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Yes, it's true, we are leaving a HUGE debt to our children...

$1 TRILLION in student loan debt.

Each month as we make our student loan payments, that money is taken directly out of the economy. Think about this, virtually every dollar lent to students is federally guaranteed.  That means that whoever lent the money (banks) is on the hook for ZERO dollars.  In fact, every dollar of interest the banks earn on student loans is almost pure profit.  If the government lends the money directly, that means they are creating the dollars that they are then expecting each student to repay, with interest.  When you send your payment every month, the government doesn't need to use this money to repay the principle, BECAUSE THEY CREATED THE MONEY!  

Every month that we make a student loan payment of $200, $500, $1500 or even higher, is a month that we don't buy a house, invest in a more fuel efficient car, save for retirement, or send our own kids to college.  

$2.2 TRILLION deficit in infrastructure spending

I saw a statistic the other day that should make us question our values. Our nation's schools are in such disrepair it would cost $270 BILLION to restore them to original condition and $542 BILLION to update to current standards.  That is less than we spent (and are still spending) to blow up things in Afghanistan.  'Shining City on the Hill' my ASS.  This is the REAL DEBT we leave our children.  A knowledge debt that will be felt for several generations.  Just think of all the opportunity lost.  The business that won't be started because the knowledge has not been created.  The new discoveries in health care that won't be made because a child didn't learn how to read.  Tell me a child who doesn't have access to technology in school, which requires spending on infrastructure, can function in today's world.  Tell me a child who is in an overcrowded, cold classroom without lab equipment will learn how to discover new things through experimentation.

A crumbling infrastructure equals a crumbling economy.  Oil price shock was a factor in the 1970's that took us into a recession.  Oil price is hurting our economy today. Business and consumers like stable prices.  They can plan for the future if they know how much things will cost.  When the price of the energy you use is subject to wild swings or is an outsize factor in your expense and ability to make a profit, it will drive how you do business. Do you think banks just decided to speculate in the price of oil because they are that smart?  No, they saw regular business people trying to purchase oil for the future at a predictable price by hedging, and realized they could manipulate the market for their own profit.  This is only going to get worse as we run out of places to drill.  Just think what a renewable energy infrastructure would do for the economy.  Stable supply, stable prices equal a stable economy.  Unstable supply and unstable price because we refuse to invest enough in renewable energy is the REAL DEBT we leave to our children.  

The incredibly sad fact is, our government could spend the $2.2 Trillion needed tomorrow to upgrade our infrastructure without blinking an eye, or creating inflation.

~~

Of the $2.1 trillion the United States spends on health care, $91 billion, or 14% of the total is administration costs.

And what do we get for all this money spent?
 

Because of medical bills or accumulated medical debt, an estimated 28 million adults reported they used up all their savings, 21 million incurred large credit card debt, and another 21 million were unable to pay for basic necessities. And yet sixty-one percent of those with medical debt or bill problems were insured at the time care was provided.

Every day, 3,700 American families file for bankruptcy caused by illness and medical bills.

WellPoint, UnitedHealth, Aetna, Humana, and Cigna -- which, combine to cover 100 million Americans, are doing just fine.  Between April and June 2011, they earned over $3.3 billion in profits, up 13 percent from their 2nd quarter profits in 2010, which, incidentally, was their most profitable year ever.

This is opportunity lost because we refuse to see that a 'for profit' health insurance system is imposing a REAL DEBT on our children.  They will have to choose between paying for medication or spending money on real necessities.  Our children will continue to have to choose between starting a new business, or taking one that pays enough to (sort of) cover their real life medical expenses.  They will have to choose whether they can continue to pay for a junk insurance policy or save for their children's college.  Yes, the ACA nibbles around the edges, but does little to address the underlying problem of accessible, affordable, healthcare for all.  The truth is, we can afford a single payer payer health care system that will take the burden off of our children, and our children's children. Our for profit healthcare system is killing us.
Their business model is to profit by finding ways to avoid caring for sick people in their time of greatest need
 
~~

$1.2 Trillion per year, 1.6% of global GDP in costs due to global warming climate change

The REAL DEBT we are leaving our children is actually incalculable.  We really can only imagine how much the real cost, not in dollars, but in lives lost, when the effects of our headlong dash into extinction are measured. Each year that we do nothing, the cost is only going to be higher.  We fight about a few billion dollars here, or a $100 million there all as the real costs mount. Our children and their children will be dealing with the effects of global warming due to our pollution of the atmosphere even if we start today.  It isn't someday, it is now.

