10 ms·

My jaded view would be that the banks would just borrow free money, but not pass anything onto the consumers, instead using it for more high risk trading. Seems

My jaded view would be that the banks would just borrow free money, but not pass anything onto the consumers, instead using it for more high risk trading. Seems to me that the government has a much better way to stimulate the economy: lower rates on existing student loans. If the Fed can afford to give negative rates to the banks, shouldn't it follow that the DoE can afford to give negative rates to students?

wdewind 11y ago
> but not pass anything onto the consumers, instead using it for more high risk trading The economy was destroyed by passing it onto the consumers through subprime lending (and a bunch of other things - not trying to assign fault for the subprime crisis here), so high risk trading is not mutually exclusive to passing it onto consumers.
- IgorPartola 11y ago
  The economy was destroyed by (a) fraudulently selling subprime mortgages as mostly AAA-rated, and (b) default credit swaps, which totaled a lot more than the mortgages themselves. I don't see your point.
  - wdewind 11y ago
    Point a) is actually heavily contended. Fraud is not estimated by any credible economist to have had a major (>5%) impact on the financial crisis. In a market situation there is always a disagreement about whether or not a security is worth what it is worth, hence the sale taking place (both sides think they are getting a good deal). There was disagreement about AAA securities of course, but it's very unclear if that is due to market valuing stuff differently or outright fraud. The contents of the loans were not lied about, whether or not they were AAA was not lied about, whether or not they should've been AAA is up for contention. I don't see your point with b) at all. If you're a bank it's not like there are a ton of avenues for you to invest your money, and outside of mortgages there aren't a lot of ways to pass the money onto consumers. So if what you want is the bank to pass its new found money onto consumers that's the avenue you want. Unfortunately the last time we did that a lot of unqualified people got loans. So my point is it's tricky.
    - deleted 11y ago
      [deleted]
  - csours 11y ago
    The economy was destroyed by inflation of a particular asset class driven in part by irrational beliefs about that asset class (housing) [1], misunderstanding of large scale risk [2], fraud in the market from players on all sides [3], and deployment of financial instruments which pushed a huge amount of money into the market [4]. Many actions made the lending crisis worse, but it would not have come about without the huge pool of money that went looking for debt. [5] The point is, it's really easy to make things worse rather than better with a huge amount of money. 1. "Homes never lose value" https://books.google.com/books?id=i2FKCAAAQBAJ&lpg=PT115&ots=SSDQOjITEY&dq=homes%20never%20lose%20value&pg=PT113#v=onepage&q=homes%20never%20lose%20value&f=false https://books.google.com/books?id=i2FKCAAAQBAJ&lpg=PT115&ots... 2. "Real Estate Risk Model Inadequate" http://pages.stern.nyu.edu/~lpederse/papers/MeasuringSystemicRisk.pdf http://pages.stern.nyu.edu/~lpederse/papers/MeasuringSystemi... 3. "Fraud in Real estate Market" http://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud-made-the-financial-crisis-worse.html?_r=0 http://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud-... 4. "Novel financial instruments in home lending" https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf Page 127 (156 in pdf) 5. https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf Page xxv (26 in pdf)
- darryl42 11y ago
  and the banks calling subprime AAA+ no risk loans
maxxxxx 11y ago
I think you are onto something but lowering student loan rates would probably just cause even higher tuition. How about incentives for companies to pay their employees better? I know it's sacrilegious to even think such a thing...
- IgorPartola 11y ago
  Well, there is a pretty large existing population of college grads who cannot afford to spend much because of the existing debt. Most proposed regulation (that I think has no chance of passing) talks about new loans. Immediately lowering rates on existing loans would actually give millennial more spending money. As for tuition skyrocketing, I think that will slow down or even reverse soon. Colleges thought that they could raise rates now, and expect the economy to catch up with higher salaries later. That didn't happen. In fact the opposite happened: the economy tanked, and a bunch of people were left with lots of debt and jobs that can't support it. I think the market will correct itself, especially as online/remote education becomes more prevalent, state schools show that your earning potential is not really linked to the prestige of your school's name anymore, etc.
  - wvenable 11y ago
    I disagree, I think the desperation for jobs will increase demand on colleges and universities and the availability of student loans make that possible. Colleges have been able to, and will continue to, charge whatever students can be loaned.
    - BEEdwards 11y ago
