Warren Bill for Low APR Student Loans, Federal Reserve

Brought up by Webster Tarpley, the Warren bill would force the Federal Reserve to make available funds at discount rate (0.75 APR) for the purpose of funding students. Search on google "warren bill student loan". There are various aspects to this that need to be explored for proper understanding.

First, to get some things out of the way:
-I am not a student; I received my degree a long time ago and if I wanted to get another I wouldn't have to take out an loans, so I my interest in this bill isn't my own financial benefit.
-If you don't know the operations of the Federal Reserve, go read Modern Money Mechanics.

Now, the meat. The Federal Reserve, being the delegated currency generator, has caused quite a lot of trouble since its inception, and has enriched quite a lot of bankers. Left to its own devices, it will continue to enrich banks and generally support the non-productive finance sector. However, the Federal Reserve is controllable by congress, given they choose to control it. And, it is controllable for the purpose of financing useful aspects of the society.

When the federal reserve makes available funding, loans taken against this funding do not count towards the national debt. Instead, when congress chooses to fund something, the conventional way is by issuing bonds which do count towards the national debt (issuing them to the fed or others). However, simply having the fed print money does not increase the debt. (What it does do, however, depending on the quantity, is inflate the currency.)

So, why is having the Fed provide funding for students a good idea? The primary reason is that it begins the process of bringing the Fed back into the active control of congress- congress, which not a great body of people, is better than a cabal of bankers, ie fed board.

About the effect of this low student loan funding would have on the economy, the can be various lines of thought. Immediately, it would be thought to allow for an increase in the overall number of college students; it would allow for a substantial decrease in college graduate indebtedness (through refinancing higher APR loans).
However, by increasing the amount of funds available for college tuition, you are necessarily increasing the demand, and will likely encounter, over some time, a increase in the cost of tuition. At present, with a low amount of funding available for college tuition, there is a pressure on colleges towards reform and efficiency which would translate to lower tuition costs.
Back to the potential benefit, it is observed that college related debt prevents graduates from either continuing into graduate degrees or from starting small business. Small business represent a major part of the US economy, and by decreasing the ability for their generation, it can be seen the the economy may shrink. Separately, advanced degrees represent our edge over more primitive cheap labor cultures. A failure to produce advance degrees in numbers leave us on the playing field with cheap labor cultures, and the eventual effect of this is a settling of pays (equalization (you get paid less)).


Well, that's all. I won't bother to proof read for various reasons.

reply to post by capob

Excellent call about the Warren bill being about getting the Fed back under congressional control. This is Elizabeth Warren's first bill and it is really strategic. Money is not bad in itself, but it is a major expression of our sickness. Beginning to get that under control is a great first step.