State of the American Debt-Slaves, Q3 2020: The Stimulus & Forbearance Phenomenon

Auto loans jump after historic price spikes. Credit cards still in stimulus wonderland. Student-loan borrowers count on debt forgiveness, mmmkay.

By Wolf Richter for WOLF STREET.

Consumers have undertaken an astounding project instead of consuming: Paying down their credit cards. In September, outstanding balances of credit cards and other revolving credit ticked down by a tad to $949 billion, not seasonally adjusted, the lowest since July 2017.

Credit card balances spike in December during the shopping season and then decline during credit-hangover season in January and February. In March, they start rising again. But not this year. In March, credit-card balances fell, and then in April, when the stimulus checks arrived and when people stopped going out and spending money, credit-card balances plunged the most ever. And they have continued to tick down every month since then (not seasonally adjusted). By the end of September, according to Federal Reserve data on Friday, they were down 9.2% from September last year:

And it’s not because consumers are defaulting on their credit cards, with banks writing off the defaulted balances. On the contrary. Credit card delinquency rates have also dropped. It’s because consumers are paying down their credit cards, and they’re spending less.

They had a lot of help in form of government money – the stimulus checks and the extra unemployment benefits of $600 a week, and then of $300 a week, both now expired, and the federal Pandemic Unemployment Assistance [PUA] program for gig workers that has been surrounded by allegations of massive fraud, and so on. Whether fraudulent or not, this money got into the hands of consumers.

But many spending options disappeared: Vacations in foreign countries, cruises, even domestic flights to see friends, and the like were taken off the to-do list, and that money wasn’t spent. And some people refinanced their mortgages to take cash out of their home. And others stopped making payments on their mortgages and moved them into forbearance programs. And some people stopped paying rent, now that eviction bans are in place. And the whole flow of consumer money changed course.

This aggregate balance of revolving credit includes many people who don’t have credit card debt at all, and who pay off their balances every month. And it includes people who use their credit card as a cash management tool. They have no savings, and the money that comes in goes into paying down their credit cards that they use to pay for nearly everything. And with some of them, there is no margin for error.

Auto loans & leases.

While consumers bought fewer new and used vehicles in the third quarter, they bought more expensive vehicles, in part because prices surged. Used vehicle retail prices spiked 15% in July, August, and September, the largest three-month spike in the data at least since 1984. New vehicle prices rose too, but people also bought more upscale vehicles – because those were the people that benefited from the Fed’s bailout of the financial markets. So they bought fewer units, but spent more dollars on them, and they took on more in loans and leases to do so.

In addition, lenders moved many borrowers who were struggling with their loan payments, or had fallen behind with their loan payments, into deferral programs to where no payments needed to be made, and the loan was not marked as delinquent, but the unpaid balances added to the overall outstanding auto loan balances.

Total outstanding balances of auto loans and leases in Q3 rose by $20 billion from Q2, to a new record of $1.22 trillion. It was the largest quarter-over-quarter increase since 2016, after having already risen by $15 billion in Q2. Compared to a year ago, balances were up by $42 billion or 3.6%:

Student loans: stalling repayments & counting on loan forgiveness.

Inexorably, student loans continue to surge, despite declining enrollment since 2010. In Q3 outstanding student loan balances jumped by $23 billion from Q2, to $1.7 trillion, and were up $54 billion from a year ago.

One of the primary factors that has been driving the loan balance up is that fewer and fewer former students made principal payments. Then came the Pandemic, and student loans were moved into automatic forbearance programs. The story I keep hearing is that you’d be a moron to make payments on your student loans because they’ll be forgiven anyway. Mmmkay. So existing loans are not getting paid down, and new loans are being added, and the balances continue to balloon:

In total…

Total consumer debt – student loans, auto loans, and revolving credit such as credit cards and personal loans but excluding housing-related debts such as mortgages and HELOCs – rose by $51 billion in Q3, to $4.14 trillion, not seasonally adjusted, after having dipped for the prior two quarters. Year-over-year, given the 9.2% decline in credit card balances, total consumer credit was up just 0.6%, the smallest year-over-year increase since the declines in 2010:

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  331 comments for “State of the American Debt-Slaves, Q3 2020: The Stimulus & Forbearance Phenomenon

  1. Richard says:

    Debt is not the issue, the issue is it doesn’t have a matching or better “productivity”. Will another stimulus package happen to send the market miles higher? Will another lockdown happen with 100K new cases and 1k death everyday? Will the Fed go negative happen with economic and health crisis both accelerating? That’s what determines the short term financial outlook, long term we are screwed no matter what frankly.

    • coalman says:

      ” Debt is not the issue” What are you smoking?!? Debt is always the issue.