      So unlike every other service colleges are special and the more people looking to do it the more expensive it is. It isn't possible to open more colleges and create competition. That wouldn't work in this case, because as stated unlike every other good or service in the world colleges are special and don't work like that. Glad we cleared that up, now we can just do nothing about the problem.
      - 11y ago
DanielBMarkham 11y ago
Not sure where I read this, but aren't the banks pretty much doing that right now? Picking up the credit and buying T-bills with it? Good for banks, the Fed gets to say it's stimulating the economy, somebody is buying the debt, and so on?
- IgorPartola 11y ago
  Not sure if they are. I remember when the Fed lowered their rates to their current level, someone theorized that it would be profitable, but I have no idea if they are actually doing this.
craigyk 11y ago
The Fed is nominally independent of the government. Ideally they should be working together with the government providing more stimulus and jobs to bridge an economic slump (also doing something about student loans, as you mentioned). Unfortunately government policy is driven as much by fear and ideology as by rationality, so we are mostly limited to what the Fed can do by setting interest rates.
- 6stringmerc 11y ago
  Though it carries some tinfoil hat like connotations, I'd say the Fed is almost more independent of the US government than Goldman Sachs (& Wall St. in general), which should be scary on an entirely different level.
gherkin0 11y ago
> Seems to me that the government has a much better way to stimulate the economy: lower rates on existing student loans. I agree about the banks, but how stimulating would lowering rates on student loads really be, though? While students overburdened by debt get a lot of press, it seems like too small of a demographic to help much. I think we'd get more bang for the buck with programs that target lower skilled and unemployed people.
- jfoutz 11y ago
  1.2 trillion [1]. rates bounce around but 5% seems fair. It's a weird world when i can't tell if 60 billion dollars is a lot or not. One thing to keep in mind, they're young. If they save the extra money, they've got a loooong time for compound interest to work on those dollars. [1] https://en.wikipedia.org/wiki/Student_debt#United_States https://en.wikipedia.org/wiki/Student_debt#United_States
  - gherkin0 11y ago
    > One thing to keep in mind, they're young. If they save the extra money, they've got a loooong time for compound interest to work on those dollars. But isn't that the exact opposite of what you want to happen? It you want to stimulate the economy, you want people to spend more money now. College graduates taking the money they save from reduced loan payments and putting it in a 401k doesn't do that, but giving a formerly unemployed person a job so they can buy new clothes and a car does.
morgante 11y ago
> If the Fed can afford to give negative rates to the banks, shouldn't it follow that the DoE can afford to give negative rates to students? Nope. The Fed is independent of the government and, most importantly, does not answer to Congress. So it can adopt measures to attempt to stimulate and improve the economy which Republicans would surely block if given the opportunity. The DoE, however, is an executive agency and has its budget determined by Congress. Changing the interest rates would require an act of Congress.
- the-dude 11y ago
  > Nope. The Fed is independent of the government Well, Yellen recently said something along the lines of 'being part of the team' and Bernanke claimed something similar in his book or talks iirc ( sorry, no references atm ). The whole independent claim is just smoke and mirrors.
  - CaptSpify 11y ago
    It seems in my uneducated opinion like the whole system would rely heavily on "you scratch my back, I'll scratch yours". Anyone more knowledgeable have insight into that?
  - dragonwriter 11y ago
    > The whole independent claim is just smoke and mirrors. No, its actually legally substantive (though its more independent within the government than independent of the government.) Within its scope of granted authority, the Fed can (and does, regularly) act independently of the President and Congress. OTOH, actions outside of the Fed's legal powers require actions by Congress and/or the Executive Branch. Now, certainly, the Fed, the President, and the Congress all interact and share their opinions, preferences, etc.
  - snowwrestler 11y ago
    The specific truth is that the Fed has fewer constraints on its policy decisions than the Dept. of Education does. The Dept. of Education's policy decisions are tightly constrained by Congress. If there's a law on the books giving the DoE freedom to determine student loan interest rates, then they can. I don't think such a law exists, though, so the Congress would need to pass one. The Fed was created by Congress, and has a multi-part mission that it must meet, which has been set by Congress. But beyond that, it has great freedom to determine how to meet that mission on a day-to-day basis. The Fed is part of the federal government, though. It even has its own federal police force.
dragonwriter 11y ago
