The American generations coming up just behind mine (Generation X, for the record) are wringing their hands about their dire economic prospects. Younger folks are putting off purchases of cars, homes, and other marks of adulthood because they are crushed by a dearth of opportunity. A major contributor to this malaise is the pile of student loan debt that college admissions counselors and banks begged them to accept.
The ruling elite’s response to this distress is to trot out its chief financial officer, the Fed Chairman, to explain to the younger folks that their crushing student loan burden is a wonderful blessing. Helicopter Ben is telling the teachers of these impressionable youth that student loan debt is not a problem for the economy. I guess Ben didn’t read the link in my first paragraph about how new graduates devote their incomes to debt service instead of investment. I feel sorry for the next crop of students/suckers who will hear their teachers repeat this nonsense.
The Fed daddy’s assurance that federal government backing of student loans is dangerous in the extreme. One trillion dollars is still a lot of money. A bailout of that magnitude would dwarf the size of TARP and send foreign central banks sprinting away from dollar holdings. Ben probably assumes a bailout won’t be necessary as long as student debt remains exempt from liquidation in personal bankruptcy. Our rulers think they are too clever by half, counting on naivete and financial repression to keep debt service payments coming their way. A debt-destroyed peasantry won’t put up with such smugness indefinitely.
Nota bene: I have never had a student loan, or any debt of any kind other than the single credit card which I pay off in full every month.