In recent decades the cost of higher education and housing, and the resulting burden of household debt, has far surpassed the ability of the population to pay. This situation is not only putting working families on the street, it is putting the American Dream out of reach for young Americans.
Student loan debt is up over 500% since 1999. Average tuition rose over 8% in 2010 alone. Nearly 23% of US homes are underwater, and home sales remain stagnant despite the ever-rosy outlook of Washington forecasters. In this situation, the government must stand between the people and the money-changers; offering protections, write-downs and refinancing on the model of the New Deal Frazier-Lemke Act.
If you pay a monthly mortgage payment, half or more of your hard-earned money goes directly into the pockets of Wall Street bankers in the form of interest payments. This is a burden not just on your family, but on the national economy. A national bank, or the Fed acting as one, can largely eliminate this burden at no cost to taxpayers—allowing young people to afford education, graduates to afford homes, and homeowners to afford the products of the real economy.
An immediate freeze (moratorium) on foreclosures of primary residences and farms, and of student loan payments, effective for 5 years or the duration of the economic crisis.
During this period, balances of loan principal may be reduced, and a payment plan approved, by an elected judge at any level.
Low or zero-interest federal loans for home mortgages and secondary education must be made widely available. This will immediately reduce the burden of usury from American families without crashing the housing market or University system.