> Seems to me that the government has a much better way to stimulate the economy The government has many better ways to stimulate the economy through fiscal policy, but that requires action by Congress, which isn't interested. The independent central bank, the Federal Reserve ("the Fed"), has its mandates from the government with regard to the economy, and a sharply limited set of monetary policy tools with which to pursue them. > If the Fed can afford to give negative rates to the banks, shouldn't it follow that the DoE can afford to give negative rates to students? No, because the Fed issues the currency, and DoE doesn't. That makes what each can afford very different. More importantly, aside from the issue of what they can afford, the Fed makes its own decisions on interest rates, DoE's decisions are made by Congress. Decisionmakers at the Fed have different priorities and preferences than those in Congress.
- bradleyjg 11y ago
  The Fed could buy up refinanced student loan paper in a similar manner to how it's been artificially decreasing the cost of borrowing to buy real estate by accumulating almost 2 trillion dollars worth of MBS paper. That would increase the demand for refinanced student loans and drive down the rates.
  - 6stringmerc 11y ago
    Oh wow, you cannot fathom how much I love this notion. If the Fed started buying up Student Loan Paper at even half the rate of the MBS program - let's go with $30 billion a month - I would probably faint out of disbelief because that action might actually benefit the economic engine of the United States.
  - jdmichal 11y ago
    I'm not sure I understand. It's not like the Fed would just buy the loans and retire them. People would still be on the hook to pay them off. All that does is let the banks get theirs now instead of having to write a good loan and wait for it.
    - 11y ago
batbomb 11y ago
Just nit picking, but the DOE is the Department of Energy. The ED or DOED is the Department of Education.
mrweasel 11y ago
>My jaded view would be that the banks would just borrow free money I'm not entirely sure that is how it would work. They use Denmark as an example, but I believe that the negative interest here was for deposits in "National Banken"/treasury bonds. Meaning that the banks can't just park their money with the state, at least not without incurring a lose. Some still bought Danish treasury bonds, because at least the lose would be predictable and with no real risk. It forces the banks to actually do something with what ever money they have, but you're right in as so fare that the customers aren't going to benefit. Most likely the money will just be placed in stock or treasury bond of other stable countries.
- T-A 11y ago
  http://www.bloomberg.com/news/articles/2015-06-30/tax-ministry-turns-into-danish-haven-as-banks-offer-no-interest http://www.bloomberg.com/news/articles/2015-06-30/tax-minist...
gabriel34 11y ago
I believe there is a misconception on this. The interest rate is payed BY the government to the holders of the treasury security. This is loan the government takes to pay for its expenses. The interest rate the government pays on these securities is determined by the FED, and it is one powerful weapon to regulate an economy. The government is the lowest risk debtor in a country, so anybody who wants borrow must pay more than what the government does. If the FED raises the rate, the rest of the economy follows, financing goods and investing get harder, but inflation tends to recede. The opposite happens when the rate is lowered. If the government pays negative rates on its securities, the banks have to pay TO the government in order to keep money invested in securities. The effect is that the government's debt will decrease, money will flood the market, possibly resulting in a bit of inflation, but maybe kickstarting the economy (and your student loan rates might get lower, if they are not regulated and/or subsidized, which I'm not of sure since I don't live in the US).
ergothus 11y ago
As much as I'm a fan of education, I'd think we'd want to do more infrastructure funding. Spending money that we are GOING TO HAVE TO SPEND makes sense when it is "cheap" money, no? But, as another commenter said, that'd require Congressional action, which doesn't seem to be happening anytime soon.
T-A 11y ago
> My jaded view would be that the banks would just borrow free money, but not pass anything onto the consumers, instead using it for more high risk trading. Regulatory changes following the financial crisis make it harder [1] for banks to engage in proprietary trading and pose stricter limits [2] on how much risk they can take on. [1] https://en.wikipedia.org/wiki/Volcker_Rule https://en.wikipedia.org/wiki/Volcker_Rule [2] https://en.wikipedia.org/wiki/Basel_III https://en.wikipedia.org/wiki/Basel_III
toomanybeersies 11y ago
It's entirely possible. Here in New Zealand, we have interest free student loans. There are minimum repayments (as a percentage of income), and the loan is no longer interest free if you go overseas for more than 6 months of the year. Since inflation is a given, student loans are effectively negative interest over time. It also means that if you graduate, and can't find a high paying job, you're not crippled by interest payments (there's also a minimum income threshold).

