It will be step 1 of recognizing that practically all dollar-denominated loans will default or take a massive haircut. There is no way that Treasuries, state bonds, and municipal bonds will be paid at face value with uninflated dollars, we just don’t have the free wealth in the economy to leach off that much money.

Either the US declares a loan jubilee or it inflates. The first hurts the rich and the people saving (i.e. the people who can recover the best), the second destroys everyone and probably leads to a Yugoslavia style crack-up (even if there is something called the USA on the other side).

As I told my late wife and kids a couple of years ago, it wouldn’t bother me so much that we seemed to be replaying the Great Depression and Weimar Germany if people weren’t 100% intent on using history as a how-to guide to do it again. Nothing since then has changed my mind.

But if that “blanket forgiveness” is just the government stepping in and paying off those loans…what does that actually achieve? The federal deficit in 2021 was roughly $3 trillion. That’s about three times bigger than in pre-pandemic 2019.
Total student debt in the U.S. is about $1.7 trillion. I don’t think there’s any way the Feds can take on that much extra debt as interest rates are going up to fight inflation.

Mike

Rufus, I took home ec in eighth grade and then general business later on in high school. Both were useful, though the home-economics not as much as I expected. Maybe it just took a few decades to really take root. (One of my regrets from junior high is not putting more effort into the decorative cushion project in that class. The substandard grade I got from the teacher for that was amply deserved. But that was the usual last-minute habit rearing its head again.)

The stimulus plan and stopping federal student loan payments goosed the 2020 econony, at the cost of real inflation hitting the 15% to 20% range for a while. Now, even middle class people need the student loan payment money just to make ends meet. (I’m looking at my budget if payments restart, and it is going to HURT. And those are loans for my kids, not for us.) The Government will have no choice but to issue a blanket forgiveness of most or all of the outstanding student loans, or watch the economy crash in March (including a massive amount of defaults).

Thanks for the tip on Kermit Weeks. I have driven by that museum dozens (a hundred?) times but never stopped in. I will make a point of doing that now. Our family loves museums! One of the Little Fireflies has built her career on our family’s many, many days spent in museums.

That statement from Professor Strohminger says a great deal. How incredibly out of touch.

Maybe it was just the blue collar neighborhood I grew up in, but when I was in High School everyone worked and everyone was very cognizant of what things cost. I made $2.85/hour and some of my co-workers were adults. Even if their spouses had similar jobs, I had a pretty good idea what household income was for many.

When my kids were in High School I noticed a lot of their friends didn’t have jobs. Even if one is from a white collar home, it’s important to do hourly labor when young, but I guess a lot of families don’t function that way. When they were Juniors in High School I also “opened the books” regarding our household. I’d sit down with them and tell them my income. Then I explained what is taken out of my gross pay and what my net income is. Then I went through our monthly budget; mortgage, their private school tuition, saving for their college, groceries, auto loans, insurance… Walking them all the way through to disposable income.

Home economics. Ought to be mandatory in every High School.

That Babylon Bee piece is well done and hilarious. If I had to guess, I’d bet that’s Frank Fleming’s work.