~~

And finally, the REAL DEBT we leave our children is the erosion of our democracy.  The rule of law is no longer observed. Our values as a nation have been reduced to infighting about who pays more in taxes, or who isn't doing their 'fair share.'  We sound like 2nd graders fighting over the crayons in the box. It is pathetic. We will soon be reduced to fighting over the scraps at the dump because that is all we will have left.  Money is speech, the lie is the new truth and we have elevated greed to the ultimate altar of worship and call it religion. The 'Golden Calf' of Wall Street will destroy us all.

~~

Fiat Money and it's Social Significance
 

...government expenditure or lending must occur before taxes can be paid.

This shows that, as a matter of first principles, government expenditure (or lending) are logically prior to taxation in a fiat-money system (or any state-money system). Taxes are not needed to fund government expenditure. Rather, government expenditure creates money that then cycles back in the form of tax payments. Government expenditure ‘finances’ tax payments.

So, in a fiat money system, there is no need for taxes to be used as a means of funding government expenditure.

...the absence of a financial constraint on government expenditure does not mean that there are no limits. It just means that the limits are resource or political constraints, not financial constraints.


THE MYTH OF DEBT
 
The fiscal myth of tax and spend shared by virtually all schools of economics is that tax is first collected and then spent. This has never been the case: the reality... has always been that government spending has come first and taxation later.
 
The Case Against Inter-generational Accounting
 
Even though some principles of accounting are universal, federal budget
accounting has never followed, and should not follow, the exact procedures
adopted by households or business firms. There are several reasons why
this is true.
First, the government’s interest is the public interest. The government
is there to provide for the general welfare, and there is no correlation between
this interest and a position of surplus or deficit, nor of indebtedness, in the
government’s books.
Second, the government is sovereign. This fact gives to government
authority that households and firms do not have. In particular, government
has the power to tax and to issue money. The power to tax means that government does not need to sell products, and the power to issue currency means
that it can make purchases by dispensing IOUs. No private firm can require
that markets buy its products or its debt. Indeed, taxation creates a demand
for public spending in order to make available the currency required to pay
the taxes. No private firm can generate demand for its output in this way.
Neither of these statements is controversial; both are matters of fact

The 1% only need only need you when you help them to help themselves
 
In providing these jobs – which are a privilege, not a right – care must be taken to leave some of you unemployed. This is crucial for many reasons. First, hardship is spiritually cleansing. Second, tribulation sorts the wheat from the chaff, revealing who among you really loves me. Third, full employment would make it difficult to convince you that the unemployed are responsible for the state of the world, just as equality would make it impossible to hold the poor to account. Fourth, full employment leads to temptation. Some of you would unjustly find yourselves with greater bargaining power over wages and fail to resist the pitfall of greed. It would simply cause more wailing and gnashing of teeth in the long run. For those with ears, understand.
 
The Job Guarantee
 
There are valuable human activities which require the motive of money-making and the environment of private wealth-ownership for their full fruition. Moreover, dangerous human proclivities can be canalised into comparatively harmless channels by the existence of opportunities for money-making and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandisement. It is better that a man should tyrannise over his bank balance than over his fellow-citizens; and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative. J.M. Keynes (GT Ch 24)

Originally posted to whoknu on Sun Mar 17, 2013 at 07:14 AM PDT.

Also republished by J Town and Money and Public Purpose.

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Comment Preferences

  •  Tip Jar (21+ / 0-)

    Loyalty to petrified opinion never yet broke a chain or freed a human soul in this world--and never will. Mark Twain

    by whoknu on Sun Mar 17, 2013 at 07:14:09 AM PDT

  •  It is shameful. (5+ / 0-)

    And those responsible (our 'leaders' and those they serve) are despicable. We shouldn't put up with it for another minute.

