afford
your own families… your own pet projects… and zombies of your own.
A Suicidal System of Credit
You need to stop your parents’ suicidal credit-based money system, too.
You don’t know about this, do you?
Your professors of government, politics, economics, and finance didn’t
mention it, did they?
Well, the system is corrupt and self-destructive. It works only by
increasing the amount of debt in the society – including student debt.
And it works only until the debt bubble gets so big it blows up.
But there’s a logic to it… a sinister logic that turns you into chumps for
older generations.
Spending on credit favors the existing owners of capital… and people who
have existing claims on the government money.
Let me explain…
When the government borrows money it gives the money to a zombie to spend,
or it spends it directly.
Usually, the money goes to an older person – your parents or grandparents
– in some form of social welfare subsidy, pension, job, contract, or
support program.
When they spend the money, it goes into the coffers of corporations. This
increases profits… and share prices.
Who owns those corporations?
Do you?
You don’t?
Then who does?
Your parents and grandparents benefit again. They are the owners of the
nation’s financial assets. By increasing credit, they shift real wealth
from the future to the present… and from you to them.
This is the money you haven’t earned yet.
I’ll spell it out for you: The government borrows a dollar. It gives the
dollar to one of its pet zombies. (It could be a health researcher, a drug
addict, or somebody who makes bombs.)
The money goes – one way or another – to a corporation, which registers it
as a sale.
If it has a 10% profit margin, 10 cents is recorded as a profit. If it sells
at a price-to-earnings ratio of 20 times, its stock price goes up $2. This
makes the owner of the stock – it could be one of your parents – $2 richer
. (I’m oversimplifying… but you get the point.)
But the government now owes $1 more. And who’s going to pay it?
You are!
Your parents and grandparents are retiring… and collecting their Social
Security and health care benefits. They think they will be able to sell
their stocks, too… and their houses… and have even more money to spend. |
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