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You still haven't made clear how I am poorer when I, the hypothetical provider of education, gained $100,000 from the student. The student is giving up the fut

You still haven't made clear how I am poorer when I, the hypothetical provider of education, gained $100,000 from the student. The student is giving up the future money they would have otherwise used to buy a home in order to give it to me, sure, but we already know that. That was established in the comment about Michigan. Did you forget to the read the entire thread, or something?

bumby 2y ago
Is your point that student loan debt is flowing to the administrators of higher education and making it's way back to the economy to push up home prices? If so, it's an interesting hypothesis, but there's a few questions like a) why did it only start to occur in the last decade or so when student loans have been increasing for decades, b) why does this specifically impact housing prices and not other CPI items, and c) has there been any empirical data to actually show this relationship?
- randomdata 2y ago
  > Is your point that student loan debt is flowing to the administrators of higher education and making its way back to the economy to push up home prices? I'm saying taking on debt comes with the assumption that you can create new value, over and above the debt value, in the future. Normally, lenders require a promise of value you have already created (security) to fall back on if you fail to create that future value in order to keep things in check. Not so for student loans, though. They are assumable by those who haven't created any value in the past, and who may struggle to create new value in the future. This creates a distortion in the economy. > why did it only start to occur in the last decade or so Why do you say that? As far as I can see it started in and around the 1950s and really started accelerating in the 1970s. Before that housing prices were almost perfectly stagnant. > why does this specifically impact housing prices and not other CPI items Mostly a function of what else are you going to buy? I wouldn't say housing is the only place that has attracted money (remember Bitcoin?), but may be the most notable. If everyone saw a share of the money then you might find competition in buying things like bread, but if it is only the top 10% (for the sake of illustration) taking the proceeds, there isn't much pressure for them to pay more for bread. Only for the things the other people in the "top 10%" want to compete for.
  - bumby 2y ago
    >Not so for student loans, though. I don't think we disagree on this. Students, by the nature of generally have no/limited assets, are able to get loans because they are backed by the government. >As far as I can see it started in and around the 1950s It took on a completely different character in recent decades, though. Changes in regulation and private loans have changed the rate of debt. >Mostly a function of what else are you going to buy? Forgive me if I'm putting words in your mouth, but it seems like you're saying money flows to education administrators and they disproportionately invest in housing. I'd need to see some data backing that up before I draw a stronger conclusion on it, otherwise it's just a neat and untested hypothesis. And you would expect other administrator-preferred asset classes to follow suit. If your stance is that money goes into the economy as a whole, I would expect a range of products to track with student loan increases, but I'm not sure the data backs that up either.

bumby 2y ago

Is your point that student loan debt is flowing to the administrators of higher education and making it's way back to the economy to push up home prices? If so, it's an interesting hypothesis, but there's a few questions like a) why did it only start to occur in the last decade or so when student loans have been increasing for decades, b) why does this specifically impact housing prices and not other CPI items, and c) has there been any empirical data to actually show this relationship?

randomdata 2y ago
> Is your point that student loan debt is flowing to the administrators of higher education and making its way back to the economy to push up home prices? I'm saying taking on debt comes with the assumption that you can create new value, over and above the debt value, in the future. Normally, lenders require a promise of value you have already created (security) to fall back on if you fail to create that future value in order to keep things in check. Not so for student loans, though. They are assumable by those who haven't created any value in the past, and who may struggle to create new value in the future. This creates a distortion in the economy. > why did it only start to occur in the last decade or so Why do you say that? As far as I can see it started in and around the 1950s and really started accelerating in the 1970s. Before that housing prices were almost perfectly stagnant. > why does this specifically impact housing prices and not other CPI items Mostly a function of what else are you going to buy? I wouldn't say housing is the only place that has attracted money (remember Bitcoin?), but may be the most notable. If everyone saw a share of the money then you might find competition in buying things like bread, but if it is only the top 10% (for the sake of illustration) taking the proceeds, there isn't much pressure for them to pay more for bread. Only for the things the other people in the "top 10%" want to compete for.
- bumby 2y ago
  >Not so for student loans, though. I don't think we disagree on this. Students, by the nature of generally have no/limited assets, are able to get loans because they are backed by the government. >As far as I can see it started in and around the 1950s It took on a completely different character in recent decades, though. Changes in regulation and private loans have changed the rate of debt. >Mostly a function of what else are you going to buy? Forgive me if I'm putting words in your mouth, but it seems like you're saying money flows to education administrators and they disproportionately invest in housing. I'd need to see some data backing that up before I draw a stronger conclusion on it, otherwise it's just a neat and untested hypothesis. And you would expect other administrator-preferred asset classes to follow suit. If your stance is that money goes into the economy as a whole, I would expect a range of products to track with student loan increases, but I'm not sure the data backs that up either.