Wednesday, May 20, 2015

"Congratulations Chumps"; A Graduation Speech for the Class of 2015 No One Will Hear

"The Wall Street Journal reports that you are the most indebted generation in history.

The average graduate with student debt has a little more than $35,000 of it. The whole bill for student debt this year is expected to reach $68 billion – a tenfold increase over the last 20 years.

...student debt is like the foul smell of gangrene: It testifies to a deeper, inner corruption.

...Our government is a disgrace to honest democracy, if there were such a thing; it is a scam and a deceit.

Rich, powerful special interests wager billions of dollars on hollow puppet candidates, knowing their investment will pay off hugely if they are successful.

Our money system is an elaborate fraud, too. It steals from laborers, merchants and artisans and rewards speculators, insiders and layabouts. The entire system is sick and dysfunctional’ve just spent the last four years of your life – and paid a fortune – so you could avoid learning about it.

...most of you have wasted your money with degrees in subjects that won’t help you understand the real world we live in or earn an extra dime in it.

...You are being tested right now. You are now confronted with a problem you probably have never thought about. But it’s one that could ruin… or at least greatly impair… your entire lives.

You are victims of a system set up before you were born. The benefits of that system, such as they are, go to your parents and grandparents.

But you have to pay for it.

You’ll find it hard to keep up with the payments. As a result, it is unlikely you will be able to enjoy the material wealth and freedom of action that we, your parents, took for granted.

...Washington has racked up more than $210 trillion of debt that you will have to pay… and pay… and pay for all your lives.

That is the money that will go to fund programs that were voted on before you were born.

It will also pay for retirees and sick people… people who your government sent to Vietnam, Iraq and Afghanistan to get their legs blown off… people who got sweet union contracts from their city and state governments… and people who have learned to game the system.

None of these bills are for things that you had any say in. Many of them were a waste of money from the get-go. Some were a curse. But – good or bad – you’re supposed to pay for them.

...You are heirs to claptrap, nonsense, bogus theories, and trillions of dollars in debt. The systems, programs, and institutions your parents set up are mostly worthless scams. Worse, they produce outcomes contrary to their stated goals.

Welfare programs do not help people escape poverty; they keep them mired in it. Health care programs do not make them healthy; they make them dependent on the drug industry.

...Under President Johnson, the government set up the Federal Direct Student Loan Program to provide “low-interest loans” (back then, “low” meant 8%) to students.

Private lenders make the loans, but they receive the full backing of the feds.

The idea was to help you afford higher education… and earn larger salaries as a result. And with your increased earnings you were supposed to be able to pay off the loan. But at over 11% of outstanding debt, the Student Loan Program now has the highest delinquency rate of all forms of household debt (mortgage loans, auto loans, credit cards).

And it will probably go much higher…

...your parents’ rigging of the economy will make it difficult to make any financial progress anyway. The median household income – after you account for inflation – has been falling since the late 1990s. And good jobs are hard to get. There are fewer “breadwinner” jobs today in America than there were in 1999.

...The rate of new start-ups is collapsing. (Remember from last week that the U.S. ranks 46th on the World Bank’s list of the easiest countries in which to start a business.) You can thank your parents for that, too. The system is designed to protect them, their Social Security benefits, their health care, their stock market portfolios, and their businesses.

Protect them against what? Against you!

You are the future. You are the competition. You are the ones who should want to shake things up and tear down the walls of bureaucracy, taxes, paperwork, and regulation that make it so difficult for you to start new businesses, get good jobs and build real wealth.

You should be talking revolution – overthrowing your parents’ multitrillion-dollar debts and pulling out of their wars on poverty, illiteracy, Iraqis, Afghans… you name it...

You need to get rid of your parents’ zombies – the millions of unproductive people who get money from the government – so you can afford your own families...

You need to stop your parents’ suicidal credit-based money system, too. You don’t know about this, do you? Your professors of government, politics, economics, and finance didn’t mention it, did they?

Well, the system is corrupt and self-destructive. It works only by increasing the amount of debt in the society – including student debt. And it works only until the debt bubble gets so big it blows up.

...When the government borrows money it gives the money to a zombie to spend, or it spends it directly. Usually, the money goes to an older person – your parents or grandparents – in some form of social welfare subsidy, pension, job, contract, or support program. When they spend the money, it goes into the coffers of corporations. This increases profits… and share prices. Who owns those corporations? Do you? You don’t? Then who does?

Your parents and grandparents benefit again. They are the owners of the nation’s financial assets. By increasing credit, they shift real wealth from the future to the present … and from you to them. This is the money you haven’t earned yet.

...Your parents and grandparents are retiring… and collecting their Social Security and health care benefits. They think they will be able to sell their stocks, too … and their houses … and have even more money to spend.

Now, it’s up to you …

You need to get a job so you can pay for their health care benefits. You need to pay your taxes so they can keep their wars going. You need to buy a house, too, so they can move to Florida and retire. You need to vote for their candidates … work for their companies … and pay their bills.

...You are arriving in the economy at the tail end of a 60-year credit expansion. Debt has boomed. The economy has boomed. We, your parents, enjoyed an economic expansion that began when we were born and continued, with only short interruptions, until we retired.

We got out of school with little or no student debt. We could start businesses with fewer impediments. We could borrow money to fund our businesses and our lives. We could hire, fire, switch jobs… buy and sell houses… move from place to place.

We were freer – and richer – than you will be …

… unless you can wipe the slate clean of our debts … our foolish wars and dumbbell programs … and our attempts to hold back the future and prevent you from living rich, full, free lives of your own.

If you don’t rise to this challenge, you will inherit our bills, our regulations, our restrictions, our obligations, our delusions, our prejudices, and our vanities. You will also inherit a financial crisis – worse than the crisis of 2008 – and a long and grinding economic slump.

The debt expansion of the last 60 years will turn into a dreary debt contraction, possibly dragging the economy into another Great Depression. Either you find a way to shuck off, default on, or inflate away your parents’ debts… or you’ll stagger under the weight of them for the rest of your lives.

Either you break free from the jackass things your parents have done to you … or you deserve what you get."