Judge Napolitano discusses the Occupy Wall Street demand for a debt jubilee, that is, forgiveness of all consumer debt. Economist Steve Horowitz notes that this would wipe out our financial system. So why do Morgan Stanley’s Stephen Roach and Harvard’s Kenneth Rogoff say this is a good idea? They are joined by the confused Ellen Brown, so you can see where this is going. HuffPo genius Brett Green says forgiving student debt will stimulate the economy.
Wait a minute. Is not the Federal Dept. of Education responsible for the Massive Education Inflation in this Country?
I bet I don’t get a refund for paying the freight on my kids Engineering Degree.
Jeff, another topic people need to be aware of!
I read today that student loan debt is greater than consumer debt and just hit $1T. What would happen to the deposits of consumers, retirees, corporate payroll accounts, etc., if $1T of assets (to the banks, these loans are assets) were just wiped out?
Conversely, what would happen to the value of the dollar if Congress or the Fed just waves a magic wand and prints money to replace this lost capital?
The catch is, defaults are coming anyways as many of those people will not be able to find jobs or jobs that pay a salary high enough to cover the vig.
Keith, your lack of imagination leaves much to be desired…
“What would happen to the deposits of consumers, retirees, corporate payroll accounts, etc., if $1T of assets (to the banks, these loans are assets) were just wiped out?”
Deposits would be insured. Banks would continue to mark the values to whatever they felt appropriate, likely above par.
“Conversely, what would happen to the value of the dollar if Congress or the Fed just waves a magic wand and prints money to replace this lost capital?”
Effects would be negligible, as per recent monitization/backstopping events.
Buck, please be nice or you will be banned, again. J
lol. Jeff, these comments were deadpan sarcasm! The ‘lack of imagination’ was totally in jest, and a comment on the sorry state of no-holds-barred creative accounting that now forms the basis of most of our ‘economy’.
I figured the remark re: marking wiped out loans to whatever values banks “felt appropriate” would make it clear enough! I’ll try better next time.
PS – I always adhere to your guidline of “what would you say to someone sharing a beer across the table from you”. Its exactly what I would say to a freind!! I’ll try to be more clear in the future.
Not everyone gets your sense of humor, Buck.