wdewind 11y ago

> but not pass anything onto the consumers, instead using it for more high risk trading The economy was destroyed by passing it onto the consumers through subprime lending (and a bunch of other things - not trying to assign fault for the subprime crisis here), so high risk trading is not mutually exclusive to passing it onto consumers.

IgorPartola 11y ago
The economy was destroyed by (a) fraudulently selling subprime mortgages as mostly AAA-rated, and (b) default credit swaps, which totaled a lot more than the mortgages themselves. I don't see your point.
- wdewind 11y ago
  Point a) is actually heavily contended. Fraud is not estimated by any credible economist to have had a major (>5%) impact on the financial crisis. In a market situation there is always a disagreement about whether or not a security is worth what it is worth, hence the sale taking place (both sides think they are getting a good deal). There was disagreement about AAA securities of course, but it's very unclear if that is due to market valuing stuff differently or outright fraud. The contents of the loans were not lied about, whether or not they were AAA was not lied about, whether or not they should've been AAA is up for contention. I don't see your point with b) at all. If you're a bank it's not like there are a ton of avenues for you to invest your money, and outside of mortgages there aren't a lot of ways to pass the money onto consumers. So if what you want is the bank to pass its new found money onto consumers that's the avenue you want. Unfortunately the last time we did that a lot of unqualified people got loans. So my point is it's tricky.
  - deleted 11y ago
    [deleted]
- csours 11y ago
  The economy was destroyed by inflation of a particular asset class driven in part by irrational beliefs about that asset class (housing) [1], misunderstanding of large scale risk [2], fraud in the market from players on all sides [3], and deployment of financial instruments which pushed a huge amount of money into the market [4]. Many actions made the lending crisis worse, but it would not have come about without the huge pool of money that went looking for debt. [5] The point is, it's really easy to make things worse rather than better with a huge amount of money. 1. "Homes never lose value" https://books.google.com/books?id=i2FKCAAAQBAJ&lpg=PT115&ots=SSDQOjITEY&dq=homes%20never%20lose%20value&pg=PT113#v=onepage&q=homes%20never%20lose%20value&f=false https://books.google.com/books?id=i2FKCAAAQBAJ&lpg=PT115&ots... 2. "Real Estate Risk Model Inadequate" http://pages.stern.nyu.edu/~lpederse/papers/MeasuringSystemicRisk.pdf http://pages.stern.nyu.edu/~lpederse/papers/MeasuringSystemi... 3. "Fraud in Real estate Market" http://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud-made-the-financial-crisis-worse.html?_r=0 http://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud-... 4. "Novel financial instruments in home lending" https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf Page 127 (156 in pdf) 5. https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf Page xxv (26 in pdf)
darryl42 11y ago
and the banks calling subprime AAA+ no risk loans

maxxxxx 11y ago

I think you are onto something but lowering student loan rates would probably just cause even higher tuition. How about incentives for companies to pay their employees better? I know it's sacrilegious to even think such a thing...

IgorPartola 11y ago
Well, there is a pretty large existing population of college grads who cannot afford to spend much because of the existing debt. Most proposed regulation (that I think has no chance of passing) talks about new loans. Immediately lowering rates on existing loans would actually give millennial more spending money. As for tuition skyrocketing, I think that will slow down or even reverse soon. Colleges thought that they could raise rates now, and expect the economy to catch up with higher salaries later. That didn't happen. In fact the opposite happened: the economy tanked, and a bunch of people were left with lots of debt and jobs that can't support it. I think the market will correct itself, especially as online/remote education becomes more prevalent, state schools show that your earning potential is not really linked to the prestige of your school's name anymore, etc.
- wvenable 11y ago
  I disagree, I think the desperation for jobs will increase demand on colleges and universities and the availability of student loans make that possible. Colleges have been able to, and will continue to, charge whatever students can be loaned.
  - BEEdwards 11y ago
    So unlike every other service colleges are special and the more people looking to do it the more expensive it is. It isn't possible to open more colleges and create competition. That wouldn't work in this case, because as stated unlike every other good or service in the world colleges are special and don't work like that. Glad we cleared that up, now we can just do nothing about the problem.
    - 11y ago

DanielBMarkham 11y ago

Not sure where I read this, but aren't the banks pretty much doing that right now? Picking up the credit and buying T-bills with it? Good for banks, the Fed gets to say it's stimulating the economy, somebody is buying the debt, and so on?

