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Unfortunately, under currently dominant monetary regimes, such outcomes are entirely predictable and inevitable. Edit: Ok, I had a nice reply to someone, but t

Unfortunately, under currently dominant monetary regimes, such outcomes are entirely predictable and inevitable. Edit: Ok, I had a nice reply to someone, but then their comment was deleted, meaning my comment had nowhere to go. I'll put it below. --- >[Deleted Comment] Unfortunately without further information on your part is hard to know if you have deep insights, carefully thought out, or it is just a naive cynic comment like those that abound all over the internet. It is a fair point. Unfortunately, any given text posted on the Internet is unlikely to be read much or given much credence by the few that do read it. Therefore, I try not to waste my time expositing large amounts of English text. I don't know if I have deep insights. I do know that most seem to have no idea of the basic mechanism of the dominant monetary regimes and that such a mechanism easily explains many of the "bad things" which occur in the economy. For example, it's just a fact that debt must rise (assuming non-decreasing population and many other "standard assumptions"). >it's probably best if everyone buries themselves as far into debt as they can This is basically the only possibility, except that the debt isn't forced to be spread uniformly. Instead, debt accumulates in regions. The steady state is basically: banks hold interest stakes in all debt, perpetually. Banks survive, while everyone else must deal with the wake forced on them by the massive amount of debt product which the banks produce.

JonFish85 11y ago
I completely agree, and I find it an interesting contrast of the current political feelings of protecting the middle/lower classes (I don't know what the acceptable term for "lower class" is). College cost Problem: college needs to be more affordable for lower-class kids Solution: give them cheap loans to go. End result: college prices rise because there's no downward pressure, kids graduate with enormous loans, and we're having this same conversation ("how can we stimulate spending?"). Housing Problem: the poor can't afford housing. Solution: Legislate it such that the poor can get access to loans to buy housing, with the government (really, society at large) subsidizing the cost. End Result: Housing prices rise because loans are cheap, people get loans they can't afford, eventually people default on loans, pushing costs of loans up, the poor can't afford to buy housing. Cycle repeats. This is where the conservative side of me thinks that government intervention really pushes this cycle along faster and faster, and makes things worse and worse (with the best of intentions). I think it was in the 90s that suddenly it became politically smart to think that "everyone should be able to own their own home", which sounds great on the surface, but there's so much more to it than a simple quote.
- eldavido 11y ago
  I very much believe that housing and education are necessities, and that builders and colleges, if the screws were turned to them more, would find ways to cut costs and make things more broadly affordable. I don't think throwing tons of debt at the problem fixes anything long-term. Right or not, you'll get killed expressing that thought (no matter how well-intentioned) as a politician.
  - JonFish85 11y ago
    Who is going to hold the screws to them? As it's set up currently, costs have been rising for 30 years at insane rates. I know I'm biased because I've been in Boston for quite some time (it's probably different elsewhere), but all of the colleges in the area have been spending money on completely non-academic things. Building elaborate new dorms & cafeterias, immaculate landscaping, bringing in various pop stars for campus events. None of it moves the needle on "education", but it for damn sure enriches the colleges. Speaking for my own alma mater, they spent $8m/year to lure the president away from a California school, because he's apparently very good at luring in sponsorships/donations from alumni (I never really understood WTF that meant). Then the college paid ~$10m for him to have a house in the "hip" part of the city. On top of that, the university spent many millions building new dorms with sushi bars and excellent views. The costs rose a steady 4-5% a year while I was there, and I believe it's been at that clip for decades now. Sure, you can make the argument that it's to pay for their investments, but remember that the university also received in the neighborhood of $100m to rename an existing building on campus. And of course don't forget the monthly phone calls to solicit donations "for the students of tomorrow". Unfortunately I think that the idea of everyone feeling that they are "above average" feeds into this--kids who can't afford it really, really want to go to this school. And subsidized loans make it very possible for people to borrow $65k a year to do it. It's a vicious cycle, because as prices rise, the more it seems that politicians want to make it easier for kids to go to any college they want to. Unfortunately I don't really know of a good way to stop people from making dumb decisions. There aren't many careers that can pay off $150-$200k in loans in any reasonable amount of time, and I'm not sure that it would work out well for the government to step in and say that you can't borrow more than $X for college from any source.
deleted 11y ago
[deleted]
theseatoms 11y ago
What do you predict?
- jsprogrammer 11y ago
  Total debt will increase on reasonable timelines; defaults and bankruptcies will occur at all periods.
  - theseatoms 11y ago
    You think the Federal Reserve is to blame for this, and not the relative scarcity of global investment opportunities compared to the cumulative stock of global savings? "Blame the Fed" is a common refrain, but I'm not convinced that their policy choices have had quite the magnitude of effect that people attribute to them. Though I don't disagree that Fed policy (along with the US government's "too big to fail" mentality) has exacerbated perverse incentives in the American banking sector.
    - jsprogrammer 11y ago
      I haven't said anything about the Federal Reserve. Nor have I laid blame to any particular institution. I'm saying that when you look at how the dominant monetary systems work, the inevitable outcome is increasing amounts of debt as that is the only way to expand the supply of money. In fact, in current systems, money and debt share an almost 1:1 relationship. Any given dollar represents some one else's debt. >and not the relative scarcity of global investment opportunities compared to the cumulative stock of global savings There may be trivial relationships that affect local environments to some extent, but I think almost all effects are probably overshadowed by the more fundamental reality: debt as money. Savings don't really exist. Savings is isolated money that debtors can't access (making it more likely that they default [as there is simply no more physical cash to meet the next payment obligation]).
      - theseatoms 11y ago
        Sorry for putting words in your mouth. Serious question: Why must the money supply must expand?

