Actually, Canceling Student Debt Will Cut Inflation \ stacker news ~bitcoin

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Actually, Canceling Student Debt Will Cut Inflation www.theatlantic.com/ideas/archive/2022/08/biden-student-debt-cancelation-stiglitz/671228/

117 sats \ 8 comments \ @satup 26 Aug 2022 bitcoin

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79 sats \ 1 reply \ @Dez 26 Aug 2022

I don't buy the argument of its only old people who could possibly work their way through college due to the price of college.

I graduated in 2014 from a state University woth zero debt. I worked two jobs(one being a graveyard shift security guard) and didnt go out every weekend like my friends who took out loans.

It was difficult but it taught me the value of sacrificing for a greater cause and I feel it made me a better person. I feel bad for the people crushed by debt but how did they get into this situation?

College is a buisness and isnt going to lower its costs out of the goodness of its heart.

We dont bail out people who buy 10 year old used cars at 10% interest because they didnt plan ahead.

I believe the system needs a fix but this aint it!

100 sats \ 0 replies \ @anonporridge 26 Aug 2022

Number one fix in my mind.

Allow student loans to be eliminated by bankruptcy.

If loan agencies realize that giving out student loans to people who end up with worthless degrees and no job prospects who can't pay back the loan, and will eventually just declare bankruptcy to wipe the slate clean, it should naturally create a more generative incentive structure and make loaners more careful about who they loan to.

The inability to bankrupt your way out of student loans has perverted the entire system.

Alternatively, make college free (like many other countries) but increase the bar to actually get in and send the remainder to trade school.

10 sats \ 0 replies \ @guyfawkes 26 Aug 2022

This is a perfect example of the shallowness of elite thinking. Morality has no place in the value proposition.

1 sat \ 1 reply \ @cryptocoin 26 Aug 2022

Here's my take.

If money is created when a bank issues a loan, then money is destroyed when the loan is repaid.

"Canceling student debt" actually means the debt is being paid by the government to the borrower. Which alone would mean that money is destroyed (i.e., it is removed from circulation).

But ... where does the government get the money? Most of government spending comes from taxes but this is an extra amount of spending, which means it is deficit spending. Deficit spending is then a loan (because the government borrows that money), and that means money is created.

So essentially the money that is destroyed by the government repaying the borrowers is then re-created by the government. So it's entirely a wash, as far as inflation of the money supply goes.

25 sats \ 0 replies \ @faithandcredit 26 Aug 2022

in my opinion It creates inflation (dont know how much) because

The students now have more money for consumption increasing demand for goods and services
Students could also take on new debt and use that for consumption unless they are specifically prohibited from borrowing money again for a while which i doubt
As you mention, where did the money to repay the loans come from? Its most likely created out of thin air which is a privilege the government has had for a while.

so yea, inflation all the way, sad :)

1 sat \ 0 replies \ @pillar 26 Aug 2022

Whatever your view of student-debt cancellation, the inflation argument is a red herring and should not influence policy. Taking that logic to the extreme, canceling food stamps would do far more to reduce inflation—but that would be cruel and inhumane, and fortunately, no one has suggested doing so. A closer look at the student-debt-cancellation program suggests that the new student-loan policy may even reduce inflation; at most, its inflationary impact will be minuscule, and the long-term benefits to the economy are likely to be significant.

Honest question: what do you think is his reasoning to not promote cancelling all student debt? Or even, why not provide everyone with food stamps?

0 sats \ 0 replies \ @BeardedSaintRef 26 Aug 2022

The banks would have to “forgive” the loans. The problem I see is that we the taxpayers and our future generations will pay for this…IMO there has been a higher education misnomer about having to go to college to earn a substantial amount of annual salary; which is just not true. I’d argue that some of the greatest and wealthiest companies in America are college dropouts and that they actually in turn are paying salaries to the ones who “need” to go to college. Apprenticeship and OJT are the most beneficial aspects of our modern society career builders IMO.

0 sats \ 0 replies \ @2big2fail 26 Aug 2022

a loan forgiveness program is deflationary as it forgives and removes bank assets that function as "money-like" instruments.

although the purchasing power of borrowers will increase it is likely to have a negligible effect because all federal loans are still in forbearance for covid