I wouldn't be surprised if it's better in a few months, especially with the growing protectionism in the anti-inflation act, etc. and acts against Chinese competition, etc. keeping more industry in the US.
The Biden administration mailed student loan checks to people (conveniently set up to arrive just before the most recent midterm): https://www.foxbusiness.com/personal-finance/student-loan-re...
The checks are "rebates" for people who paid their student loans during the moratorium. The idea is to reimburse those people and add back their student loan debt so they can claim the maximum $10K / $20K amount of the forgiveness program.
It's hard to argue that's not inflationary.
Those are people who overpaid during the pause in payments. It's as inflationary as getting a tax refund in April.
It’s directly related to the student loan cancellation program as it’s intended to maximize the amount of cancellation for people who paid during the moratorium.
> Those are people who overpaid during the pause in payments. It's as inflationary as getting a tax refund in April.
It’s not overpayment. It’s just payment because it’s money those people owed on their loans. A payment pause doesn’t mean the money is not owed, it’s simply delayed.
Additionally it’s only for people who paid their loans during the pandemic and have less than $10k in their current loan balance. The check is for whatever amount would return their balance back to $10k.
> "If you made voluntary payments during the payment pause (from March 13, 2020, through Dec. 31, 2022) and your current loan balance is below the amount of debt relief you’ll receive, after you successfully apply for and receive debt relief under the administration's debt relief plan, we’ll automatically refund the amount you paid during the payment pause (only up to the remaining amount of your eligible debt relief)," the Office of Federal Student Aid states on its website.
> But that plan is currently being challenged in court. A federal appeals court on Oct. 21 issued a temporary block on the student loan forgiveness program as it considers legal challenges raised by six states: Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina.
I didn't see anything corroborating your statement that checks were mailed out. Maybe I missed something?
It's my understanding that the pause in student loan payments was initiated prior to Biden becoming president, along with the trillions of dollars of stimulus given to small business owners and individuals, as alluded to by the top post in this thread.
[0] https://www.foxbusiness.com/personal-finance/student-loan-re...
I feel silly because I paid off a student loan during this period and if I had paid nothing it would have been forgiven.
The rational action is to pay nothing as long as possible.
I am definitely familiar with how American public schools are funded (there are also federal funds in the mix).
It’s the governments fault for making terrible loans and forcing taxpayers to absorb the risk. Don’t be mad at people for receiving…be mad the government is offering!
Large income and large student loans is actually very typical for early-career doctors and many other professionals who have very high expected lifetime income.
FWIW, this transfer was means tested - it's just that they consider the lesser of 2021 & 2020 income and we were in school in 2020.
The government stopping charging interest. They don’t care if you pay or don’t. You aren’t taking any money from the taxpayer.
Also, the “taxpayer” charged me 6% internet when the prime rate was 2%. Did it make you feel like shit because you, the taxpayer, were gouging student borrowers?
The discussion isn’t about never paying back. The discussion is about not paying back during the 0% interest period when the gov asking not to pay back.
I’ve been using money that normally goes to loans for other bills. I imagine plenty of other people are buying more stuff with the money so i imagine it does contribute to inflation
Just spitballing here… But maybe you should pay because you promised to pay it, the costs were borne by the vast majority of taxpayers who did not take out such loans, and because tradesmen and other perfectly deserving parties do not get access to such easy money?
The sheer amount of interest I have paid, and will pay, on my student loans makes me think the costs will in fact be borne by me.
After all, I don’t want to be labeled some kind of troublemaker.
If the government wanted us to repay during this period it would not have automatically turned our payments off and told us multiple times it turned auto-debit off.
What kind of absolute fool would restart payment during a 0% interest penalty free forbearance? That’s having a loan that’s much less than the inflation rate. Why on earth except based on irrational internet principles would an individual restart payments on a loan like that? Very little spit balling went into that original comment..
I expect my savings to go up by $20k thanks to this, so I will shift some of my current savings to spending.
You rate the risk of SCOTUS rejecting the program at 0%?
Regardless, it will shift my consumption patterns.
