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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

#171

Post by eemax »

aggronn wrote: post #129
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…

Okay you piqued my interest... "bad monetary policy" usually means we should be on the gold standard, but I've never heard that before as a solution for student loans. What are you proposing is the monetary fix?

A gold standard is terrible monetary policy, even worse than the status quo.

Good monetary policy would be the fed doing NGDP level targeting a la Scott Sumner: https://www.mercatus.org/system/files/NGDP_Sumner_v-10%20cop...

Monetary policy only goes so far though, if you actually want to distribute resources in an equitable way, you probably also need good tax policy.

Good tax policy would be taxes which decrease wealth inequality (e.g. luxury consumption taxes, land value taxes).

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

#172

Post by mjevans »

MollyR wrote: post #37

US government backed student loans were a huge mistake. We needed something like rent control enforced on public universities, for government backed loans. But we didn't. So it created a situation that caused an enormous amount of millennials to be taken advantage of by universities and colleges. Those universities and colleges pumped full of government loan cash became increasingly predatory. They increased their ad…

Well, rent control isn't exactly the correct option.

Econ 101: if you want the price of a 'product' to go down, increase supply.

The correct thing to do is to provide more supply (full ride public institution, paid for by taxpayers at government run community colleges) and focus production on fields valued by society.

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

#173

Post by JBlue42 »

adreamingsoul wrote: post #141
throwaway30yo wrote: post #110

Earlier quoted context omitted.

Millenial here. I think things are better then you think. Failing government systems? Have always existed. Unaffordable education? Never went, no idea. Online education still free. Limited Housing and Land? Flyover country, tons of cheap housing and land. Degrading Climate? Yes. But even the most pessimistic projections are unlikely to effect my life. Its a great time to be alive. Country not at war, unemployment is…

Thanks for the encouragement. I'm probably just being extra hard on myself today.

Take the weekend off from the news, or longer. Find a good, non-political book and dive in.

I've found it pretty easy to get into a negative spiral when reading about all the shit going on. Our awareness of the myriad problems and the seeming political and cultural insurmountability of them don't do our minds any favors.

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

#174

Post by Turing_Machine »

tinym wrote: post #144
throwaway30yo wrote: post #110

Earlier quoted context omitted.

Millenial here. I think things are better then you think. Failing government systems? Have always existed. Unaffordable education? Never went, no idea. Online education still free. Limited Housing and Land? Flyover country, tons of cheap housing and land. Degrading Climate? Yes. But even the most pessimistic projections are unlikely to effect my life. Its a great time to be alive. Country not at war, unemployment is…

Only slightly pedantic: The United States has been at war for just over 16 years now.

Even more pedantic: The United States has been at war with North Korea since June 27, 1950. The war has been in a ceasefire state for a long time, but there has never been a formal peace treaty.

Although a still more pedantic person might point out that there was no formal declaration of war in Korea, so technically it's not a "war" (it was called a "police action").

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

#175

Post by Turing_Machine »

vminkov wrote: post #93
adreamingsoul wrote: post #65

Earlier quoted context omitted.

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.

Come to Eastern Europe, your student loan money is enough for a whole new life here. P.s. honestly, I don't understand how ppl who are so hoplessly indebted are not migrating here. Bulgaria offers very cheap life with the opportunity of doing business with the EU and the US. Why work 24/7 when you can enjoy a good life in a place where the local people and economy need a foreigner to lead them in the business and glo…

What happens if Mr. Putin (or one of his successors) suddenly decides that he wants Bulgaria back under Russian control?

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

#177

Post by Turing_Machine »

lewis500 wrote: post #122

Would it be better if banks owned all the debt? I think the really bad statistic is just how much student debt there is. Progressives in Oakland want the city to create a municipal bank. If they do, maybe progressives will then complain "Y% of Oakland's assets are mortgages and small business loans." For any level of student debt, I think it is obviously better that the government own a lot of it, as the payments the…

>In fact, given the government can borrow money at 2% while student loan rates are like 4-8%, it might not even be a bad idea to have the government issue treasuries and buy more student loans.

If 40% of the loans are in default and/or the borrowers aren't making payments for some other reason (which is the actual case) it would be a very bad idea.

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

#178

Post by adreamingsoul »

prepend wrote: post #139
adreamingsoul wrote: post #94

Earlier quoted context omitted.

You don't have to agree, but that fact is still true. I also have hesitations with buying land in the Midwest, mostly due to climate change factors.

That’s an interesting perspective. What climate change factors worry you? The Midwest is one of the few regions in the US that stand to benefit from climate change. Easy/West will be worst hit.

My biggest concern with the Midwest is the erosion of healthy living top soil.

https://19january2017snapshot.epa.gov/climate-impacts/climat...

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

#179

Post by marshray »

prostoalex wrote: post #119
d--b wrote: post #79

Earlier quoted context omitted.

Yes, the title makes it sound like the US government is in a dire situation because it has its solvency tied to students paying back their loans... But mostly the government is a borrower of cash and not a lender. Here the government is indirectly financing people's education by offering cheaper loans than the market would give. There is not much to talk about...

The rate that the government can borrow at is determined by the quality of underlying assets. US 10-year note is 2.58% at the moment, but Argentina's is 7%.

Well the US is somewhat special in that the dollar (or currencies tied to it) is used by 70% of all global transactions.

The other day a minister in China floated the idea of buying less US Treasuries. It became apparent that there just weren't a lot of other instruments available with which to invest that sheer volume of money.

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

#180

Post by wonder_er »

aggronn wrote: post #129
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…

Okay you piqued my interest... "bad monetary policy" usually means we should be on the gold standard, but I've never heard that before as a solution for student loans. What are you proposing is the monetary fix?

not OP, but taking a stab, since I agree with their assessment:

bad monetary policy, in regards to student loans, means subsidizing them in two ways (at least):

1. paying the difference in interest rate compared to going to a regular bank. I can get student loans w/3% interest, but a bank wouldn't give me that money for less than 7%.

2. Making it illegal to disperse student loans in bankruptcy.

Both of these are monetary policy decisions that "hide" risk.

The higher interest rate is to compensate for the riskiness of the loan, while making loans illegal to disperse is the gov't response to the risk.

both of these will hide increasingly large amount of risks, where everything looks like its going fine, until it will all fail, catastrophically.

The politicians will claim no one could have seen it coming, but if they'd not allowed the risk to be so hidden, they'd have seen the institution crumbling decades before.

edit: formatting

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