Current headlines use the broad statistics, such as the most exclusive unemployment stats, that don't really capture what's happening on Main Street.
The reporting on the economy barely pokes at issues and are generally just looking for general correlations, such as "Stocks do X as Y does that," or "GDP is doing X while Y is doing Z."
You probably know this, but just to clarify economics has many more complicated statistics than those that make it into newspaper headlines. For example, the "unemployment number" is technically U1. U2, U3, U4, etc. capture different nuances.
Banks clearly don't think there's much risk of long term high inflation.
Your debt is liquified but your house value also goes into the crapper.
Also “the system” isn’t setup to be nice to you.
The FED is sitting on trillions of taxpayer bailout money from the CARES Act, yet if you took about 1/8th of that money, government could wipe the entire student loan debt, but then you’d hear the media talking point screaming how we can’t afford it.
Similarly, the people with the largest student loan debt tend to be affluent. Gifting the affluent more money than a poor person who could not afford school may be able to save in their lifetime is a bad look politically, and would be deeply unfair.
I question this. I'd assume the largest student loan debts are held by the middle class, because the affluent didn't take out loans because they paid for their education with cash.
Not if they didn't become affluent until after going to college and getting a high powered career... case in point, I took out almost $70k in student loans to get an MBA and paid it back within three years of graduation. I actually screwed up by paying it off so quickly, because the interest rate after refinancing was less than 3% and I would have been better off using that money to load up my IRA (which presumably would earn better than 3% on average, as well as provide a tax break).
Under the current tax code, a forgiven debt isn’t always taxable. I have represented student loan holders and had their student loans forgiven (6 figure debts), and they had no tax liability.
And if student loans were forgiven it would be through the passing of a law, and it would be pretty trivial to include a provision that would remove any tax liability from student loan forgiveness.
And if people had a $10k tax bill due immediately (which you completely made up), they would not be mad if they had $100k or $200k in loan forgiven. It’s funny how the $10k tax bill is your concern on one hand then you shift to saying it would be deeply unfair because the people with the biggest loans tend to be affluent.
Affluent people don’t have student loans because their parents pay for their school. Otherwise the people with the most amount of debt are the biggest victims of the poorly designed system intended to indebt them for their entire lives.
No, it’s not “just the way things are”. Student loans are official government policy codified into law. There is certainly a much better way for the system to have been designed, instead it was designed to allow tuition to be completely unrelated to market conditions. The government could have easily placed a cap on tuition prices/increases to protect students, instead the government allowed universities to set any tuition they want while supplying the loans to the detriment of students.
The thing is is your average American would never even consider the ultimate possibility of a foundational collapse of their economy and currency.
And it's not just the average American. Nearly all hedge funds etc have USD as their basis.
Bitcoin, Gold, Stocks, real estate etc has a value tag that's denominated in Dollars.
You open up your portfolio and be happy when the USD value goes up in a nice green color.
But what happens when USD gets diluted and debased so much that it's not possible to stop anymore. Are we not past point of no return already?
Debasement of currency marked the end of the Roman empire, why would American empire be any different?
Because US has nukes?
Because they can force the rest of the world to keep using USD at gunpoint?
For how long?
The fall of the Roman Empire had so many causes that to attribute it to one thing is misleading at best.
This is false, many have CAD, EUR, and other currencies as their basis.
> Bitcoin, Gold, Stocks, real estate etc has a value tag that's denominated in Dollars.
This is false as well. You can measure BTC,Gold, stocks or realestate in any currency you want.
Do you really think Canadians denominate their real estate in USD? Why would BTC, Gold or stocks be any different.
The US denominates BTC, Gold, Stocks and real estate in USD. The reset of hte world uses their own currency.
And the alternative? The EUR which is held by an EU that will likely break in the future. The CNY which is held by China (great idea :) ) or Russia's currency which is inflating like there is no tomorrow.
Bitcoin/Gold could be a hedge but it's quite volatile to preserve value especially for short/medium term holding periods.
There is no alternative to the USD at the moment.
Which is a huge if! That's the maximalist bet, and I still have trouble believing in it even as I've watched intermediate predictions come true.