You are incorrect about the exact specifics about the Direct Student Loan program refunds - anyone who had made payments during the pandemic can be refunded.
You are still generally correct though - inflation is caused by several things, M1 and M2 money supply, employment, demand, supply, and sentiment.
Everyone not paying their loans decreased demand for jobs, as that was the primary motivator for many to work. Additionally, the money printed and disbursed to colleges not being paid back leads to another increase in money supply, since the money never gets repaid, and a few select loan companies are now holding very large U-O-ME's, which the department of education seemingly is going to average between all of us, by forgiving it, further adding to the printed money pile.
This is a widely disproved myth.
Everyone got money for free. Things that are free, tend to have less value.
Note also that investors eventually get wise to inflation and start putting their money in gold or somesuch.
The Fed is trying to command the economy, but ultimately people must be more productive for a little less. QE easing and asset deflation have some part, but unemployment must increase, or we simply won't have the "strong labor market" that increased productivity requires. We don't have the sentiment or confidence, and that is going to be devastating if not quickly corralled - inflation can lead to hyperinflation exponentially.
Not for the USD - we have control of the world's economy - which is why the MIC complex and foreign policy is actually an investment in the largest scale.
That difference, between productivity gains and captured output, is the price our future generations pay (in inflation) for continuity _now_. But it isn't fair to push such a can down the road. Things need to pop sooner rather than later, and the Fed would like a "soft landing" - no pop, which may not be possible at this point.
You can print money endlessly, stuffing it into people's bank accounts limitlessly, and as long as they don't spend it you won't see inflation. But once they do start to spend it, the capacity to spend is magnified. Stocks, real estate, etc. provided essentially that bank account... until now.
That means all of my usual expenses during that period were paid for (unless I made nothing or too much that week), plus a lot of weeks it made sense for me to get new equipment.
In many states, people on the low end of the earning scale made more through unemployment than they did working. I have two friends with small businesses that had a hard time getting people to come back to work for that reason.
In a non-inflationary period increasing prices will be met with less demand.
If "more money makes each dollar worth less" was the story then we'd see all goods inflate at similar rates. Perhaps it'd be delayed from the money printing but we'd still see this consistency across industries.
But we don't.
But it is well understood that said willingness changes on what buyers believe[1]. If they believe that lockdown stimulus is causing inflation, it will cause inflation. The mere existence of lockdown stimulus won't cause inflation, but the emotional response to it very well could.
And given that this appears to be a widely held belief, something even some government officials trumpet as the cause of inflation, it seems unlikely that it isn't a significant contributing factor. How is this dispelled?
[1] https://www.brookings.edu/blog/up-front/2020/11/30/what-are-...
Housing has been hard to balk at for a decade for the same reason that nobody politically wants to address: a lack of supply in the market. Renters are now doubly stuck in renting, as home ownership as an alternative market is now rendered unaffordable by spiking mortgage rates. (I.e., the very "demand destruction" the fed desired. And my landlord knows it!)
Energy prices are spiking due to … a lack of supply in the market.
Still, the rate is allegedly +7% YoY, apparently, and my rent goes up +9.5% YoY "due to economic conditions", and my salary is -1% YoY.
Stimulus checks contributed $844 billion to the $1.7 trillion of excess savings we still had by mid-2022.
> We estimate that households in the lower half of the income distribution were still holding about $350 billion in excess savings as of mid-2022—mostly stemming from the boost to income induced by fiscal stimulus in 2020 and 2021.
Personal consumption expenditure went up especially for the bottom income quartile, driven by stimulus. As soon as the bottom of the income distribution had extra money, they drove up the prices of things that are in the CPI.
In contrast, when the top of the income distribution has excess savings, they drive the prices of Tesla stock, NFTs, and real estate. Since they are not in the CPI, nobody cared and money printing could continue. This is what we had in 2010–2020. Direct money transfers to the poor were the thing that broke the system.
Wouldn't protectionism be inflationary?
Unless you are a savvy technocrat who knows where production bottlenecks are better than the market does, protectionism is just a welfare program at best and a cynical rent-seeking, vote-buying scheme at worst.