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Is the concept of the Federal government making loans to the states Constitutional?

Posted on 08/19/2021 1:58:27 AM PDT by Jonty30

Could a federal loan program, open to the states work?

If the Federal Government were to set aside money, into a fund for the states to borrow from for their needs like infrastructure and development, charging a low interest rate but high enough that the funding could eventually become self-funded. This way, there would be a point where the feds could stop borrowing money to give to the states and, hopefully, it could contribute to an end to deficit financing.

That's the idea.

I just want to know if this idea is Constitutional. I know it's not workable, because of corruption by the Democrat states and they would just continue their terrible spending by borrowing from the federal government until the whole country went bankrupt. Nobody here has to tell me that it's not workable and it's an open bank to the corrupt states.

I just want to know if it's Constitutional, because the Federal government is not taking over any state and it would treat each state equally and all that and each state would have to ask the Federal government for a loan.


TOPICS: Business/Economy; Chit/Chat; History; Society
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1 posted on 08/19/2021 1:58:27 AM PDT by Jonty30
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To: Jonty30

Why not?

The federal gummit loans billions to foreign countries….how many are forgiven or defaulted on?

NGO grants or loans is another questionable practice

Not to mention all the federal gummit loan guarantees

They’re in the business of squandering our county’s future to benefit the pols, imo


2 posted on 08/19/2021 2:09:39 AM PDT by thinden
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To: thinden

Just like soc sec was setup. Look how that worked. Just another account Government can raid,


3 posted on 08/19/2021 3:22:05 AM PDT by Don_Ret_USAF ("No Government can survive Without The Trust Of The People."er)
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To: Jonty30
The federal government doesn't have money to lend, it takes it from those who do. The bond market is what you are describing. Specifically the Muni bonds. Those bonds are issued and purchased by individuals or institutions like unions, insurance companies, etc.... who fund the projects you mentioned. Those bond issuers enjoy a low cost of capital by having a low interest rate and the government makes them sweetened by making them tax free in most cases.

It's not unusual for some municipalities to default on their bond payments.

4 posted on 08/19/2021 3:24:24 AM PDT by blackdog (Sophisticated so public policy is not applicable. )
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To: thinden

Foreign loans are typically secured by the rights to the resources of the nation borrowing the money. Example would be coal, minerals, timber, uranium, etc.....So if Trinidad wants money to build highways, their sugar cane output or off-shore oil reserves are collateral securing the loans.


5 posted on 08/19/2021 3:31:54 AM PDT by blackdog (Sophisticated so public policy is not applicable. )
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To: blackdog

Conceivably, it could start a small amount. Say, $20 billion and then add a bit every year.

However, my question is the Constitutionality of the fund.


6 posted on 08/19/2021 3:40:47 AM PDT by Jonty30 (My superpower is setting people up for failure, without meaning to. )
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To: Don_Ret_USAF

I know it wouldn’t work, but I’m just wondering what would happen if Biden set up such a fund and was challenged by a responsible governor and the Supreme Court accepted the challenge?

Would the Court likely disallow it or would it likely say that it passes the muster?


7 posted on 08/19/2021 3:47:45 AM PDT by Jonty30 (My superpower is setting people up for failure, without meaning to. )
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To: Jonty30
"Conceivably, it could start a small amount. Say, $20 billion and then add a bit every year." Sounds like congress approving deficit spending?

I can see loans being administrated being confused with issued by. When a mortgage loan is issued it's not the bank issuing their money to borrow. Loans are always funded by someone, some group, some source of capital. The banks then sign on as administrators of those loans for a fee.

This is a good thread because it gets to the heart of a boring reality. That being there has to be capital to loan in the first place. The government is not a source of capital.

8 posted on 08/19/2021 4:01:42 AM PDT by blackdog (Sophisticated so public policy is not applicable. )
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To: blackdog

It may not be a source of capital, but it can still create a fund that would eventually be self-funding at a lower rate than what one could get on the bond markets to fund government debt instead.

I’m just wondering if it is Constitutional.


9 posted on 08/19/2021 4:55:28 AM PDT by Jonty30 (My superpower is setting people up for failure, without meaning to. )
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To: Jonty30

Look. Congress built the Federal Central Valley (water) Project in California in the 1930’s when that state was bankrupt under an interest free loan that farmers, not taxpayers, are still paying off. It can be done. But that would defeat the purpose of destroying the value of the US dollar, which is the current objective of the cabal that runs the government. We previously faced the same cabal during the FDR presidency when the Communists ran the government (Alger Hiss, Rosenbergs, etc.). So where are the Joseph McCarthy’s, Dick Nixon’s and Whitaker Chambers?


10 posted on 08/19/2021 5:16:08 AM PDT by WLusvardi (Drudge Fudges)
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To: Jonty30

There is nothing in the 18 enumerated powere of Congress detailed in the Constitution allowing the government to make loans to anyone.


11 posted on 08/19/2021 5:58:19 AM PDT by DownInFlames (G)
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To: Jonty30
“I'm just wondering if it is Constitutional.”

What an old-timey question. I haven't heard that since 1865.

The purpose of this scheme is to allow states to, in effect, print counterfeit money as well as the federal government in order to . . . build a utopia.

Once states run up a debt they can't possibly repay, we will be told to feel bad for their hopeless burden. Then federal “loan forgiveness.”

Then start all over again.

12 posted on 08/19/2021 6:06:17 AM PDT by jeffersondem
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To: Don_Ret_USAF

Just like soc sec was setup. Look how that worked. Just another account Government can raid,

xxxxxxxxxxxxxxxxxxxxx

yup.

Cali, NY & Ill will suck that up pretty quickly.

smells like they’re trying to set up a source to borrow funds for under funded state pension bailouts??


13 posted on 08/19/2021 7:53:40 AM PDT by thinden
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To: Jonty30
. . it would treat each state equally . . .

You are joking, right?

14 posted on 08/19/2021 9:26:54 AM PDT by aimhigh (THIS is His commandment . . . . 1 John 3:23)
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To: Jonty30

And a big hearty HELL NO. There are always strings attached. This is a big problem among many states. Do not accept fed dollars for anything unless ya wanna dance to their tune.


15 posted on 08/19/2021 10:12:27 AM PDT by LastDayz (A blunt and brazen Texan. I will not be assimilated.)
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