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Jane Sanders interviews MMT's Stephanie Kelton on Student Loans(video)

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  • Strongly Liberal Democrat
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    Dallas, TX
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    The Sanders Institute Talks: Student Loan Debt

    https://www.youtube.com/watch?v=GIo-5d4xBlQ

    The Macroeconomic Effects of Student Debt Cancellation by Scott Fullwiler, Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum - Bard College

    In summary:

    "A program to cancel student debt executed in 2017 results in an increase in real GDP, a decrease in the average unemployment rate, and little to no inflationary pressure over the 10-year horizon of our simulations, while interest rates increase only modestly. Our results show that the positive feedback effects of student debt cancellation could add on average between $86 billion and $108 billion per year to the economy. Associated with this new economic activity, job creation rises and the unemployment rate declines….

    It is important to note that the macroeconomic models used in this report cannot capture all of the positive socioeconomic effects associated with cancelling student loan debt. New research from academics and experts has demonstrated the relationships between student debt and business formation, college completion, household formation, and credit scores. These correlations suggest that student debt cancellation could generate substantial stimulus effects in addition to those that emerge from our simulations, while improving the financial positions of households."

  • Strongly Liberal Democrat
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    Pensacola, FL
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    I might point out that this observation comes from or compliments the ancient concept of jubilee . Forgiving all debt. Dedicating resources to production instead of stagnating debt is all positive. The only opposition to progress is excessive debt.
  • Strongly Liberal Democrat
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    Dallas, TX
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    Ancient Jubilee's were cyclical and could create moral hazard in context with modern consumer debt/borrowing. But they were very much apart of ancient societies. Back then, most debt was related to what we would call fines or defaults on accounts payable, and not mortgages or credit card debt.

    This would be one-time thing in conjunction with a transition to publicly funded community + university colleges. As Kelton explains to Sen. Sanders' wife, the point of doing this would be lost if we were just to begin again with a student loan debt build up.

  • Strongly Liberal Democrat
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    Pensacola, FL
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    Carlitos Wrote:

    Ancient Jubilee's were cyclical and could create moral hazard in context with modern consumer debt/borrowing. But they were very much apart of ancient societies. Back then, most debt was related to what we would call fines or defaults on accounts payable, and not mortgages or credit card debt.

    This would be one-time thing in conjunction with a transition to publicly funded community + university colleges. As Kelton explains to Sen. Sanders' wife, the point of doing this would be lost if we were just to begin again with a student loan debt build up.

    What is the point of strangling an economy with stagnating interest expanding debt. Simple solution make things to sell. Bad solution more and continued wars. Schmidt's Eisenhower piece offers a peaceful solution. Invest money in jobs producing ventures. Spend money . Spending is prosperity. Saving is conservative.
  • Strongly Liberal Democrat
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    Pensacola, FL
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    "As Kelton explains to Sen. Sanders' wife, the point of doing this would be lost if we were just to begin again with a student loan debt build up."

    As Harley Riders say, if I have to explain you wouldn't understand.

  • Strongly Liberal Democrat
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    Pensacola, FL
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    An economy is the trading in goods and services. Money is a medium used to facilitate the trading. Making things to sell is jobs. Put this together and institutions are the result and the population has a way to sustain a living. Somehow the concept of providing jobs has been lost. The message from the DNC to win elections and support is to promise lots of good paying jobs. Properity is not an elusive impossible dream. It is an easily attained condition. Just ask the the top percentile. Prosperity means you don't have to save and suffer to live your last years. It is simply attainable by legislating money away from stagnation. Increasing the velocity of money is prosperity for everybody .
  • Strongly Liberal Democrat
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    Dallas, TX
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    Currently, the Federal Government stands ready to fund non-dischargeable student loans for anyone able and willing to go to approved colleges. The government has the lowest cost of funds ($0) of any lender and the interest rates owed by borrowers are set by Congress.

    Students have little leverage outside of protests to negotiate prices with colleges and universities.

    So when student loan borrowers agree to the cost of tuition, that’s like government validating or setting that price. Government is the one paying for it, at least initially.

    Student loan debt is like “pay fors” that attempt to acquire government revenues so that this lending (spending) has a built in positive internal rate of return.

    So the cost of tuition will continue to go up until there are revenue declines from lack of willing borrowers due to the price of and/or some cultural shift against the borrower’s value of a college education.

    Meanwhile, all the student loan repayment plans (Income Based Repayment options) and defaults could dramatically reduce the value of the Department of Education’s financial assets (our loan debt repayments) and the govt’s internal rate of return.

    So what we have is a mostly government owned and operated student loan industry w/ a privatized servicing contractor (Navient), that, oh by the way, does nothing that the Education and Treasury departments could not already do at lower cost.

    So this whole thing is madness.

    Grades and education outcomes are not the most important things.

  • Strongly Liberal Democrat
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    Dallas, TX
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    It turns out, the limited government solution is a progressive one.

    The federal govt should pay for the seat of any student able and willing to do the course work, and insist and require that the course work should be hard, not dumbed down to improve metriculation and graduation rates, as is the case with the current incentives to further student loan borrowing, and, thereby, increase college and university revenues.

    Colleges and universities need to be financially incentivized, to a degree, by the real education outcomes of their students.

    We should make education, not only a right, but a duty. And some government organized private industry input and planning is necessary to adapt higher education to the needs of industry.