yaks_hairbrush
Joined 16 years ago
Joined 16 years ago
On the supply end, if competitors enter a given market and take some of your customers, you might lower prices to lure them back. And if people just can't afford (or otherwise don't want) to go to your salon/restaurant as often, then you might lower prices to lure them back.
As far as the current environment, we've got student loan payments restarting in a couple months after a three-year hiatus. A good number of folks who had some disposable income are going to have less. That'll impact the demand end of the equation. Won't necessarily cause deflation, but will at least lower inflation.
Even if you do that, you're still getting inflation. That'll hit everyone -- not just high earners. Loan forgiveness and payment pauses free up a fair bit of middle class budget and therefore increase the velocity of money.
Someone with a high school diploma will earn on average $1.3 million over their lifetime. Someone with a B.S. averages $2.3 million. The college degree is thus worth, on average, $1 million in lifetime earnings.
Source: https://cewgeorgetown.wpenginepowered.com/wp-content/uploads...
> The fact is, a huge number of people have staggering amounts of student loan debt, and very little ability to repay that debt—and a legal prohibition on discharging it.
I believe I acknowledged that. Making provisions for discharging student loans via bankruptcy would be a really good idea. Much better at targeting student loan relief to those who need it.
> What does this situation gain us that would be lost if we simply cancelled all that student loan debt?
Cancelling all student loan debt would lead to some combination of higher taxes and inflation. No matter how you slice it, that would be a redistribution of wealth from the uneducated to the educated. That redistribution of wealth therefore goes the wrong way -- the uneducated are more likely to be poor, and the educated more likely to be rich.
And, quite frankly, I'd gravitate towards a "no" on this. When taken as a group, I'd expect college graduates to be able to pull off an income stream sufficient to pay down the student loans.
Of course there are individuals for whom student loans pose a real problem. There should be some realistic provisions for discharge in bankruptcy.
Considering our recent/current environment of low unemployment and high inflation, broad-based loan forgiveness is simply the wrong choice from a Keynesian economics perspective. The same is true of continuing the payment pause.
In reality, these aren't completely instantaneous events. But any event duration at its source is going to decrease the event size. Take the extreme case: the event actually took place at its source over the course of two minutes. And we observed it over two minutes. We would have to conclude that the event had zero size.
Of course, the reality is that we have no idea how long the event took place at its source. All we know is that we observed it over two minutes. But that's enough information to conclude that the event we're seeing certainly occurred within a two light-minute sphere. If it had occurred over a larger sphere, we would have observed it over a longer period of time because of the time light takes to traverse the length of the source.