Tuesday, October 15, 2013

Student Slavery

     Student loans or student slavery?

     I've spoken to many young students who decry out of control tuition costs, deeply confused as to why this is the case. Hint: Look at the first two lines of the post. Tuition costs are skyrocketing because of access to student loans, or rather, unlimited access. You can thank Bill Clinton for government backed Stafford Loans and congress for deregulating any and all parental income requirements. And you can also thank Clinton for repealing Glass-Steagall, which allowed banks to engage in unlimited gambling with your deposits and mortgage backed derivatives, which eventually crashed the system after Greenspan's housing bubble in 2008. Repealing the Glass-Steagall Act was the single most destructive thing in our economic history.

     At any rate, this is why tuition costs continue to skyrocket year after year. The problem is unlimited dollars. And I don't just mean price inflation of goods and services caused by the unholy debasement of our currency.

     In other words, there is unlimited access to student loans. Why? Because government backstops any and all student loans written by the banks. So the banks don't care about the risk, but neither does the government since student debt cannot be forgiven in bankruptcy court... and guess again who was responsible for that? Let's go through this again, just to be clear.

     Banks want you to borrow as much as possible. The more debt you're in, the more money they make on interest. But what about the potential risk of default, especially given these students are graduating with tens of thousands, if not hundreds of thousands of dollars of debt only to enter an American economy in terminal decline? The banks don't care about the risk of default because government backstops the loans - all of them. It's a nice little scam the government and the banks have going as we shall see.

     And government doesn't care about the risk because debt can't be forgiven in bankruptcy court. As well, government doesn't care because even if you do default, they can just continue to counterfeit money in the treasury market since the whole world still believes dollars are worth something and are even more dumb to believe our government is good for it. And finally, the government doesn't care because it's obvious they have no problem being totally, utterly insolvent. It's much more important to them to hook in as many financial slaves as possible, just like the banks.

     So the more access to student loans, the more colleges will charge, as it creates unlimited demand. It is an artificial distortion in the market, a distortion caused by government, and as usual, government interference in the markets fails 100% of the time. But you don't hear about this on the corporate/state sponsored media.

     This distortion is also trashing the value of a college degree. If everybody can get one, it is no longer a stamp of recognition. It no longer validates you as a uniquely qualified job candidate. If everybody has a college degree, then a college degree gives you no leg up in the job market. So I guess you're just as well off "spendin' a dollah fitty in late chahges down at the public library" like good will hunting.

     There is one more issue with colleges and universities, which I shouldn't get into right now. But the truth is that intellectuals are bred by colleges and universities to maintain the status quo. Many of them have no clue they're being used to promote a statist agenda. They think they're just really super smart and everybody else are poor morons who need to be told what's good for them. Unfortunately, it appears that all of these intellectuals being spewed out of liberal arts colleges and universities aren't so bright after all. Just have a look at our central planners and you'll have all the proof you need.

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