      • Richard says:

        Debt is only a issue when productivity lags behind significantly. We can have 100T debt but guess what tomorrow we figure out controlled nuclear fusion tech, 100T isn’t a big deal no more. My point is don’t focus on debt but productivity figures such as labour participation rate, exports, GDP etc in relation to debt.

        • Nacho Libre says:

          Debt goes under the assets column.

          As long as stimulus checks take care of monthly payments, debt are an asset.

          Of course this is all from Fed and an economist’s perspective. Not common sense perspective.

          Common sense economics is long dead in this country.

        • coalman says:

          compound interest on debt always grows faster than income for the vast majority of working shmucks. Productivity gains are extracted by corporate suits before they are ever seen by ordinary wage earners.

        • Cas127 says:

          Richard,

          Get your point *but*…

          If the cumulative debt has been rising relentlessly, mercilessly for *decades* an honest person has to look in the mirror and ask themselves, “When is the productivity payoff supposed to happen?”

          Because it never happened sufficiently to have a period of debt paydown…almost *ever*.

          You are making the pitch that politicians’ pet economists make (ie, don’t worry…debt is growth).

          Uh huh.

          The median individual’s financial status has stagnated/declined for decades in the US…so the “debt promises productivity” pitch ain’t cutting it anymore.

          It is much more likely that declining prices would reflect true productivity…but the Fed has declared Total War on “dat evil deflation” (just look at the harm deflation caused the computer sector…)

        • Pandora'sJF says:

          Controlled nuclear fusion is the solution. I can’t understand why more aren’t talking about it.

        • NBay says:

          Pandora-Because a “small sun in a box” will never happen.

          Anecdotal, but I had two PhD friends (plasma physics and tritium) who spent whole careers based at Lawerence Livermore and they never thought it would. But who’s gonna screw up a fun, tons of big toys, and well paid lifelong gig? The tritium guy even got to make many trips to the South Pacific.

          You can, however, think of solar cells, wind and wave/tide machines like long probes sticking into the actual sun, if the “controlled” adjective pleases you.

      • Trinacria says:

        In Italian, if people behave badly, or try to cheat, or believe they can be recklessly and skirt by, etc. …..destiny speaks and says “corri, corri, pero’ qui ti aspetto”. Basically, this means, go ahead and run and do whatever you think to try and get away with wrongdoing, but “I” will be here waiting for you. We can keep on with the magical and unicorn thinking, but destiny awaits !!! This is biblical!!

      • M says:

        Another domino falls. This will decrease the banks’ income, since they have gotten such huge portions of their earnings for a long time from funds procured at around 2.5% interest per year or less from their “Federal” Reserve and at 2% or less annual interest from gullible savers, which funds they lent to consumers at 7% to over 30% per year.

        Banks and financial institutions already face gigantic decreases in the fair market (meaning immediately realizable in an ordinary market transaction) value of their assets for many, many months. This will result due to fall of the dominos of more and more business closures, more evictions, more mortgage defaults, etc. Pity the dire straights of the ultra-rich control groups of the financial institutions, who fear the loss of their goals to continue as economic parasites.

        The asset portion of their banks’ balance sheets, which always reflected a thin amount of true, net-FMV, capital, will soon be overwhelmed by the gigantic and increasing, undiminished amount of their legal liabilities. In other words, they are now or will soon be legally insolvent.

        Therefore, prepare to soon see the greatest *or the second greatest after 2008-2011) wealth transfer event/secret robbery taken from Americans and the US government to bankers and Wall Streeters, directly by bailouts approved by congress or by secret aid, if they cannot buy or deceive enough politicians, via their “Federal”
        Reserve. I doubt that the massive aid just recently given to them by their “Federal” Reserve’s purchase of billions of real estate backed debts at inflated, way-above-FMV assets will be enough.

        I do not want to sound like a broken record by speaking out each time that billions or trillions of US dollars are effectively stolen from Americans again and again and again and gifted to the ultra rich individuals that control financial institutions, but I must. Look, they are about to start robbing us and our descendants again!

        • M says:

          Sorry about the typos. It is hard to write without them when children keep interrupting constantly.

      • cd says:

        more of an issue when the prudent are asked to pay for the credit criminals, the debt slaves…..

        no different then crooked governments and corporations

        todays corpocracy is bad for the prudent, best to just join them….

    • Joe Saba says:

      well remember that ‘stimulus’ this year added just $3,500,000,000,000 to govt debt(which we can’t pay and therefore won’t)

      we went to restaurant last night – they raised their prices 25%(no inflation though)

      and now under President Biden expect another stimulus of epic proportions – ie adding to debt

      not to worry – our sub 2% inflation rate just means the REAL INFLATION will continue in the 10-30% range ANNUALLY

      so sorry low wage workers but you won’t have chance – I just raised my hourly rate $5 an hour to compensate for debasement of $dollar

      • Anthony A. says:

        I don’t have an hourly rate anymore. I’m retired on a fixed income. I can’t wait for my 2% increase in SS this January. I suspect that will be offset by the increased premium in Medicare premium I pay. Medicare is not free folks. Neither is the supplemental Medigap policy you will need. Oh, that premium goes up each year too.

