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from the I-owe,-I-owe,-it's-off-to-work-I-go dept.
Another day, another record broken.
The debt held by US households has surpassed its pre-2008 record, several financial outlets note. A peculiar spotlight in the associated numbers falls on student loans, where delinquencies are multiple times higher than for other debt types: 10 percent is the norm.
That's some pretty troubling news for the economy [and wider society], notes Rana Foroohar at sister outlet the Financial Times. First off, there's the association between the rise in student debt, and a decrease in home ownership for young people. This connection is exacerbated by them millennials increasingly turning towards income-based repayment programmes, which spread out the debt over more years.
Secondly, the level of student debt delinquencies ain't changing: the 10 percent figure is a near-constant over the past 4-5 years. People who've ever had a delinquency -- even if they recover -- have a much lower rate of home ownership at age 30 as compared to their non-defaulted compatriots. Not having a home means not filling it with stuff, and filling with stuff is kinda what the economy is based on.
Then, thirdly, it's not only students that are hit by student debt: increasingly, their parents are taking on debt too, to help out. Fuel for that debt sandwich is something peculiar: the rate of inflation in college admission costs is three times higher than the consumer price index. Must be that college professors wages have increased a lot, then.
Given that boomers and their millennial offspring are the two largest voting blocks in the US, a snappy future president-elect might consider raising the issue a bit.
(Score: 2) by migz on Friday May 19 2017, @07:38AM (4 children)
False. Fractional reserve banking is not capitalism. It's the continual failure of Central Planning.
Imagine that the government decided tomatoes were the most important thing in the economy. Instead of farmers growing tomatoes and selling them to grocery stores which people bought them from the government outlawed all of that. Instead they founded a new "Independent" Federal Tomato Reserve. Tasked with producing tomatoes. If anybody else produced tomatoes they would send in the government for fraud. This makes sense because their tomatoes would not be as good as the FTR tomatoes. Who would ensure the quality of the tomatoes without the FTR? What if they produced too many tomatoes? What if they produced too few? There would be chaos.
But instead of growing tomatoes, they produced little vouchers, that said, this voucher entitles the bearer to one tomato, or what ever the enumeration of tomatoes designated on the note was. Everybody liked this, because they no longer had to haul boxes of tomatoes everywhere, and could instead carry a few vouchers in their wallets instead.
Later the FTR decided, they did not actually need to redeem the tomatoes.
This is what government control of money looks like. It is ridiculous. It is however NOT capitalism. It is protectionism, it is monopoly, and it is only possible through the complicity of government. If you want to blame somebody, blame the responsible people. Government.
(Score: 2) by kaszz on Friday May 19 2017, @02:18PM (3 children)
"Tomatoes" were only forbidden for plebs in the period 1933 - 1974 in the USA. And since 1977 it's even allowed to write contracts that demands payment in such way.
Value as property is harder to devalue by printing or canceling paper notes or to tax because, they are not visible.
An interesting effect occurs when two persons bid on the same object. Where person A is backed by loans. And person B is backed by other property. When person A wants to increase his wealth the bank can always outdo him. When person B wants to increase his wealth by adding property with value, the price of said property is likely to go up if the bank(s) tries to print more paper money.
(Score: 1) by khallow on Saturday May 20 2017, @04:08AM (2 children)
When person A wants to increase his wealth the bank can always outdo him.
I'm unclear on the concept of "outdo". Does this mean that if I borrow money to build a tomato farm, the bank president will go "We can't have that!" and build his own tomato farm to drive me out of business?
(Score: 2) by kaszz on Saturday May 20 2017, @02:08PM (1 child)
It means you can earn money to save up for something. But the people that are willing to sign away their future can always come up with more money from the bank. This scheme works as long as the seller accepts the bank currency.
People will use their high salary to compete on how much the bank is willing to loan them to bid on property that sells for more money than it's actually worth. The end winner is the bank.
(Score: 1) by khallow on Saturday May 20 2017, @03:53PM
It means you can earn money to save up for something. But the people that are willing to sign away their future can always come up with more money from the bank. This scheme works as long as the seller accepts the bank currency.
I'm still unclear on why you seem to think this is a problem or insisted it was the bank doing the outdoing. For a business, loans reduce cash flow problems. A tomato farmer who is more competent, has better farm equipment, better location, etc would also have advantages. But we wouldn't say that a tractor manufacturer, providing the better farm equipment, is outdoing the farmer who doesn't have that equipment.
People will use their high salary to compete on how much the bank is willing to loan them to bid on property that sells for more money than it's actually worth. The end winner is the bank.
So what? Nobody is forced to play that game. And bad decisions tend to be their own cure here.
Also, this is a great way to transfer wealth from the people with high salaries to others. Banks take a cut, but the wealth doesn't all go to the bank.