4 ms·

Well this is excellent. I look forward to the day when the responsible members of society (people who pay their bills on time, who save for retirement, who don

Well this is excellent. I look forward to the day when the responsible members of society (people who pay their bills on time, who save for retirement, who don't over-buy) are pushed even further to take care of the people who were immature and planned incredibly poorly. Our society works fine when it's assumed that a small portion of its members are irresponsible. But when it's systemic, there isn't enough money to go around. That's what happened with the housing bubble. Blaming banks is easy, and certainly they did a lot of shady stuff. But nobody forced people to take on mortgages they couldn't hope to pay. Nobody forced kids to take out $100k in loans to go to a dream school instead of a state school. The student loan debt burden is enormous. And I suspect that the people who make out the worst in it will be the ones who actually PAY on time. And I'm terrified of what will happen when it's time to start cashing out my 401k. After years of saving, a person who has faithfully saved $5M should have a nice retirement ahead of them. But I suspect that so many more people will have nothing, and those people will still be voting, and cut themselves a hefty slice of the pie from those who actually planned ahead. And because of the way 401k's are set up, it's a multi-trillion dollar pot of money that can be re-assigned from the "$5m retirement rich" people to those who didn't bother to think ahead and save. One person defaults on an irresponsible debt, no big deal. But the more people do it and the more acceptable that becomes, the worse it is for everyone (especially the responsible people that a society relies upon to keep the money flowing).

curiouscats 11y ago
Student debt becoming unreliable will likely impact rates on student debt. Though it is confused by government subsidies. Those who would lose out are those forced to pay higher rates on student debt. If the government bails out those financial institution then everyone paying taxes suffers. If we continue to subsidies debt and have to do so at higher subsidy levels to make up for risk of defaults then taxpayers again suffer. Indirectly, if it became a significant macroeconomic factor those schools would suffer if students refuse to take out high amounts of hight cost debt. Frankly, this would be a good outcome as they would stop adding on huge admin costs and ego boosting expensive buildings. Student debt is tricky because credit histories likely haven't been built up. For other debt largely those with good histories will get good rates. Those with bad histories will get bad rates (for cars, houses, etc.). Startup small business loans are pretty much always bad rates (if you can get them at all). Given our track record the last few decades don't worry about the 1% ($5 million puts you way into the 1%). Congress has done nothing but bend over backwards to give every possible favor to the 1%. The middle class (say those with $100,000 to $400,000 in their retirement accounts) may suffer but the 1% is very unlikely to suffer until we drastically change who we elect.
- JonFish85 11y ago
  For a generation currently in the 25-30 range, having ~$5 million in a retirement account at age 65/70 will be "way into the 1%"? Putting 12-15% of salary into a 401k plan for 40 years would seem to get you into that range.
Delmania 11y ago
> That's what happened with the housing bubble. Blaming banks is easy, and certainly they did a lot of shady stuff. But nobody forced people to take on mortgages they couldn't hope to pay. Nobody forced kids to take out $100k in loans to go to a dream school instead of a state school. Really? We're told, almost from day one, that the best path to success in America is through a college education. We're also told that the American dream is to buy your own house. Furthermore, we're told to follow our dreams, chase our passions, that nothing can stop us, and that we shouldn't let anything or anyone get in our way. We can be anything we want to be so long as we put in hard work. How much financial literacy training did you get in high school? I went to private Catholic high school, and I didn't get any. Most people will say that's Mom and Dad's job. Wait, they're too busy working trying to pay for healthcare, make sure there's food in the pantry, and gas in the car. The claims of personal responsibility and caveat emptor can only go so far. When the culture you live in is literally teaching you the opposite, it's not enough to blame the buyers. Everyone is to blame.

curiouscats 11y ago

Student debt becoming unreliable will likely impact rates on student debt. Though it is confused by government subsidies. Those who would lose out are those forced to pay higher rates on student debt. If the government bails out those financial institution then everyone paying taxes suffers. If we continue to subsidies debt and have to do so at higher subsidy levels to make up for risk of defaults then taxpayers again suffer. Indirectly, if it became a significant macroeconomic factor those schools would suffer if students refuse to take out high amounts of hight cost debt. Frankly, this would be a good outcome as they would stop adding on huge admin costs and ego boosting expensive buildings. Student debt is tricky because credit histories likely haven't been built up. For other debt largely those with good histories will get good rates. Those with bad histories will get bad rates (for cars, houses, etc.). Startup small business loans are pretty much always bad rates (if you can get them at all). Given our track record the last few decades don't worry about the 1% ($5 million puts you way into the 1%). Congress has done nothing but bend over backwards to give every possible favor to the 1%. The middle class (say those with $100,000 to $400,000 in their retirement accounts) may suffer but the 1% is very unlikely to suffer until we drastically change who we elect.

JonFish85 11y ago
For a generation currently in the 25-30 range, having ~$5 million in a retirement account at age 65/70 will be "way into the 1%"? Putting 12-15% of salary into a 401k plan for 40 years would seem to get you into that range.

Delmania 11y ago

> That's what happened with the housing bubble. Blaming banks is easy, and certainly they did a lot of shady stuff. But nobody forced people to take on mortgages they couldn't hope to pay. Nobody forced kids to take out $100k in loans to go to a dream school instead of a state school. Really? We're told, almost from day one, that the best path to success in America is through a college education. We're also told that the American dream is to buy your own house. Furthermore, we're told to follow our dreams, chase our passions, that nothing can stop us, and that we shouldn't let anything or anyone get in our way. We can be anything we want to be so long as we put in hard work. How much financial literacy training did you get in high school? I went to private Catholic high school, and I didn't get any. Most people will say that's Mom and Dad's job. Wait, they're too busy working trying to pay for healthcare, make sure there's food in the pantry, and gas in the car. The claims of personal responsibility and caveat emptor can only go so far. When the culture you live in is literally teaching you the opposite, it's not enough to blame the buyers. Everyone is to blame.