(Stillness in the Storm Editor) On the issue of bank loans: all are illegitimate and fraudulent if based on promissory note conversion—which the vast, vast majority are.
The reaction people tend to have when it comes to student loans is that “if you were willing to take out the loan, you should be forced to pay it back.” But if the loan is based on fraud—which 99.99% of loans are—then this logic is faulty.
Fraud has no statute of limitations and voids contracts and agreements when it is discovered. Anytime or anywhere fraud is present, no true obligation or duty to perform exists because a meeting of the minds never occurred. Without a meeting of the minds—so as to facilitate transparency, full disclosure, and honorable consent—no bonafide contract exists.
Therefore, paying back debts that were never valid, lawful or right is worse than refusing to pay them at all. By paying back fraudulent loans we empower an unlawful tyrannical system that enslaves individuals in ever increasing oceans of debt.
Debt contesting methods are available to the consumer for discharging illegitimate debt—which makes up almost all debt today. But student loans are almost impossible to contest due to a change in bankruptcy laws which took place several years ago.
The fact that individuals cannot contest debt means the system is unlawful by design. And the only way to restore the balance—in my view—is to boycott student loans and their repayments. In other words, the system continues to oppress student loan borrowers because the majority of people make efforts to pay back these crooked debts.
If everyone banded together and said “we refuse to pay back any loan that is based on fraud” the system would be forced to change overnight. The system requires our participation to stay alive and what’s worse is those who choose to pay back dishonest debt make it impossible for others to contest them.
In this sense, the issue is dualistic or binary; either you are taking steps to stop fraud and change the system (by refusing to pay fraudulent loans) or you are enabling the system and oppressing others by paying them back.
By our actions, we either embody change or become agents of oppression. Until, as a people, we are ready to unite for change (and boycott the system), the spreading of awareness and information is arguably the best preparation.
The following article further exemplifies that the government is literally supported on the backs of the downtrodden and disenfranchised, as the government lists student loan debt as its number one asset.
by Jill Mislinski
Note: We’ve updated the quiz based on last week’s Q1 2016 Financial Accounts of the United States (previously referred to as the Flow of Funds Accounts). Hint: The correct answer is the same as it was for the last quiz.
Pop Quiz! Without recourse to your text, your notes or a Google search, what line item is the largest asset in Uncle Sam’s financial accounts?
- A) U.S. Official Reserve Assets
- B) Total Mortgages
- C)Taxes Receivable
- D) Student Loans
The correct answer, as of the latest quarterly data, is …
… Student Loans.
The rapid growth in student debt has been an ongoing topic in the financial press. A stunning chart that continues to haunt us illustrates the rapid growth in federal loans to students since the onset of the great recession. The chart is based on the Federal Reserve’s Financial Accounts data (available here) for government’s assets and liabilities. We’ve used a log-scale vertical axis.
For a more dramatic look at the same data, here it is with a standard linear axis.
As we point out on the chart, the two callouts are for Q4 2007, the quarter in which the Great Recession began (December 2007), and the most recent quarter on record, Q1 2016. The loan balance has risen and astonishing 853 percent over that time frame, most of which dates from after the recession.
This chart only includes federal loans to students. Private loans increase the debt burden. The Federal Reserve Bank of New York regularly tracks household debt and credit. In their most recent update, they calculate student load debt to be nearing $1.2 trillion.
But back to our quiz. Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? It’s 45.7 percent of the total Federal assets. This is about 8.4 times larger than the 5.4 percent for the Total Mortgages outstanding and 5.3 times the size of Taxes Receivable at 8.6 percent.
Interestingly enough, the 45.7 percent referenced above is off the peak in Q1 of 2015. Here is a look at how this metric has changed since 1995.
Of course, assets are, sadly, the trivial side of Uncle Sam’s Financial Accounts balance sheet — about 2.16 Trillion. The liability side totaled 17.92 Trillion at the end of Q1 2016.
The student loan bubble, the biggest slice in Uncle Sam’s asset pie, will haunt us for many years to come.
Closing note: For a fascinating perspective on student debt repayment, see this article by a team of economists at the Federal Reserve Bank of New York.
Related Where Does Money Come From? – The Fraud of Bank Credit | Do you own a home? A car? Do you have a credit card or a student loan?
Stillness in the Storm Editor’s note: Did you find a spelling error or grammar mistake? Do you think this article needs a correction or update? Or do you just have some feedback? Send us an email at [email protected]. Thank you for reading.
Minor grammar corrections were made to the commentary of this article.