If the BTC chain became a Schelling point, where all market players see it as their best move to hold some, then eventually a satoshi could be worth about a 2021 US cent. It would then be unlikely to fluctuate more than a fraction of a percent in BTC/fiat pairs per day, unless one of those fiat coins happened to be hyperinflating.
If both of those things happened, then pricing things in satoshis would be more stable than pricing them in fiat, because that's what hyperinflation is: it's when inflation in a currency gets so bad that it becomes a bad unit of account.
The fact that there's no alternative to the USD at the moment is the best argument for the BTC chain forming that Schelling point. But! It hasn't happened, and contrary the maximalists, there is no law of nature which says that it will.
From my maximalist perspective, we aren't that far from Bitcoin becoming a viable global reserve currency (El Salvador just made it legal tender, other countries are investigating doing the same).
The moon may not be that far away.
That seems like a bright future to me, but my cynical tinfoil hat worries that the US will find some pretext to invade El Salvador to 'root out terrorists' or whatever so that dollar hegemony is not threatened.
What happens is that these countries buy the safest bonds possible and those are issued by governments. You are relying on the ability of the government to collect taxes to pay the debt and that ability correlates with military power as having a weak military would be a risk vector. A destroyed government is unlikely to honor its debts as seen with the Weimar Republic.
The rhetoric that the US is going around the world with guns to force people to buy their bonds (and therefore USD) doesn't make sense because countries are voluntarily selling products for USD and then buy US treasuries with the USD. They actually want the military protection.
People and countries outside the US don't use the dollar because of the US military, any more than they use the Swiss franc because of the Swiss military. They use both currencies (and the UK pound, and the Euro, and the Japanese yen) because decades of experience show that the countries that issue said currencies are the least likely to default on their financial obligations, and are most transparent about their own financials.
Russians and Chinese themselves avoid using their own countries' currencies when abroad as much as possible because they are most aware of this. To put another way, the primacy of the dollar isn't a supply issue (something that the US directly forces), but a demand issue (it's the currency everyone else prefers to use).
(This is where you'll bring up the "petrodollar". No, the petrodollar isn't real. Well, it's real in the sense that oil is, like almost every other product, usually denominated in US dollars when sold internationally. What's not real is the theory that the US has a particular need for (say) Iraq back in the day to denominate its oil sales in dollars, as opposed to Euro. Or that Venezuela attempting to denominate its oil in yuan today surely augurs the collapse of the US economy tomorrow.)
After decades of this, we've reached the point where the US Dollar is so deeply embedded in nearly every global supply chain that everyone needs it all the time. I don't think it has anything to do with being transparent about financials or unlikely to default; it's just accepted everywhere and has a better stock-to-flow ratio (i.e. stability) than the alternatives.
Other countries are dumping their deficit into the US and we are the ones pretending that the US is doing something wrong.
Roughly speaking, a central authority might work in certain scenarios, for a short time, to prevent situations where market participants might otherwise panic.
In the long run, the problem is the same authority does not have to all "local", decision-making information available to the individual market participants, and that might prevent the economy from reaching an optimal configuration.
Everyone should know that free markets can allocate resources better than any central planner
and what the fed is doing is reacting to trends to prevent the system from tilting out of control, not centrally planning things (when the fed starts making 5-year plans then we can talk)
Old people want to keep their pensions and savings with 0% inflation or even deflation. The one thing they don't want to do is spend money, for obvious reasons. They'd burn through their pension very quickly.
An economy that is not spending money will die. Someone has to spend to keep it going. Interest rates must go to 0% or lower so that someone finally spends their money.
This makes no sense, if only because the US government is the only entity that can “mint” US dollars.
More directly, just because the brokerage website says you have $x worth of an asset based on multiplying quantity of the asset times most recent sale price of a unit of that asset, unless you can trade it and deposit the cash into your account, you do not have $x.
Many people who live in the real world know that CPI is a garbage measure of inflation and life is increasing in price faster than they say.
CPI doesn’t even measure the right thing: inflation is a monetary, not a price phenomenon. It’s not things getting more expensive, it’s the value of money growing less. But they don’t publish the m2 money stock charts any more. Wonder why?
Because they moved savings deposits into M1. So the old M1 and M2 charts are retired and replaced with M1SL and M2SL.
opinion - feels - seems ?
Do you have any sources for your unpopular opinion?