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Half of the US government's financial assets are student loans

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Re: Half of the US government's financial assets are student loans

#21

Post by fixermark »

tboyd47 wrote: post #7
fixermark wrote: post #5

Earlier quoted context omitted.

They're protected from defaulting by law, because they can't be divested by bankruptcy. ... which merely means you need to calculate where the knee in the curve of issuing them was, extrapolate to life expectancy, and know when to cash out. Convenient!

> you need to calculate where the knee in the curve of issuing them was, extrapolate to life expectancy, and know when to cash out. Sorry, what does that mean?

Calculate where, approximately, we get to the point where the average issuee will not be paying the value of the loan back in their lifetime. That's the point where the average loan is not worth is face value and a housing-style mass write-down is imminent.

Re: Half of the US government's financial assets are student loans

#24

Post by branchless »

bradleyjg wrote: post #16
trsohmers wrote: post #6

I have been skeptical of the real "value" of cryptocurrencies (outside the technical ability to allow for value transfer, which does not necessitate the coins having value inthemselves), but assuming this is true I have a lot less faith in dollar bills and the fact that they are backed by the "full faith and credit" of the US government. If the student debt bubble really does pop, the government (and thus all of us t…

In what sense is it a bubble? What assets are being bid up by enthusiastic investors and could suddenly collapse in value?

This usd has entered the economy via universities. The inflation is already out there. The issue comes when the loss is chrystalized. As in 2008 the state is filling in a hole not building a hill.

Re: Half of the US government's financial assets are student loans

#25

Post by [deleted] »

bradleyjg wrote: post #16
trsohmers wrote: post #6

I have been skeptical of the real "value" of cryptocurrencies (outside the technical ability to allow for value transfer, which does not necessitate the coins having value inthemselves), but assuming this is true I have a lot less faith in dollar bills and the fact that they are backed by the "full faith and credit" of the US government. If the student debt bubble really does pop, the government (and thus all of us t…

In what sense is it a bubble? What assets are being bid up by enthusiastic investors and could suddenly collapse in value?

[deleted]

Re: Half of the US government's financial assets are student loans

#26

Post by chatmasta »

mylons wrote: post #14

how does this bubble pop? isn't this debt something you can't default on?

Just because someone can’t default on their loan doesn’t mean they can pay it.

It’s also not hard for me to imagine, in the near future, a social media movement like “don’t pay back your loans.”

Re: Half of the US government's financial assets are student loans

#27

Post by r00fus »

matte_black wrote: post #13
jjoonathan wrote: post #3

Oof. What happens when a huge chunk of these default because educating everyone doesn't magically create jobs for everyone?

The banks that loaned out all that money will need massive bailouts or else shut down. Let’s be clear, students will NEVER be allowed to default these loans, nor should they. They must either pay it or take their debt to the grave and pass it down to their heirs.

> Let’s be clear, students will NEVER be allowed to default these loans, nor should they.

Why not?

Re: Half of the US government's financial assets are student loans

#28

Post by trsohmers »

notyourwork wrote: post #18
trsohmers wrote: post #6

I have been skeptical of the real "value" of cryptocurrencies (outside the technical ability to allow for value transfer, which does not necessitate the coins having value inthemselves), but assuming this is true I have a lot less faith in dollar bills and the fact that they are backed by the "full faith and credit" of the US government. If the student debt bubble really does pop, the government (and thus all of us t…

Aren't they always the ones holding the bag? Auto industry bail out, bank bail out, insurance agency bail out from Katrina. This responsibility is what stabilizes the world's currencies I suppose.

In all of those cases there was legislation passed after the crises... in this case, the US government has already guaranteed all of the loans and has no way of getting out of the without the US government defaulting. That only leaves room for printing money, which hurts all holders of US dollars.

Re: Half of the US government's financial assets are student loans

#29

Post by mylons »

chatmasta wrote: post #26
mylons wrote: post #14

how does this bubble pop? isn't this debt something you can't default on?

Just because someone can’t default on their loan doesn’t mean they can pay it. It’s also not hard for me to imagine, in the near future, a social media movement like “don’t pay back your loans.”

ya, I had this thought as well, but then the IRS garnishes your wages until you die. So how does it pop? Seems like a lot of people would have to go to jail or something along those lines for it to actually happen?

Re: Half of the US government's financial assets are student loans

#30

Post by snuxoll »

tboyd47 wrote: post #7
fixermark wrote: post #5

Earlier quoted context omitted.

They're protected from defaulting by law, because they can't be divested by bankruptcy. ... which merely means you need to calculate where the knee in the curve of issuing them was, extrapolate to life expectancy, and know when to cash out. Convenient!

> you need to calculate where the knee in the curve of issuing them was, extrapolate to life expectancy, and know when to cash out. Sorry, what does that mean?

Debt doesn't pass on to kin, any that can be is paid off by your estate and what is left is written off.

You could theoretically calculate when the bubble is going to pop but figuring out when the majority of loans was issued, life expectancy and some financial details on student loan recipients. With details along these lines you can theoretically calculate an approximate picture of how much student loan debt will be written off and when.

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