Half of the US government's financial assets are student loans • Hacker News Board

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

#61

Post by eemax » Fri, Jan 12, 2018, 9:40 PM UTC

jdoliner wrote: post #32

Anytime the US wants the world to be a certain way but just can't quite get reality to conform debt is our answer. Everyone should be a homeowner but for some reason isn't? Simple, just give them cheap loans for houses. Everyone should be educated but it doesn't seem to be happening? Debt time. Why do we do this? Because it allows us to pretend that complicated long-term structural problems are simple short-term capi…

Well, it does actually solve the problem in the sense that it actually causes houses to be built and students to go to college. Probably this indicates the real problem is more about bad monetary policy and bad tax policy, not a fundamental shortage of resources.

Of course, it would be better to improve monetary policy rather than just making a bunch of dumb, risky loans leading to a dramatic boom and bust.

But that would require policymakers understanding basic macroeconomics, so don't hold your breath...

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

#62

Post by philipov » Fri, Jan 12, 2018, 9:40 PM UTC

thinkloop wrote: post #44

One thing to keep in mind is that "assets" are far from "spending". Governments generally do not accumulate assets, everything they collect is reserved for spending (besides some operational accounts and things like foreign reserves). The student loan program is an exception and so figures heavily in this stat.

Government owns a lot of land, and land is most certainly an asset. Does it figure into these stats?

It would be rather deceptive to craft your definition of asset to exclude the most important one.

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

#63

Post by fixermark » Fri, Jan 12, 2018, 9:40 PM UTC

matte_black wrote: post #34

r00fus wrote: post #27

Earlier quoted context omitted.

> Let’s be clear, students will NEVER be allowed to default these loans, nor should they. Why not?

Because that was the deal.

It is, of course, possible for the federal government to craft a deal that's actually bad for the American people.

When discovered to be so, it's also possible to alter the deal.

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

#64

Post by FabHK » Fri, Jan 12, 2018, 9:41 PM UTC

hidenotslide wrote: post #17

mxpxrocks10 wrote: post #2

is this for real? does anyone have any info that proves this right/wrong?

Almost assuredly false. The Federal Reserve balance sheet is US treasuries and mortgages, and Fannie Mae/Freddie Mac are mortgages as well. Probably not a complete data set.

US treasuries and mortgages are liabilities, though, right? This is the asset side of the balance sheet.

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

#65

Post by adreamingsoul » Fri, Jan 12, 2018, 9:41 PM UTC

gesman wrote: post #11

Recent reports from the Treasury Department show that the US government owns nearly $1.5 trillion in student loans. That’s pretty sad when you think about it: the US government’s #1 financial asset is debt owed by tens of millions of its young people for university education that didn’t even necessarily qualify them for a real career. Millennials are the most educated generation in history. Yet there are record numbe…

Millennial here, thanks for the daily reminder of the future I have to deal with.

Failing government systems, check. Unaffordable educational system, check. Limited housing and land, check. Degrading climate, check.

Some days I believe I just may find a way out of it. But, for every day I participate in the rat race is just another lost when I should be working on building a better future for my family.

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

#66

Post by linkmotif » Fri, Jan 12, 2018, 9:41 PM UTC

jdoliner wrote: post #32

Anytime the US wants the world to be a certain way but just can't quite get reality to conform debt is our answer. Everyone should be a homeowner but for some reason isn't? Simple, just give them cheap loans for houses. Everyone should be educated but it doesn't seem to be happening? Debt time. Why do we do this? Because it allows us to pretend that complicated long-term structural problems are simple short-term capi…

You forgot to mention the cops. Cops and debt together are the United States solutions to all problems.

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

#67

Post by rhombocombus » Fri, Jan 12, 2018, 9:41 PM UTC

irrational wrote: post #50

matte_black wrote: post #13

Earlier quoted context omitted.

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.

Wait, what? Since when is debt passed on to heirs? If I die with credit card debt, that debt dies with me. My kids don't have to pay my debt. Any assets I own will be sold to help pay off my debts, but if the sale of my assets isn't equal to or greater than my debts, the debt holders have to write off that debt.

It isn't, student debt dies with you too, or at least federal debt does.

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

#68

Post by fixermark » Fri, Jan 12, 2018, 9:43 PM UTC

evanpw wrote: post #51

Notwithstanding entirely valid concerns about student loans, this is pure clickbait. The feds also own 30% of the nation's land (640M acres), and have the exclusive right to collect $3T+ per year in taxes (not to mention they can literally print dollars).

What is the impact to the American economy when the Federal government has to write down the value of over half its assets as the average lendee dies without paying?

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

#69

Post by hidenotslide » Fri, Jan 12, 2018, 9:43 PM UTC

FabHK wrote: post #64

hidenotslide wrote: post #17

Earlier quoted context omitted.

Almost assuredly false. The Federal Reserve balance sheet is US treasuries and mortgages, and Fannie Mae/Freddie Mac are mortgages as well. Probably not a complete data set.

US treasuries and mortgages are liabilities, though, right? This is the asset side of the balance sheet.

Treasuries are liabilities when the government issues them and assets when the Fed holds them. One person's liability is another person's asset.

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

#70

Post by JumpCrisscross » Fri, Jan 12, 2018, 9:43 PM UTC

trsohmers wrote: post #28

notyourwork wrote: post #18

Earlier quoted context omitted.

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.

> 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

If college students are defaulting on their student loans en masse that means we’re in a recession. Recessions are deflationary. Monetising the debt would just take the place of central bank bond buying, except in a more egalitarian way.