  •  You hit it out of the park as usual. n/t (5+ / 0-)

    The banks have a stranglehold on the political process. Mike Whitney

    by dfarrah on Sun Mar 17, 2013 at 09:29:47 AM PDT

  •  Guarantee your own jobs. (0+ / 0-)

    If a school district needs physical plant improvements that will actually save money, put up the money.

    Take your IRA, invest in a new bond issue by the district.  There's no reason why "Wall Street" has to be involved in local issues.  Identify the funding source, and get it done.

    New IRA contributions are tax deductible.  I'm pretty sure that even 10% guaranteed return is pretty hard to make.  Tens or hundreds of people ensuring that local funding is available can certainly fill the scope of a single school district contract.

    -7.75 -4.67

    "Freedom's just another word for nothing left to lose."

    There are no Christians in foxholes.

    by Odysseus on Sun Mar 17, 2013 at 01:01:12 PM PDT

  •  Another debt, the kind that cannot be fixed, which (3+ / 0-)
    Recommended by:
    psyched, whoknu, Amber6541

    the Rs are leaving is the same kids they claim to be protecting as to federal financial matters, is a want of preK care, needful food from food stamps, day care so parents, especially single ones, can work rather than stay home and care for them with no sort of support, have worse schools in which to learn to be adults  and so on and so on. It is the same kids Rs claim to want to protect who are getting battered out of this so that they will be less well prepared for adulthood and less well educated and less healthy when the day comes if it ever does, that the financial effect of deficit on them from which the Rs claim to be protecting them,  becomes an issue, if they survive that long.

    Another of the family sins of Rs  has to do with the different ways the current Twenties are dealing with children and marriage as a basic matter, one made worse for not recognizing it and legislating with the reality of the situation in mind.

    The NYT this AM had an interesting article about delays in the marriage age and the difference between that and the birth of first child age, on a class basis. College people OK per NYT views, but those not college grads are in a position where although men marry at 29 and women at 27, half of them have at least one child before that, and the woman the 29 year old marries may well not be marrying the mother of the first child he conceived. So it is not merely a problem of foolish poor women that there are many many single parents of very young children, but rather a substantial generational change in the matter of marriage at all, no small part of which is caused by the fact that in this economy it is not possible for young twenties without college, and certainly teens, even to get jobs with which to support the children they make in relationships they are not going to refuse to have because they are not then economically established.

  •  A super-good diary! (1+ / 0-)
    Recommended by:
    whoknu

    Thanks for the great research and organization this diary demanded, not to mention the real passion behind it!
    .
    .


    For the first time in human history, we possess both the means for destroying all life on Earth or realizing a paradise on the planet--Michio Kaku.

    by psyched on Sun Mar 17, 2013 at 04:30:40 PM PDT

  •  Great Diary! (2+ / 0-)
    Recommended by:
    psyched, whoknu

    "Of the $2.1 trillion the United States spends on health care, $91 billion, or 14% of the total is administration costs."

    I find this confusing. First, the data it's based on doesn't seem to be current. I'm seeing estimates of $2.7 or $2.8 T spent right now or about 18%. Of this number, the majority of it, perhaps 60% is spent by Federal State and Local Governments, leaving about 1.1T paid for by insurance companies and people out of pocket.

    Second, I'm not sure what to make of the 14%. The quote says that 14% of the total is Administrative costs. If so, that means these are up to $392 Billion. But didn't the McKinsey report refer to 14% of the amount spent above that expected? Is that right?

    Third, I'm not sure McKinsey is the best source of health care data, since the company is so neoliberal in its orientation. When I'm looking for the most current data, I usually begin at pnhp.org and then follow the links to the most current available data.

    Other than that, I think your slant on the real debts is something we need a lot more of. A broad perspective like the one  you're giving here; is the proper answer to the people who keep talking about the debts we're leaving to our children and grandchildren.

    •  Yes, you may be right (2+ / 0-)
      Recommended by:
      Amber6541, psyched

      I did a quick search to find some numbers trying to keep my radar attuned to seriously slanted numbers but there is so much data out there it makes it harder to pick and choose.

      Loyalty to petrified opinion never yet broke a chain or freed a human soul in this world--and never will. Mark Twain

      by whoknu on Sun Mar 17, 2013 at 07:48:24 PM PDT

      [ Parent ]

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