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Waiting until the economy hemorrhaged and adding means testing on loan forgiveness was the equivalent of shooting yourself in the foot at the starting line. If

Waiting until the economy hemorrhaged and adding means testing on loan forgiveness was the equivalent of shooting yourself in the foot at the starting line. If they did this early pandemic no one would've batted an eye as govt was printing money wildly. Adding now that there is means testing excluding tens of millions from forgiveness makes it unpopular with voters as well.

zamadatix 4y ago
> Adding now that there is means testing excluding tens of millions from forgiveness makes it unpopular with voters as well. Did the means testing become significantly more strict than initially proposed? I thought it was yearly income of 125k (individual) or 250k (household). The reason I ask is I'm not even sure if there are 10s of millions of hits for that let alone 10s of millions of hits for that that were also interested in getting rid of their student loan debt and then miffed. Doubly surprised this had any significant impact on how many voters supported the plan. But it'd all make a lot more sense if those numbers since dropped quite a bit.
User23 4y ago
Debt forgiveness isn't printing money, it's destroying money. Remember, someone holds those loans on the asset side of their ledger. The money was "printed" when the loan was originated. Here's a simple example. Suppose that I loan you $20. Then later I say, you know what, don't worry about it, your debt to me is forgiven. Do I have to "print" $20 to do that? No, of course not. Do you have to somehow come up with $20? Also obviously not. My net worth decreases by $20, and yours stays constant. Clearly the total supply of financial assets has been reduced, not increased.
- theandrewbailey 4y ago
  When the Feds create a loan, unless it's backed by a bond, they print the money they give to you. (They are masters of the money supply, so they can and do print it.) When you pay back that debt, it's "destroyed" and removed from circulation. If they forgive your debt, it won't be destroyed anymore, so the money that was given was effectively printed forever and won't leave circulation.
  - User23 4y ago
    Because as you rightly observe the Congress and its various creatures are masters of the US dollar denominated money supply, it's meaningless to talk of them as having any kind of financial net worth in the way that an entity that isn't a currency issuer has. Congress's "debt" in no way constrains their operational spending ability as it does for those parties who can't create money de novo. Thus, as I already said, the money was effectively printed when they originated the loan, and no new money is created when they forgive it. You're confusing a lack of deflation with further inflation. As for "backing by a bond," clearly you're aware that's just a shell game, because the Fed will issue and front the Primary Dealers whatever reserves they need to buy whatever bonds the Treasury issues. It's operationally impossible for a treasury auction to fail because Congress, via the Fed, backstops it using their constitutional money creating power. It's a kind of fig leaf to hide the fact that in the end it's all just naked money creation. That's not to say that a sovereign currency issuer doesn't face real limits on their spending[1] power, but that would be a rather lengthy digression and I'm fairly certain you understand at least the gist of it anyhow. [1] But not money creating power! Nobody denies that Zimbabwe and Weimar Germany were able to create money, they really truly did. It just had greatly diminished purchasing power.
- jlokier 4y ago
  > My net worth decreases by $20, and yours stays constant. The above is not correct. When I forgive your $20 loan, my net worth decreases by $20, and yours increases by $20. That's accounting 101. The $20 debt is your liability and my asset. It contributes –$20 (negative $20) to your net worth, until it is forgiven or settled. Then it stops contributing –$20. When it was lent in the first place, you also gained a +$20 cash asset at the time, but that's not relevant at the time of forgiveness as you aren't paying it back . (The question of whether money is "printed" is subtler. As the comment I'm replying to says, we usually say government or bank issued loans are "printed" when they are lent out in the first place. It'd be a strange extension to the metaphor to call the same money "printed" for a second time when forgiven.)
  - User23 4y ago
    > but that's not relevant at the time of forgiveness as you aren't paying it back You're correct, I oversimplified to the point of error. This is the salient point though. No money is created or "printed" as part of the operation of forgiving a debt.
rnk 4y ago
Early in the pandemic Biden wasn't in charge and republicans wouldn't do that. They wanted to take away things like health insurance as an option. Maybe the dems could have gotten into one of those covid stimulus bills but I doubt it.
- flyingfences 4y ago
  Biden has been "in charge" since January 2021. Waiting until August 2022 was not the right move.
  - rnk 4y ago
    I wish it had passed but all the things that did pass were by a tiny wisp of barely there support. Via Sinema and Manchin, who ended other obviously good things. I wish it had passed congress but it probably wouldn't have. Get rid of the filibuster, get rid or Manchin and Sinema and we could have passed it into law, but the supreme court looks to reverse the loan forgiveness.

