> You continue to ignore the incentives that systems create. A college degree in the past also provided a comparable earning premium, yet was affordable by a median part time job. Then the government expands debt opportunities and the costs skyrocket to the point of being independently unaffordable. Why? Because the incentives changed. Like Charlie Munger said, "Show me the incentive and I'll show you the outcome."
No, I understand incentives perfectly well. Students are incentivised to go into debt for their education because the premium (and or intangible value) they expect exceeds the cost of the loans.
If the repayments attached to those loans become more expensive, universities are only incentivised to drop their entry fees enough to cover the increased costs of servicing student debts. The overall cost to students would remain unchanged, it's just less of it would be paid to the entity providing their education.
(In practice, of course, they wouldn't need to drop it that by the amount because they could just skew their admissions more towards people that already had $200k lying around, and the all important profit-generating sportsball players of course. Funny how all the changes you want to help the less well off actually benefit those with dynastic wealth at their expense...)
Above all, I understand that universities which now have low single digit acceptance rates do not need to drop their tuition costs to equivalent to part time earnings to fill their courses, with or without federal government loans. The problem with trying to derive how a market will behave if things change from naive memes about the 1950s is that it's rarely a good idea to ignore all the other things that have changed since the 1950s, like the demand for graduate jobs and graduate premium being much higher US economy now being based around high value added services rather than production lines, expectations of college attendance being much less narrowly centred on certain social classes and even women and non-white people expect to be given equal treatment nowadays. (You'll like the 1950s even more when you learn how high the acceptance rates for that cheap Ivy League degree was! At least until you understand why so few people were applying for them...)
> Deflationary systems do not create an incentive to hoard money, because you're not fighting against the system. You can even take smaller edges. If you can see a 0.1% return on something, your wealth is growing and becoming worth more on top at the same time.
No, this argument is as basically wrong as saying "if we supply less of something the price will go down". Indeed arguing that reducing the money supply will make people willing to invest or lend their money for lower return is literally a form of that argument.
Actually a 0.1% monetary return is terrible under any form monetary policy once you understand that risk is a thing and interest rates are not the same thing as the rate of inflation.
In a deflationary system, someone might expect to earn a 2% real return on doing absolutely nothing with their money. So a 2.1% real return on risking money on something isn't very attractive.
And that's even before we've considered base interest rates, which are much higher when credit creation is limited by an arbitrary amount of metal rather than risk assessment. Nobody is investing for a 0.1% when they can extract much higher returns out of lending to a bank with gold-standard induced maturity transformation issues. And the fact that if you're investing in producing something expecting a 0.1% return when prices of everything are going down, you will normally get a return of a lot more than 0.1% investing in producing the same good or service when prices of everything are going up...
> In 1950 the US was still under Bretton Woods which imposed a gold standard on the government. That only ended in 1971 and, even then, only due to a default. I can try to use previous dates if you prefer but on top of the systems being more alien, you also start to run into data issues. Lots of data we take for granted today (and in 1950) didn't exist when you go further back.
If your argument is that deflation is good and the Fed's target of 2% inflation is bad, arguments that a decade which had 2% inflation was good supports an argument against your post. Bretton Woods wasn't sustainable precisely because the system relied on the US government being able to print many more dollars than it could redeem in bullion. An intellectually honest argument in favour of deflation would focus on opposing the decision to end the 1930s deflation by making the dollar no longer convertible to gold, not the 1950s when prices rose at rates comparable to modern central bank targets (but with more volatility). There's certainly no lack of data for the 1929-33 period. Of course, the fact that data and analysis all points to the problems created by arbitrarily tying currency to a fixed commodity is inconvenient...
But yeah, I would agree that as we go further back into history systems are more alien. This is one of the reasons why I don't think that trying to bring the banking systems of the ancients into an era of universal access to real time information and internationally mobile capital is a good idea.
> The paper I linked earlier [1] gave the numbers. In 1951 56% of people owned their home, free and clear. That was a local low because the 50s were the early beginnings of the end
Something of a moot point since the 1950s isn't remotely representative of your deflationary dream, but you misread that. Your paper puts the number of owner occupiers including people with mortgages at 53%, which the paper you linked to points out was an all time high (though it's over 65% now) not a local low. 56% of the owner occupiers were free and clear, which works out at under 30% of the total. There's no shortage of actual time series showing how these figures work, though I guess one of the few advantages of trawling through 1950s papers looking for data is you get other gems like 23% of them not having a bathtub or shower, and rental rates doubling in 10 years. Weird how fewer people owned houses (and cars), considering that according to you, they both basically came free with a degree and part time job everybody paid their mortgages off easily...