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).
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
#52I 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?
The fact that private lenders are incentivized to give out more and more leads to universities charging more and more. Even with all the money being spent, the same (or in some cases less) level of education is being provided. On top of that, how do you repossess someones education in the case of default? You can't, so the government can do one of three things:
1.Pay off the loan holders (by printing money, huge inflation) 2.Allowing indentured servitude 3.Debt forgiveness (now all the lenders are out of money)
Sadly, I think the 3rd option is the best one, but is by no means actually a good one.
Re: Half of the US government's financial assets are student loans
#53I 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?
In the same sense that the mortgage industry was a bubble. For mortgages, the investor lent money to home buyers and expected a long-term payment schedule. The houses were being bid up.
If you assume student loans are a bubble: the long-term earnings potential of students is being bid up (and will collapse, leaving the government with lower worth/worthless assets.)
Re: Half of the US government's financial assets are student loans
#54Earlier 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.
If that's the case, shouldn't this be flagged? Also, you mentioned the Fed, which isn't the same thing as the US gov't, right?
I don't really want to go down the conspiracy theory rabbit hole of who does what at the Fed but it's main decision makers are government appointees, it was established by an act of Congress, and it remits its profits to the Treasury.
Ginnie Mae is part of the government as well (also mortgages). Fannie/Freddie are GSE's but currently under directly government control since the financial crisis.
I'm not sure how the accounting works, but they are somewhat autonomous and have their own balance sheets.
Re: Half of the US government's financial assets are student loans
#55Healthcare is a much bigger problem for the government than student loans. The federal government spends about 1 trillion per year on healthcare, while the total of all student debt in the U.S. is around 1 trillion. This is true on a societal level too. U.S. healthcare spending is 17% of GDP, up from 5% in the 1960s. The problem with student loans is that the burden falls mostly on the least financially secure people. This is as opposed to Medicare/Medicaid where the government tries to foot the bill rather than allow people to get in massive debt.
Re: Half of the US government's financial assets are student loans
#56I 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?
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Re: Half of the US government's financial assets are student loans
#57Earlier 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!
Most of the student loan debt is owed to private creditors and it is the federal government that insures these loans. If a student doesn't make payments, the lender gets a guaranteed bailout by the government (no need for congress to step in like they did for the banks and auto companies). Basically, all the lenders are incentivized to give out as much money as possible, which incentivizes universities to raise tuiti…
How is that bailout guarantee structured? Fixed pool, or the money will just come from "somewhere?"
Re: Half of the US government's financial assets are student loans
#58buy gold now. you’ll thank me later
Delicious, nutritious gold.
Re: Half of the US government's financial assets are student loans
#59Earlier 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.
>pass it down to their heirs. AFAIK, (and I'm a pretty ignorant fellow) debt in America isn't passed down, the creditors just take what they're owed out of a dead person's estate before its divied up by a will. So there could be a big "pop" if a bunch of people with lots of student loan debt and no assets die.
the creditors just take what they're owed out of a dead person's estate
You mean the estate that contains value I would otherwise get the full value of were it not for the student loan debt that was taken out? The debt is most certainly passed down, it's just abstracted away a bit. The only way the debt doesn't get passed down is if the debtor dies penniless.
Another way to put it is if the creditor extracts anything to pay that debt after the debtor dies, then the debt is most certainly passed on to someone because that money didn't materialize out of nowhere.
Re: Half of the US government's financial assets are student loans
#60Earlier 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.
Last time I checked, "the deal" as it were indicates, in writing, that student loan debt from the federal government is forgiven on death.