4 ms·

High inflation and rising wages is a great time to have lots of debt! Certainly much better than the past two decades of debt-saddled college graduations.

oneoff786 5y ago
I’m pretty sure real wages are falling for the lower class
- jonathan-adly 5y ago
  Yeb.. real wage growth is down 2.4% on average YoY[0]. Given how much raises the tech sector is getting, it means everyone else is getting absolutely crushed. 0. https://www.zerohedge.com/personal-finance/us-consumer-prices-soar-fastest-39-years-real-wages-tumble-9th-straight-month https://www.zerohedge.com/personal-finance/us-consumer-price...
- 0xB31B1B 5y ago
  Real wages for working class folks are rising at the fastest pace in 40 years. It’s middle class folks who have stagnant wages.
  - raziel2701 5y ago
    This[0] shows an overall 4% wage increase for all employees compared to last year, while inflation is up 7% year over year. Wages are not keeping up with inflation. [0]https://fred.stlouisfed.org/series/CES0500000003#0 https://fred.stlouisfed.org/series/CES0500000003#0
- bequanna 5y ago
  Actually, the opposite. Wages for low level jobs have risen the fastest. All other categories have only a slight increase or flat.
hiram112 5y ago
> High inflation and rising wages is a great time to have lots of debt! Yes I know there are a lot of progressives / young people who were hopeful the current administration would "cancel" their student debt. While the idea that the executive can simply erase a few trillion of gov't owned debt with an executive order was and is legally dubious, I think a lot of folks aren't aware that the administration is, in fact, wiping out almost 10% of their existing student loans per year via inflation. Meanwhile, the admin has continued to extend the moratorium on student loan payments and interest accumulation, so they are, in fact, fulfilling that campaign promise, at least partially. Though I'm not sure they want to advertise that, lol.
- namelessoracle 5y ago
  Soft cancellation (making X amount of dollar 0 percent interest) is probably politically tenable, and most conservatives i've spoken with feel that is fair. Avoids the moral hazard problem they bring up of "what about the people who paid back their loans?!". The continuing moratorium is effectively just making that the new policy. But the only real reason it feels like the moratorium got continued is because Build Back Better failed and the Biden administration didnt want to compound that political failure with also breaking a major campaign promise. Though continuing student loans during election season also seems politically non viable as well. Especially if an astute Republican hits the drum of "make them zero interest!" to combat the issue. The real problem is that I had heard (https://thehill.com/opinion/columnists/dick-morris/302247-loans-subsidize-obamacare https://thehill.com/opinion/columnists/dick-morris/302247-lo...) that provisions of Obamacare actually use student loan interest payments as source of paying for that program. So a major democratic program is reliant on Student loans. This makes it even mnore of a political vulnerability because Republicans attacking student loans also weakens Obamacare. To put the cherry on top. The Federal Reserve probably really wants student loans to continue. People paying those again is a powerful deflationary measure and puts less liquid capital in the market. It feels like the current admin from a policy perspective REALLY wants to start them back up, but know its politically damaging to do so.
  - hiram112 5y ago
    I follow a few progressives on Twitter, and I've been flabbergasted by just how naive a lot of younger (supposed) college grads are about gov't finances, modern monetary theory, etc. There's apparently a whole generation who really believe that "money" is just made up - that printing trillions of dollars or wiping away the same amount of debt can be done with 0 consequences, and that inflation is just some myth concocted by evil bankers or Republicans. Interesting about the Obamacare funds. Obviously all debt payments to the gov't are subsidies to some other group, but I did not know that these indebted students were literally funding another program that they themselves advocate for (though they assume it can be paid for if they just tax the "billionaires" a bit more). Their heads would explode if someone told them that we could have Medicare for all (another huge line item they want) if we just bumped up the interest rates on their own student debt. Funny how none of the progressive politicians (e.g. AOC) who claim to want Biden to cancel the debt have not come clean with their Twitter fans - that in order to cancel the debt, it'd come at the expense of Obamacare subsidies for people much poorer than most of the indebted grads who want the debt wiped away.
cjbgkagh 5y ago
Young people have the least access to debt (ignoring college debt) and if they have access it’s at higher interest rates. They are the least able to take advantage of high inflation. Unlike rich people who get lower interest rates and tend to own inflation resistance assets. High inflation benefits the rich. AFAIK wages are not keeping up with inflation. Plus looks like we’re going into a stagnation / recession. So even as someone who graduated into the Great Recession I think this generation has it worse. I wonder how much wage growth is actual a shift in the average from the lowest wage people losing their jobs. There has been a marked increase in hidden unemployment / non-participation.
- UncleMeat 5y ago
  Ignoring college debt seems unfair given the huge numbers it represents.
  - cjbgkagh 5y ago
    College debt is restricted to only be spent on college and thus cannot be separated from the expected yield of college. That is an entirely different conversation especially given current and expected future economic circumstances. Then there is the ability to eschew student debt as much as possible by going cheap, going foreign, or not going at all. There is no need for college to be so expensive. There seems to be a hope that inflation will act as a debt forgiveness, or a gateway into MMT to support progressive spending. My point is inflation will exacerbate wealth inequality which is worse than the gain from the 'debt forgiveness' of student loans and MMT requires high taxes to avoid inflation. Which is fine until you're the one paying those taxes.
    - epistasis 5y ago
      Compensating for lots of debt forgiveness with high taxes seems kind of fair, considering that the high debt levels are in part (or largely?) due to defunding public university education.
      - 5y ago