IgorPartola 11y ago
Not sure if they are. I remember when the Fed lowered their rates to their current level, someone theorized that it would be profitable, but I have no idea if they are actually doing this.

craigyk 11y ago

The Fed is nominally independent of the government. Ideally they should be working together with the government providing more stimulus and jobs to bridge an economic slump (also doing something about student loans, as you mentioned). Unfortunately government policy is driven as much by fear and ideology as by rationality, so we are mostly limited to what the Fed can do by setting interest rates.

6stringmerc 11y ago
Though it carries some tinfoil hat like connotations, I'd say the Fed is almost more independent of the US government than Goldman Sachs (& Wall St. in general), which should be scary on an entirely different level.

gherkin0 11y ago

> Seems to me that the government has a much better way to stimulate the economy: lower rates on existing student loans. I agree about the banks, but how stimulating would lowering rates on student loads really be, though? While students overburdened by debt get a lot of press, it seems like too small of a demographic to help much. I think we'd get more bang for the buck with programs that target lower skilled and unemployed people.

jfoutz 11y ago
1.2 trillion [1]. rates bounce around but 5% seems fair. It's a weird world when i can't tell if 60 billion dollars is a lot or not. One thing to keep in mind, they're young. If they save the extra money, they've got a loooong time for compound interest to work on those dollars. [1] https://en.wikipedia.org/wiki/Student_debt#United_States https://en.wikipedia.org/wiki/Student_debt#United_States
- gherkin0 11y ago
  > One thing to keep in mind, they're young. If they save the extra money, they've got a loooong time for compound interest to work on those dollars. But isn't that the exact opposite of what you want to happen? It you want to stimulate the economy, you want people to spend more money now. College graduates taking the money they save from reduced loan payments and putting it in a 401k doesn't do that, but giving a formerly unemployed person a job so they can buy new clothes and a car does.

morgante 11y ago

> If the Fed can afford to give negative rates to the banks, shouldn't it follow that the DoE can afford to give negative rates to students? Nope. The Fed is independent of the government and, most importantly, does not answer to Congress. So it can adopt measures to attempt to stimulate and improve the economy which Republicans would surely block if given the opportunity. The DoE, however, is an executive agency and has its budget determined by Congress. Changing the interest rates would require an act of Congress.

the-dude 11y ago
> Nope. The Fed is independent of the government Well, Yellen recently said something along the lines of 'being part of the team' and Bernanke claimed something similar in his book or talks iirc ( sorry, no references atm ). The whole independent claim is just smoke and mirrors.
- CaptSpify 11y ago
  It seems in my uneducated opinion like the whole system would rely heavily on "you scratch my back, I'll scratch yours". Anyone more knowledgeable have insight into that?
- dragonwriter 11y ago
  > The whole independent claim is just smoke and mirrors. No, its actually legally substantive (though its more independent within the government than independent of the government.) Within its scope of granted authority, the Fed can (and does, regularly) act independently of the President and Congress. OTOH, actions outside of the Fed's legal powers require actions by Congress and/or the Executive Branch. Now, certainly, the Fed, the President, and the Congress all interact and share their opinions, preferences, etc.
- snowwrestler 11y ago
  The specific truth is that the Fed has fewer constraints on its policy decisions than the Dept. of Education does. The Dept. of Education's policy decisions are tightly constrained by Congress. If there's a law on the books giving the DoE freedom to determine student loan interest rates, then they can. I don't think such a law exists, though, so the Congress would need to pass one. The Fed was created by Congress, and has a multi-part mission that it must meet, which has been set by Congress. But beyond that, it has great freedom to determine how to meet that mission on a day-to-day basis. The Fed is part of the federal government, though. It even has its own federal police force.

