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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

#151

Post by brianjoseff »

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…

> Why do we do this? Also an issue of framing. Wrong metrics.

With your framing above, it was "everyone should be a homeowner" and "everyone should be educated"... well we did that. Reality conformed. Just at tremendous cost and risk.

The issues are of course way more complex than "# of ppl who own a home" and "# of ppl with a degree"

So the question, then, is how do we use instruments of governance to move complex systems in the direction we think we want.

This is complicated by, among other things: 1.) the fact that politicians are really just optimizing for "signaling" that they are fixing things rather than tangible results. 2.) long time horizons on these issues clashing with shorter time-horizons of political attention spans and our capacity to even reason about long-term things. etc...

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

#152

Post by the_gastropod »

icedchai wrote: post #133
the_gastropod wrote: post #121

Earlier quoted context omitted.

This is really dangerous advice, especially for the poor. Crypto "investments" only multiply by convincing the next person down the line to buy your at a higher price than you did. Add to this that there are no consumer protections around it, and it's an absolute honeypot for scammers. 99% of the key to wealth is to live beneath your means. It's unglamorous advice, but it's absolutely effective.

I'm pretty sure the parent was being sarcastic. "The Millionaire Next Door" should be required reading in high school. It has all you need to know about living below your means, building wealth slowly and consistently.

Ahh! I've been Poe's Law'd I guess!

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

#153

Post by gumby »

Trivially solved by magically declaring it off the books as was done with mortgages.

This isn’t actually a meaningful number, The far more important number is the converse: what percentage of total student debt (and total residential mortgage debt) is held by the US government? Almost all of it.

Those “markets” only exist because the government is the industry, and everybody would save money if the govt cut out the intermediaries (banks) who are collecting huge fees for nothing.

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

#154

Post by eemax »

jdoliner wrote: post #88
eemax wrote: post #61

Earlier quoted context omitted.

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…

Is that really solving the problem though, or does it just give us houses no one wants to own and college graduates no one wants to employ? That's what it looks like to me at least. I don't think it's bad monetary or tax policy per-say, although those are bad, but just bad policy in general. But the badness of the policy comes from a fundamental over estimation of what the government is capable of doing for a society…

Well, to some degree, people probably do want to live in big, new houses. There's also probably some "real" underlying demand for an education, outside of people needing it (or believing that they need it) to get a good job.

But the point is, regardless of how much people "actually" want them, it is in fact technologically and ecologically possible to provide most people in the U.S. with these goods. (The evidence is that a lot of people do in fact have these things, even if on paper they are underwater on a mortgage or saddled with a big student loan.)

The bad policy is that by subsidizing and insuring these loans / mortgages far too cheaply, the government is driving up demand, and as a result people buy a bigger house than they need, or get an education that isn't useful for getting a high-paying job.

If the government stops subsidizing mortgages and student loans with bailouts, insurance, laws preventing default, etc. the result will probably be

1) the cost of a college education goes down and also that less people actually go to college 2) people don't buy as many homes and buy smaller houses than they otherwise would have

If you then want more people to have houses, education, healthcare, food, etc., whether or not they are able / willing to sell enough of their labor to pay for these things themselves, the next step is to solve wealth inequality.

We could probably fix wealth inequality with good monetary policy (e.g. NGDP targeting) and "taxing the rich" in a sane way, e.g. with land value taxes, luxury consumption, VAT taxes, etc. After that, you're probably done, but for the remaining poor, the government can just give them cash, e.g. basic income, instead of trying to subsidize a million different services like healthcare and education and homes, in which case the subsidies end up in the pockets of doctors and administrators and landlords.

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

#155

Post by dang »

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.

Please don't post ranty flamebait to Hacker News. Divisive threads are low-quality enough as it is.

https://news.ycombinator.com/newsguidelines.html

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

#156

Post by lukevdp »

AlexCoventry wrote: post #82
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…

> the company will make a payment to a buyer’s student loans of as much as 3% of the purchase price, up to $13,000. How does this make economic sense? It reminds me of the deals home sellers would make to prop up their numbers in '06/'07.

For the building company it's a 3% discount wrapped up in marketing.

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

#157

Post by Zelphyr »

rayiner wrote: post #87
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…

> The Board of Trustees of Social Security tells us that the program is going to completely run out of money within the next 15 years. Millennials’ retirement horizon is far beyond that. That’s not how Social Security works. For practical purposes, it’s pay-as-you-go system: http://www.heritage.org/social-security/report/misleading-th... . As boomers retire, taxes will need to go up to account for the higher ratio of…

As a Gen-X'er I was told in my twenties that Social Security was going to run out by the time I was forty. Here I am, in my forties, and it hasn't run out yet. That's not to say that it can't or won't. But in those twenty years, if I've learned anything, it's to not trust the headlines.

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

#158

Post by notyourwork »

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.

I don't think that changes the premise of my point which is the government supports all situations where a bail out is needed.

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

#160

Post by njarboe »

The number one asset is the ability to tax an economy of $20 trillion(ie. 320 million Americans) to extract $3.7 trillion annually(2016). Holding the equivalent in 3% 30yr US bonds to give you that income would be about $125 trillion dollars. So this asset is 100 times the student debt one.
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