        I suspect if we were totally broke (income wise), we could get *free* healthcare…just like in Canada.

        We don’t pay much attention to the restaurant inflation stuff….my wife and I just split the meals anymore. Hey, we call it “dieting”.

        • Paulo says:

          Healthcare in Canada is costed at less than 60% of the US version for the total package. With, better outcomes and obviously universal access with no fees or co-pays.

          Therefore, if the US decided to go that route you might save some money to apply to the debt.

          Canada’s 2017 debt-to-GDP ratio was 89.7%, compared to the United States at 107.8%.

          Direct quote from Healthaffairs

          Canada not only has achieved universal coverage but spends substantially less per capita on health than the United States. Those favoring the Canadian model have tended to assume that the savings in cost come with minimal or no effect on the quality of care or health outcomes. On the contrary, because of universal coverage, health outcomes averaged over the Canadian population as a whole may even exceed those in the United States. However, the U.S. debate over whether the Canadian system is superior has paid less attention to health outcomes than to differences in cost and coverage levels. In Canada, by contrast, there is no serious advocate of the U.S. system.

        • Wolf Richter says:

          “I can’t wait for my 2% increase in SS”

          1.3%

        • David G LA says:

          @paulo
          But then we’d have a collapse of our health care industrial complex. We can’t have that.

        • Dave says:

          @Paulo,

          When we compare health outcomes between USA and Canada I wonder if Canadians have better/same/worse habits/preventative care/well care/demographics/diet etc., etc and how that influences said outcomes. I have only been to Canada a couple of times years back and only on very cursory visits.

          I know as an inner city ICU nurse, A LOT of our struggles in the USA are secondary to poor decisions, bad diet, lack of exercise, lack of access, stress, poverty and many other factors.

      • JC says:

        if eating out is too expensive don’t eat out … why are you eating out when there’s a pandemic anyway

      • Thomas Roberts says:

        Joe Saba,

        The real inflation rate is above 2%, but, 10 to 30% is vastly above what it actually is. It would be debatable what it actually is, but, I would guess it would be something like 2.5% above, what they claim on average over time (that still adds up very fast). It could go up faster in the future, but, as the current healthcare system is quickly going to fail, it cannot really be guessed; in the near future, large structural changes will be forced to happen to many aspects of America, and that will determine the economy going forward.

      • Rowen says:

        Restaurant food increases probably have a lot more to do w/ consolidation at every level of the supply chain, from the slaughterhouses to cold storage to Sysco, than dollar devaluation. Now restaurants have to raise all prices to offset the ridiculous fees charged by uBerEats, doordash, postmates, etc etc.

  2. lenert says:

    So, admittedly a little slow on the uptake here, but over the past 15 years students have borrowed $80B a year to go to school because rich people don’t want the government to spend the equivalent of 3 tenths of a percent of GDP directly on public education?

    • 2banana says:

      College used to be very affordable.

      Loans, if needed, for college education were a private matter between banks, the college and the student.

      Student debt could be discharged in bankruptcy.

      Then government got involved…

      • Joe Saba says:

        hopefully this to will change
        I’m for ENDING ALL STUDENT LOANS
        any forgiveness needs to be matched by paying back those who were responsible and paid their debts

        • Stephen C. says:

          How about the government paying me and others who worked night shifts to get through college? That would be quite a nice Christmas present but I don’t expect Santa Claus to be coming this year.

        • cd says:

          debt serfs love for the prudent to pay for thier stupidity….these twits of today have it made…..while the tough have to pay for their vanity sheep brains…….the vanity nation whines about signing a contract…..tar and feather the fools

          stop taking out debt, idiots….
          sheep, too much grass, blind

        • candyman says:

          why forgiveness? did they not know what they were agreeing to and signing? Going forward, perhaps a new policy for free college, but my guess is then it will be intellect tested. Only those deemed worthy will get educated. Be careful what you ask for, you may get it.

          Paulo…MGH here in Boston loves Canada.

      • OutsideTheBox says:

        Stephen

        ” I did it so you whippersnappers will do it TOO ! ”

        Another doddering codger spews……

      • ozz says:

        For my fall semester in 1978 tuition for 18 course hours was $378 at a 4 year school. I would hate to figure out what tuition is today and what percentage it has increased compared to salary orhoirly wage increases. I got 90 days same as cash and paid my way through with a small scholarship. College has to be one of the biggest ripoffs in the economy today. I pity the young people that feel obliged to pursue degrees that will ultimately not help them find “good” jobs.

