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The crash (or correction) of 2015 might be because of student loans & labor participation rates of recent graduates. The load is such that many of them could no

The crash (or correction) of 2015 might be because of student loans & labor participation rates of recent graduates. The load is such that many of them could not grow into the consumer role to the degree that the economy needed of them in order to grow. And reducing growth/recovery even further, stagnant wages further hold back consumption. 2008 and 2015 are economic events which feel to me like they're based in inequality manifesting in different ways.

jahewson 11y ago
New graduates are a relatively small slice off the overall workforce and they have a long time to pay of their loans. I don't see any mechanism there which would cause a crash. We've seen quite clearly that over-subsidising their debt burden simply causes them to take on larger loans - it doesn't help. The problem for those younger people entering the market is not that they don't consume - in fact, they consume readily - but that they can't afford property and don't receive adequate pensions or other benefits.
- digikata 11y ago
  It's not that they don't consume, it's that that don't consume to the same degree of past demographics (they simply can't). That consumption would have worked its way through many hands (businesses & employees) causing a multiplier effect vs going to pay back a loan. So larger scales of student debt, aren't just larger numbers on the balance sheets, it pulls money out of the active economy. If they can't afford to buy a property, a whole cascade of secondary 'new place' purchases don't happen.. it's a symptom of not enough circulating money at the center of society to sustain the economy. The crash part comes when investors look at falling activity in China, and falling commodity prices as strong indicators that global demand is falling.
jimbokun 11y ago
"Second, those fluctuations will be unwittingly used as a Rorschach test by everyone with a political axe to grind." https://news.ycombinator.com/item?id=10110809 https://news.ycombinator.com/item?id=10110809
- digikata 11y ago
  The difficult part of arguing economics is that it's a feedback loop - not even a clean loop but a messy cyclic network. One can point a myriad of direct relationships between elements of the network which are true, yet completely miss why the overall network is moving one way or another. It's not just political axe's being ground (and dismissing arguments as political is itself political), but schools of economic theory and social values. If we actually knew what to concentrate on as the root drivers of crashes - we wouldn't have crashes.

jahewson 11y ago

New graduates are a relatively small slice off the overall workforce and they have a long time to pay of their loans. I don't see any mechanism there which would cause a crash. We've seen quite clearly that over-subsidising their debt burden simply causes them to take on larger loans - it doesn't help. The problem for those younger people entering the market is not that they don't consume - in fact, they consume readily - but that they can't afford property and don't receive adequate pensions or other benefits.

digikata 11y ago
It's not that they don't consume, it's that that don't consume to the same degree of past demographics (they simply can't). That consumption would have worked its way through many hands (businesses & employees) causing a multiplier effect vs going to pay back a loan. So larger scales of student debt, aren't just larger numbers on the balance sheets, it pulls money out of the active economy. If they can't afford to buy a property, a whole cascade of secondary 'new place' purchases don't happen.. it's a symptom of not enough circulating money at the center of society to sustain the economy. The crash part comes when investors look at falling activity in China, and falling commodity prices as strong indicators that global demand is falling.

jimbokun 11y ago

"Second, those fluctuations will be unwittingly used as a Rorschach test by everyone with a political axe to grind." https://news.ycombinator.com/item?id=10110809 https://news.ycombinator.com/item?id=10110809

digikata 11y ago
The difficult part of arguing economics is that it's a feedback loop - not even a clean loop but a messy cyclic network. One can point a myriad of direct relationships between elements of the network which are true, yet completely miss why the overall network is moving one way or another. It's not just political axe's being ground (and dismissing arguments as political is itself political), but schools of economic theory and social values. If we actually knew what to concentrate on as the root drivers of crashes - we wouldn't have crashes.