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OPINION

Incompetent Banks & Education Systems

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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Is this the last gasp of the central banks?

The global economy issues are becoming worse, and don’t look like they are going to get any better. However, this year, we have seen several 'surprise' interest rate cuts. While Peru, Egypt, India, and Turkey are nowhere near zero percent or quantitative easing, the experts were caught off guard.

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Canada was added to the list yesterday as it managed to catch the experts off guard with a "surprise" rate cut.

Central Bank
2015 cuts
New Rate
Peru3.25
Egypt9.25
India7.75
Turkey7.75
Canada0.75

I get where market skeptics point to money printing and stocks. In fact, central banks are trying to pump up their respective economies with cheap money, and not with high share-prices. The masses are not moved by high stock prices. Yet all this cash is supposed to flow through broken banks, and it is not getting to Main Street.

I do not have to tell anyone who does not have a home in the Hamptons, or who works out of a palatial home in Connecticut, the only place regular people are seeing the Federal Reserve cash are subprime auto and overpriced student loans.

The guys with the printing presses seem lost. On the eve of the European Central Bank (ECB), they were pulling out all the stops. Check out a headline in the Financial Times:

“Central Bank Incompetence and Monetary Dysfunction Make Gold Look Attractive”

Now, gold is breaking a key resistance number, and more than survivalists are giving it a second look as a safe haven currency.

The plot thickens and the desperation needle moves closer to the red area. The main problem for me is that nations are trying to use monetary policy to do what fiscal policy should.

Europe went down the "fair" path with a bunch of goodies that deterred work, investing, and saving. After governments proved Margaret Thatcher to be prophetic, (running out of other people’s money), they are now reaching to phantom money printed by the ECB. Japan allowed failed businesses to hang around, and China is dealing with potential fallout for hiccups that are natural parts of economic cycles.

Then, there is America, where President Obama offered a slate of goodies that do not require an ounce of extra sweat from recipients- maybe a C average for free college.

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There are limits to what all this money printing can do, and one-day, even negative consequences, but in the meantime, a lack of political will and smart fiscal policy are the real enemy to growth, and the real enemy to Main Street.

Education Crisis

A shocker of news has not gotten the kind of attention it should have received. For the first time in 50 years, a majority of public school students, Pre-K to 12th grade are eligible for federal programs, such as free and reduced food.

Most are in the south and west. However, for me, the news should be the ultimate indictment against policies so focused on destruction of wealth; the ladder of success has been sawed in half.

Of course, the spin is the exact opposite, and will be the clarion call for an unfair nation that spends too little on young poor people- especially children. While some poor schools get less money than the national average, the average amount spent in America rivals that of other developed nations, while teacher pay dwarfs almost all other nations.

Education in Western WorldUnited StatesOECD Nations
Spending per Student$11,000$9,313
Spending % GDP7.3%6.3%
Teacher Pay (first year0$38,000$31,000

It goes without saying that without an educated workforce, America cannot remain on top. Educating our children has to be a top priority. Yesterday, on CNBC, Jamie Dimon, actually took it a step further saying that the high number of inner city and minority students who do not graduate is America's biggest sin.

High School Dropout Rate19902012
White9%4%
Black13%8%
Hispanic32%13%

Our nation's dropout rate has actually come down a lot in the past dozen years. Moreover, I agree, it is a shame and heartbreaking, but we cannot blame the situation on the entire country. The "Sin" has to be centered in the home, although all Americans should lend a hand if possible fixing this problem.

I get where it is nice to have computers and white boards in your school, but it is a cop-out for not excelling.

Right now, state and federal governments spend $500 billion on educating poor students, and the Obama administration is looking for a few more billion. Why not tighten up the ship- the money is already there.

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Moreover, improper payments to federal programs approach $100 billion, with the second highest percentage of misallocated money in the school lunch program.

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