"Student Debt: Cancelled"
Next up, mortgages, auto loans, credit cards,
bar tabs and annoying social obligations!
by Bill Bonner
Poitou, France - "Every day the headlines come. And every day they are a mixture of real news, propaganda and claptrap. CNBC: "Biden cancels $10,000 in federal student loan debt for most borrowers. Nearly 45% of borrowers, or almost 20 million people, would have their debt fully canceled, according to the White House."
Isn’t that nice of him, dear reader? Of course, it wasn’t his money. And canceling the debt won’t cost him a penny. But Biden’s generosity is a big step forward in financial history. For thousands of years, we humans have been plagued by debt. And now we have the answer – just ‘cancel’ it. Free at last… free at last…
And now it’s time for Our Saviour to take aim at all the other disagreeable debits in our lives; he should cancel auto-loans… and mortgage loans… and payday loans… revolving loans… government debt… pawn shop loans… bank loans… credit card debt… margin loans… social obligations (‘they invited us…we need to reciprocate’) …loans for solar panels and EVs… child support… alimony… gambling debts… and bar tabs too.
Thanks to the Fed’s ultra-low interest rates and its ‘money-printing,’ our economy is burdened by $90 trillion in debt. And Mr. Biden has just shown us all how to get rid of it. And why stop there? Why should we have to return the umbrella we borrowed from the Merrion Hotel during a sudden downpour in Dublin… or the serving platter Ms. Jones left with us when she brought over some cookies? We also have a nice little rental car in the driveway; we’d like to keep it. Thank Divine Providence, our president is on the case!
Robbing Peter to Forgive Paul: Only Fox News dared to ask: if the people who got the service don’t have to pay for it, who does? Education is a service. It has a cost. It must be paid by someone. Biden’s act of largesse means that the freight will be paid by people who didn’t ride the train, many of whom didn’t go to college and don’t earn as much as the people who did. In other words, the law clerks and bookkeepers will have to pay for their bosses’ professional training.
Is that such a good idea? Maybe not. But don’t worry about America’s middle class. The housing market may be rolling over. Mortgage payments may be going up. But at least, according to the mainstream press, the job market is still ‘red hot.’ Here’s the most recent monthly report, from the Wall Street Journal: "July Jobs Report: U.S. Added 528,000 New Jobs as Unemployment Rate Fell to 3.5%."
"U.S. employers added a robust 528,000 jobs last month, helping the economy recoup the 22 million positions lost early in the pandemic, as hirers clamored for workers despite a slowdown in economic growth. The labor-force participation rate - or the share of adults working or seeking a job - ticked down to 62.1% in July from 62.2% a month earlier. While the economy has recovered all the jobs it lost since February 2020, there are still 623,000 fewer people in the workforce…Wage growth was stronger than economists anticipated in July, with average hourly earnings rising 0.5% from June and 5.2% from a year ago."
Let’s see, wages are rising at a 5.2% rate. But prices are rising at an 8.5% rate. Doesn’t that mean that workers are worse off? Yes, of course it does. And what about all those people who don’t have jobs? David Stockman at ContraCorner: "According to the BLS, 243,000 workers dropped out of the labor market in July and 449,000 abandoned the search for work since March. In turn, these fugitives from the jobs market have caused the participation rate to fall to just 62.1%—-the lowest level (aside from the Lockdown plunge of April 2020) since April 1977!"
Working Class Ripoff: Since February, 2020, the adult US population has grown by about 6 million people. But the labor force is actually smaller – by 623,000 people. That must mean that there are 6.6 million MORE adults without jobs than there were 2 years ago. And here’s another part of the story worth mentioning: Inflation. Economists long ago noticed that inflation seemed to correspond with lower unemployment. From there it was a hop, skip and jump into error: that a little inflation was ‘good for the economy’ because it brought higher employment.
The French economist, Jacques Rueff, saw the scam immediately. If inflation lowers unemployment, he pointed out, it was only because it rips off the working class by reducing their real wages.
So, aren’t we lucky? We live in an enlightened Republic, where we are encouraged to borrow so that we can study gender fluidity and ‘intersectionality’ – rather than get a job and learn how to be a competent welder…where we are lured to borrow money to install solar panels on our roofs and drive a spiffy electric car…where we are less productive and earn less money… but we have a ‘red hot’ labor market…and where we can run up trillions in debt…and then, the government cancels it!"
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Joel’s Note: "As to the great student debt inferno, dear readers may fairly be wondering… what happens to honest, hard working folk who saved their money and paid back their college loans? Will they be getting a check in the mail?
What about people who chose to forego college altogether, so that they might proceed directly into the workforce, who were paying taxes while their comrades in college were playing beer pong and mastering the art of the keg stand? How about the truck driver who took out a loan to start his own small business… and had the audacity to pay it back? Or the stevedore who worked double shifts to pay off his mortgage? Or the joiner who bartended on weekends to get through his apprenticeship?
These people may not have blue hair or master’s degrees in Critical Everyone Else Is A Racist Theory, but surely their skills in building real world things that real world people use count for something, right? Moreover, what about the people who (and this concept will come as a triggering shock to many) chose not to go into debt in the first place, but to simply live within their means?
As it happens, one such everyman dared put the question to Senator Elizabeth Warren, an ardent champion of the bill who never saw a cent of someone else’s money she wasn’t willing to generously give away, back in 2020. Their brief exchange resurfaced yesterday… and promptly lit up the interwebs…
Senator Warren appeared on MSNBC around the time this clip was going viral (again) to express her confidence heading into the upcoming midterm elections. “I’m liking it, I’m liking it, I’m liking it!” she said, gleefully rubbing her palms together.
Dear readers heading to the polls in November may wish to recall H.L. Mencken’s wise words as they step into the booth: Every election is a sort of advanced auction on stolen goods."
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