zamadatix 4y ago

> Adding now that there is means testing excluding tens of millions from forgiveness makes it unpopular with voters as well. Did the means testing become significantly more strict than initially proposed? I thought it was yearly income of 125k (individual) or 250k (household). The reason I ask is I'm not even sure if there are 10s of millions of hits for that let alone 10s of millions of hits for that that were also interested in getting rid of their student loan debt and then miffed. Doubly surprised this had any significant impact on how many voters supported the plan. But it'd all make a lot more sense if those numbers since dropped quite a bit.

User23 4y ago

Debt forgiveness isn't printing money, it's destroying money. Remember, someone holds those loans on the asset side of their ledger. The money was "printed" when the loan was originated. Here's a simple example. Suppose that I loan you $20. Then later I say, you know what, don't worry about it, your debt to me is forgiven. Do I have to "print" $20 to do that? No, of course not. Do you have to somehow come up with $20? Also obviously not. My net worth decreases by $20, and yours stays constant. Clearly the total supply of financial assets has been reduced, not increased.

theandrewbailey 4y ago
When the Feds create a loan, unless it's backed by a bond, they print the money they give to you. (They are masters of the money supply, so they can and do print it.) When you pay back that debt, it's "destroyed" and removed from circulation. If they forgive your debt, it won't be destroyed anymore, so the money that was given was effectively printed forever and won't leave circulation.
- User23 4y ago
  Because as you rightly observe the Congress and its various creatures are masters of the US dollar denominated money supply, it's meaningless to talk of them as having any kind of financial net worth in the way that an entity that isn't a currency issuer has. Congress's "debt" in no way constrains their operational spending ability as it does for those parties who can't create money de novo. Thus, as I already said, the money was effectively printed when they originated the loan, and no new money is created when they forgive it. You're confusing a lack of deflation with further inflation. As for "backing by a bond," clearly you're aware that's just a shell game, because the Fed will issue and front the Primary Dealers whatever reserves they need to buy whatever bonds the Treasury issues. It's operationally impossible for a treasury auction to fail because Congress, via the Fed, backstops it using their constitutional money creating power. It's a kind of fig leaf to hide the fact that in the end it's all just naked money creation. That's not to say that a sovereign currency issuer doesn't face real limits on their spending[1] power, but that would be a rather lengthy digression and I'm fairly certain you understand at least the gist of it anyhow. [1] But not money creating power! Nobody denies that Zimbabwe and Weimar Germany were able to create money, they really truly did. It just had greatly diminished purchasing power.
jlokier 4y ago
> My net worth decreases by $20, and yours stays constant. The above is not correct. When I forgive your $20 loan, my net worth decreases by $20, and yours increases by $20. That's accounting 101. The $20 debt is your liability and my asset. It contributes –$20 (negative $20) to your net worth, until it is forgiven or settled. Then it stops contributing –$20. When it was lent in the first place, you also gained a +$20 cash asset at the time, but that's not relevant at the time of forgiveness as you aren't paying it back . (The question of whether money is "printed" is subtler. As the comment I'm replying to says, we usually say government or bank issued loans are "printed" when they are lent out in the first place. It'd be a strange extension to the metaphor to call the same money "printed" for a second time when forgiven.)
- User23 4y ago
  > but that's not relevant at the time of forgiveness as you aren't paying it back You're correct, I oversimplified to the point of error. This is the salient point though. No money is created or "printed" as part of the operation of forgiving a debt.

rnk 4y ago

Early in the pandemic Biden wasn't in charge and republicans wouldn't do that. They wanted to take away things like health insurance as an option. Maybe the dems could have gotten into one of those covid stimulus bills but I doubt it.

flyingfences 4y ago
Biden has been "in charge" since January 2021. Waiting until August 2022 was not the right move.
- rnk 4y ago
  I wish it had passed but all the things that did pass were by a tiny wisp of barely there support. Via Sinema and Manchin, who ended other obviously good things. I wish it had passed congress but it probably wouldn't have. Get rid of the filibuster, get rid or Manchin and Sinema and we could have passed it into law, but the supreme court looks to reverse the loan forgiveness.