We have heard a lot about bubbles in the last couple
of years – the housing bubble, the stimulus bubble, the
auto/clunker bubble, the student loan bubble, the tuition
bubble, etc. The Federal government was responsible for
all of these. Congress blames greedy capitalists, but, if
the gold supply at Fort Knox is left unsecured and the
fact is publicized, the bad decision is primarily at fault,
and the greedy folks who take the gold are just opportunists
doing what comes naturally.
The Community Reinvestment Act was passed in 1977. Every
President since then has used it to increase the percent of
home ownership and then made it a campaign statement that
they were helping Americans to achieve the American dream.
The problem was that any loan which was denied was denied
due to “racism.” Banks were threatened with Federal lawsuits
under the Civil Rights Act. The banks complied and got the
bad loans off their balance sheets as quickly as possible –
condolidated debt obligations sold to taxpayers (Fannie &
Freddie). The “First-time home buyer” program hoped to
reduce the glut of foreclosed homes, but most buyers wanted
new homes in better neighborhoods.
The Congress passed the Troubled Assets Relief Program and
the stimulus plan. This rewarded banks which “lost” money
and also political supporters. Local “shovel-ready projects”
were funded all at once to stimulate the economy. Work
scheduled for years was completed in months. Hundreds of jobs
were created at the Savannah River Site for expedited cleanup.
That bubble has burst.
The “cash for clunkers” program got inefficient vehicles
off the roads while stimulating the automobile industry.
Since American taxpayers are part-owners with unions of
automobile manufacturers like General Motors, this sounded
like a good idea.
Alternative energy companies – wind, solar, wave,
geothermal – were heavily subsidized by taxpayers while
carbon-based energy was threatened with carbon taxes,
moritoriums on drilling, and stagnation in the permitting
process. Our national security is at risk because our
wealth has been and is being transferred to our enemies.
The EPA has deemed humans as polluters since the breath
that we exhale is carbon dioxide.
Subsidies to financial institutions selling student
loans were reduced, and the Federal government took over
the student loan business. This is like the “single payer”
system favored by Democrats under Obamacare. Drive out
private insurers and nationalize Medicare-for-everyone.
Lotteries have created bubbles by “free” tuition
increasing demand while supply grew more slowly. Colleges
increased tuition by 200% or more of the inflation tax,
and competition from other lotteries reduced the amounts
available for scholarships. Only 56% of graduates found
jobs versus 90% a decade before. The default rate on
student loans – particularly with for-profit online
universities and loans needed to pay the increased tuition –
will put taxpayers deeper in debt.
Welcome to the centrally-planned and centrally-controlled
economy! A Constitution and a free-market economy made
America great. Central planning is destroying it!
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