oneoff786 5y ago

I’m pretty sure real wages are falling for the lower class

jonathan-adly 5y ago
Yeb.. real wage growth is down 2.4% on average YoY[0]. Given how much raises the tech sector is getting, it means everyone else is getting absolutely crushed. 0. https://www.zerohedge.com/personal-finance/us-consumer-prices-soar-fastest-39-years-real-wages-tumble-9th-straight-month https://www.zerohedge.com/personal-finance/us-consumer-price...
0xB31B1B 5y ago
Real wages for working class folks are rising at the fastest pace in 40 years. It’s middle class folks who have stagnant wages.
- raziel2701 5y ago
  This[0] shows an overall 4% wage increase for all employees compared to last year, while inflation is up 7% year over year. Wages are not keeping up with inflation. [0]https://fred.stlouisfed.org/series/CES0500000003#0 https://fred.stlouisfed.org/series/CES0500000003#0
bequanna 5y ago
Actually, the opposite. Wages for low level jobs have risen the fastest. All other categories have only a slight increase or flat.

hiram112 5y ago

> High inflation and rising wages is a great time to have lots of debt! Yes I know there are a lot of progressives / young people who were hopeful the current administration would "cancel" their student debt. While the idea that the executive can simply erase a few trillion of gov't owned debt with an executive order was and is legally dubious, I think a lot of folks aren't aware that the administration is, in fact, wiping out almost 10% of their existing student loans per year via inflation. Meanwhile, the admin has continued to extend the moratorium on student loan payments and interest accumulation, so they are, in fact, fulfilling that campaign promise, at least partially. Though I'm not sure they want to advertise that, lol.

namelessoracle 5y ago
Soft cancellation (making X amount of dollar 0 percent interest) is probably politically tenable, and most conservatives i've spoken with feel that is fair. Avoids the moral hazard problem they bring up of "what about the people who paid back their loans?!". The continuing moratorium is effectively just making that the new policy. But the only real reason it feels like the moratorium got continued is because Build Back Better failed and the Biden administration didnt want to compound that political failure with also breaking a major campaign promise. Though continuing student loans during election season also seems politically non viable as well. Especially if an astute Republican hits the drum of "make them zero interest!" to combat the issue. The real problem is that I had heard (https://thehill.com/opinion/columnists/dick-morris/302247-loans-subsidize-obamacare https://thehill.com/opinion/columnists/dick-morris/302247-lo...) that provisions of Obamacare actually use student loan interest payments as source of paying for that program. So a major democratic program is reliant on Student loans. This makes it even mnore of a political vulnerability because Republicans attacking student loans also weakens Obamacare. To put the cherry on top. The Federal Reserve probably really wants student loans to continue. People paying those again is a powerful deflationary measure and puts less liquid capital in the market. It feels like the current admin from a policy perspective REALLY wants to start them back up, but know its politically damaging to do so.
- hiram112 5y ago
  I follow a few progressives on Twitter, and I've been flabbergasted by just how naive a lot of younger (supposed) college grads are about gov't finances, modern monetary theory, etc. There's apparently a whole generation who really believe that "money" is just made up - that printing trillions of dollars or wiping away the same amount of debt can be done with 0 consequences, and that inflation is just some myth concocted by evil bankers or Republicans. Interesting about the Obamacare funds. Obviously all debt payments to the gov't are subsidies to some other group, but I did not know that these indebted students were literally funding another program that they themselves advocate for (though they assume it can be paid for if they just tax the "billionaires" a bit more). Their heads would explode if someone told them that we could have Medicare for all (another huge line item they want) if we just bumped up the interest rates on their own student debt. Funny how none of the progressive politicians (e.g. AOC) who claim to want Biden to cancel the debt have not come clean with their Twitter fans - that in order to cancel the debt, it'd come at the expense of Obamacare subsidies for people much poorer than most of the indebted grads who want the debt wiped away.

cjbgkagh 5y ago

Young people have the least access to debt (ignoring college debt) and if they have access it’s at higher interest rates. They are the least able to take advantage of high inflation. Unlike rich people who get lower interest rates and tend to own inflation resistance assets. High inflation benefits the rich. AFAIK wages are not keeping up with inflation. Plus looks like we’re going into a stagnation / recession. So even as someone who graduated into the Great Recession I think this generation has it worse. I wonder how much wage growth is actual a shift in the average from the lowest wage people losing their jobs. There has been a marked increase in hidden unemployment / non-participation.

UncleMeat 5y ago
Ignoring college debt seems unfair given the huge numbers it represents.
- cjbgkagh 5y ago
  College debt is restricted to only be spent on college and thus cannot be separated from the expected yield of college. That is an entirely different conversation especially given current and expected future economic circumstances. Then there is the ability to eschew student debt as much as possible by going cheap, going foreign, or not going at all. There is no need for college to be so expensive. There seems to be a hope that inflation will act as a debt forgiveness, or a gateway into MMT to support progressive spending. My point is inflation will exacerbate wealth inequality which is worse than the gain from the 'debt forgiveness' of student loans and MMT requires high taxes to avoid inflation. Which is fine until you're the one paying those taxes.
  - epistasis 5y ago
    Compensating for lots of debt forgiveness with high taxes seems kind of fair, considering that the high debt levels are in part (or largely?) due to defunding public university education.
    - 5y ago