JonFish85 11y ago

I completely agree, and I find it an interesting contrast of the current political feelings of protecting the middle/lower classes (I don't know what the acceptable term for "lower class" is). College cost Problem: college needs to be more affordable for lower-class kids Solution: give them cheap loans to go. End result: college prices rise because there's no downward pressure, kids graduate with enormous loans, and we're having this same conversation ("how can we stimulate spending?"). Housing Problem: the poor can't afford housing. Solution: Legislate it such that the poor can get access to loans to buy housing, with the government (really, society at large) subsidizing the cost. End Result: Housing prices rise because loans are cheap, people get loans they can't afford, eventually people default on loans, pushing costs of loans up, the poor can't afford to buy housing. Cycle repeats. This is where the conservative side of me thinks that government intervention really pushes this cycle along faster and faster, and makes things worse and worse (with the best of intentions). I think it was in the 90s that suddenly it became politically smart to think that "everyone should be able to own their own home", which sounds great on the surface, but there's so much more to it than a simple quote.

eldavido 11y ago
I very much believe that housing and education are necessities, and that builders and colleges, if the screws were turned to them more, would find ways to cut costs and make things more broadly affordable. I don't think throwing tons of debt at the problem fixes anything long-term. Right or not, you'll get killed expressing that thought (no matter how well-intentioned) as a politician.
- JonFish85 11y ago
  Who is going to hold the screws to them? As it's set up currently, costs have been rising for 30 years at insane rates. I know I'm biased because I've been in Boston for quite some time (it's probably different elsewhere), but all of the colleges in the area have been spending money on completely non-academic things. Building elaborate new dorms & cafeterias, immaculate landscaping, bringing in various pop stars for campus events. None of it moves the needle on "education", but it for damn sure enriches the colleges. Speaking for my own alma mater, they spent $8m/year to lure the president away from a California school, because he's apparently very good at luring in sponsorships/donations from alumni (I never really understood WTF that meant). Then the college paid ~$10m for him to have a house in the "hip" part of the city. On top of that, the university spent many millions building new dorms with sushi bars and excellent views. The costs rose a steady 4-5% a year while I was there, and I believe it's been at that clip for decades now. Sure, you can make the argument that it's to pay for their investments, but remember that the university also received in the neighborhood of $100m to rename an existing building on campus. And of course don't forget the monthly phone calls to solicit donations "for the students of tomorrow". Unfortunately I think that the idea of everyone feeling that they are "above average" feeds into this--kids who can't afford it really, really want to go to this school. And subsidized loans make it very possible for people to borrow $65k a year to do it. It's a vicious cycle, because as prices rise, the more it seems that politicians want to make it easier for kids to go to any college they want to. Unfortunately I don't really know of a good way to stop people from making dumb decisions. There aren't many careers that can pay off $150-$200k in loans in any reasonable amount of time, and I'm not sure that it would work out well for the government to step in and say that you can't borrow more than $X for college from any source.

deleted 11y ago

[deleted]

theseatoms 11y ago

What do you predict?

jsprogrammer 11y ago
Total debt will increase on reasonable timelines; defaults and bankruptcies will occur at all periods.
- theseatoms 11y ago
  You think the Federal Reserve is to blame for this, and not the relative scarcity of global investment opportunities compared to the cumulative stock of global savings? "Blame the Fed" is a common refrain, but I'm not convinced that their policy choices have had quite the magnitude of effect that people attribute to them. Though I don't disagree that Fed policy (along with the US government's "too big to fail" mentality) has exacerbated perverse incentives in the American banking sector.
  - jsprogrammer 11y ago
    I haven't said anything about the Federal Reserve. Nor have I laid blame to any particular institution. I'm saying that when you look at how the dominant monetary systems work, the inevitable outcome is increasing amounts of debt as that is the only way to expand the supply of money. In fact, in current systems, money and debt share an almost 1:1 relationship. Any given dollar represents some one else's debt. >and not the relative scarcity of global investment opportunities compared to the cumulative stock of global savings There may be trivial relationships that affect local environments to some extent, but I think almost all effects are probably overshadowed by the more fundamental reality: debt as money. Savings don't really exist. Savings is isolated money that debtors can't access (making it more likely that they default [as there is simply no more physical cash to meet the next payment obligation]).
    - theseatoms 11y ago
      Sorry for putting words in your mouth. Serious question: Why must the money supply must expand?