Student Loan Relief/College tuition

[davidpdx]

I've been reading Elizabeth Warren's new book after being encouraged by a few DUers. I then came across an article in Businessweek called "Could the Central bank Print Money to Help the Poor?"

The two together made me think a bit. Warren has been a champion of trying to help those who are in debt and face bankruptcy having more protections and has spoken out about the risk of student loan debt.

From the article:

Central bankers have long viewed sovereign money creation as a sacred policy tool, to be used sparingly lest it stoke inflation. That sanctity, however, had been challenged by the policy response of choice to the financial crisis: quantitative easing, which has increased the stock of money in the economies of the U.S., the U.K., and Japan by $3.7 trillion, more than three times the total physical stock of dollar notes in circulation worldwide. This raises the question of whether the same strategy used to ward off a global depression might now be deployed to sustain progress toward wiping out extreme poverty around the world. Put another way: Can we simply print money for aid?

Before the financial crisis, the idea of central banks’ creating money to buy assets would have been unthinkable. Yet over the last five years, investors’ reactions have been remarkably sanguine. The price of gold, an asset some argue protects against inflation, did jump, but investors bought other assets that offered little protection from inflation. They bought fixed-income securities and bonds. They bought equities, too. For all the scare stories, the actual actions of investors spoke of rapid acceptance and confidence based on two pillars. The first was that, after years of keeping inflation under control, central banks were trusted to take the money-printing away if inflation became a threat. Second, inflation never did become a threat. Consumer price inflation in the U.S. and elsewhere remained below or close to long-run averages.

snip

The mechanics in terms of what central banks would do are not so different from what they’ve done through their asset-purchasing programs. Some central banks can create money with offsetting account items. Another possibility, as suggested by Andrew Jackson and Ben Dyson in their book Modernising Money, would be for the government to issue perpetual bonds that pay no interest, and for the central bank to then purchase these bonds in the required amount. Because the bonds never mature, they shouldn’t add to national debt.

snip

The experience of the financial crisis has shown that the risks from money creation are more manageable than previously believed. The potential benefits from creating relatively modest amounts of money for aid, meanwhile, could be massive. Such opportunities of controlled risk and high reward rarely last long; the window of opportunity for this idea could be closing. Today money creation by central banks is an accepted policy tool. Now might also be the only time in which developed nations can actually afford to provide the level of aid to the world’s poor they’ve always aspired to. Can we print money for overseas development aid? The question we should be asking ourselves is, “Why not?”

http://www.businessweek.com/articles/2014-05-08/could-central-banks-print-money-to-help-developing-nations

Note: this maybe behind a paywall, so I tried to post as much as possible

The author talks about doing this for developing nations, but couldn't this also be applied to the problem of either student loan relief or creating a program for college tuition?

[grasswire]

1. surely sounds interesting

Unusual times (wealth hoarding by 1%) demand new solutions to the inequality.

[scarletwoman]

2. Interesting idea - here's a kick. (nt)

[davidpdx]

4. Thanks

And a back

[riderinthestorm]

3. K&R nt