dragonwriter 11y ago

> Seems to me that the government has a much better way to stimulate the economy The government has many better ways to stimulate the economy through fiscal policy, but that requires action by Congress, which isn't interested. The independent central bank, the Federal Reserve ("the Fed"), has its mandates from the government with regard to the economy, and a sharply limited set of monetary policy tools with which to pursue them. > If the Fed can afford to give negative rates to the banks, shouldn't it follow that the DoE can afford to give negative rates to students? No, because the Fed issues the currency, and DoE doesn't. That makes what each can afford very different. More importantly, aside from the issue of what they can afford, the Fed makes its own decisions on interest rates, DoE's decisions are made by Congress. Decisionmakers at the Fed have different priorities and preferences than those in Congress.

bradleyjg 11y ago
The Fed could buy up refinanced student loan paper in a similar manner to how it's been artificially decreasing the cost of borrowing to buy real estate by accumulating almost 2 trillion dollars worth of MBS paper. That would increase the demand for refinanced student loans and drive down the rates.
- 6stringmerc 11y ago
  Oh wow, you cannot fathom how much I love this notion. If the Fed started buying up Student Loan Paper at even half the rate of the MBS program - let's go with $30 billion a month - I would probably faint out of disbelief because that action might actually benefit the economic engine of the United States.
- jdmichal 11y ago
  I'm not sure I understand. It's not like the Fed would just buy the loans and retire them. People would still be on the hook to pay them off. All that does is let the banks get theirs now instead of having to write a good loan and wait for it.
  - 11y ago

batbomb 11y ago

Just nit picking, but the DOE is the Department of Energy. The ED or DOED is the Department of Education.

mrweasel 11y ago

>My jaded view would be that the banks would just borrow free money I'm not entirely sure that is how it would work. They use Denmark as an example, but I believe that the negative interest here was for deposits in "National Banken"/treasury bonds. Meaning that the banks can't just park their money with the state, at least not without incurring a lose. Some still bought Danish treasury bonds, because at least the lose would be predictable and with no real risk. It forces the banks to actually do something with what ever money they have, but you're right in as so fare that the customers aren't going to benefit. Most likely the money will just be placed in stock or treasury bond of other stable countries.

T-A 11y ago
http://www.bloomberg.com/news/articles/2015-06-30/tax-ministry-turns-into-danish-haven-as-banks-offer-no-interest http://www.bloomberg.com/news/articles/2015-06-30/tax-minist...

gabriel34 11y ago

I believe there is a misconception on this. The interest rate is payed BY the government to the holders of the treasury security. This is loan the government takes to pay for its expenses. The interest rate the government pays on these securities is determined by the FED, and it is one powerful weapon to regulate an economy. The government is the lowest risk debtor in a country, so anybody who wants borrow must pay more than what the government does. If the FED raises the rate, the rest of the economy follows, financing goods and investing get harder, but inflation tends to recede. The opposite happens when the rate is lowered. If the government pays negative rates on its securities, the banks have to pay TO the government in order to keep money invested in securities. The effect is that the government's debt will decrease, money will flood the market, possibly resulting in a bit of inflation, but maybe kickstarting the economy (and your student loan rates might get lower, if they are not regulated and/or subsidized, which I'm not of sure since I don't live in the US).

ergothus 11y ago

As much as I'm a fan of education, I'd think we'd want to do more infrastructure funding. Spending money that we are GOING TO HAVE TO SPEND makes sense when it is "cheap" money, no? But, as another commenter said, that'd require Congressional action, which doesn't seem to be happening anytime soon.

T-A 11y ago

> My jaded view would be that the banks would just borrow free money, but not pass anything onto the consumers, instead using it for more high risk trading. Regulatory changes following the financial crisis make it harder [1] for banks to engage in proprietary trading and pose stricter limits [2] on how much risk they can take on. [1] https://en.wikipedia.org/wiki/Volcker_Rule https://en.wikipedia.org/wiki/Volcker_Rule [2] https://en.wikipedia.org/wiki/Basel_III https://en.wikipedia.org/wiki/Basel_III

toomanybeersies 11y ago

It's entirely possible. Here in New Zealand, we have interest free student loans. There are minimum repayments (as a percentage of income), and the loan is no longer interest free if you go overseas for more than 6 months of the year. Since inflation is a given, student loans are effectively negative interest over time. It also means that if you graduate, and can't find a high paying job, you're not crippled by interest payments (there's also a minimum income threshold).