    • roddy6667 says:

      All that debt helps to keep the proles in their place.

    • Kent says:

      You say that like its a bad thing,

    • Lisa_Hooker says:

      I’m looking at the results from decades of K-12 “free” education and can clearly see we did not get our money’s worth – for the kids. It has been a relatively successful public make-work jobs program for adults. However, the insolvent pension fund payouts are coming. Don’t worry about being slow, most folks learn more as they grow up.

      • Zantetsu says:

        True. Nothing can be done to improve outcomes for kids until parents improve their parenting. And in this country, that is not likely to happen any time soon.

        • rhodium says:

          The wife works in education, and I get to hear all kinds of stories about the parents. Any kid who acts like a little terrorist and refuses to learn and assaults the other kids almost always has parents that are basically children themselves or who don’t seem to care whatsoever that their child is acting like a young criminal. Many of these people do not value education at all. I ask her what the dad does, if she knows, and more often than not he’s an oilfield worker or something similar.

      • Joe Saba says:

        schools are finding out right now that enrollment is down 10-20% in public schools
        do to HOME SCHOOLING
        better to home school than have baby sitters teaching snotty nosed kiddies

      • Paulo says:

        Nonsense comment. Public education actually allows people to work without paying daycare these days which is exactly why there is so much push to keep them open in a pandemic, but the primary purpose of universal schooling was to create good little workers for the manufacturing economy based on the same industrial model. Now that manufacturing is done somewhere else?…….

        Furthermore, students that come from motivated families that are involved with school work and attempted outcomes always do well. Students from families that don’t support education don’t do as well.

        Everyone has been to school so is an expert on education, just like folks who have a computer first consult Dr Google before going to their own Doc.

        And yes, I do have a Masters degree in Leadership and Training from Royal Roads University that I paid for myself with no debt. Plus, two trade certifications and and one technical degree. That is precisely why my son is an electrician. :-)

        Your comment that school is a public make work project is highly insulting and so far off the mark I should have kept my thoughts to myself. Imagine, just imagine how great society would be without schools and all information is simply gleaned from computer searches and social media. Now that would be a fun place to live and raise children, wouldn’t it. :-) I always wanted someone like Steve Bannon to raise my kids.

        • Lisa_Hooker says:

          Paulo, I always read your comments with relish and respect. I have no axe to grind with the concept of schools; however, publicly funded mandatory elementary schooling in the US has been a disaster – so far. And, twelve year olds should not require daycare.

          On reflection, schools got in my way after 4th grade when I found I could read for myself – which led to a self-educated mechanical/electrical engineering career, no internet until 1994. Yes, advanced maths and law were the hardest ;-). It’s hard to keep children raised by good parents down, mine were the best.

          Were I currently involved in kid raising I would try to be sure that they could discern elements such as Bannon for what they really are.

          Personally I have no use for the current “social media” craze that I believe has even more deleterious effects than public elementary schooling. From your comments it’s obvious you have a very level head on your shoulders and I’d bet your children do too, thanks to you.

          Hopefully the internet will change our schooling practices. This experiment has begun in earnest because of the virus, despite the public/private for-profit education industry. I fear that we now have far more “workers” than we require for the current economies and their future is much more unstable than when we both were young. Big changes a’comin. We do the best we can every day.

        • Cas127 says:

          “just imagine how great society would be without schools”

          False choice, P.

          The choice is between better and worse, and the incentive structures and organizational pathologies that lead to one or other.

          The current state of American public education is the ever more toxic product of Teachers’ (Etc) union political gamesmanship and predation.

          Public sector unions are the organizational and financial backbone of the political Left in the US and, in stark contrast to their publicly proclaimed platforms, ensure that they eat first and best with regard to the general US public.

          They aren’t that far from the old Soviets, with better PR.

        • Greg Hamilton says:

          Paulo,
          You might want to read Isaac Asimov’s “The Fun They Had”, a 1951 short story about the future of education. It’s coming sooner than you think.

        • Lee says:

          Visit Australia and you’ll see various levels of ‘educational outcomes’ in public schools ranging from totally pathetic to super outstanding and better than anything you’ll find in the USA.

          Overall Australian education is much better than in the USA especially in the big cities. The university level, well, it has turned into a business more than education for a lot of departments, but even saying that, overall the kids here are probably better educated than in the USA.

          Although as I have stated in other posts, the level here has fallen quite a bit over the past 25 years or so.

          Private schools ofter better outcomes and if you’d check the university entrance test scores for private versus public you’d find that the highest scores come from private schools.

          For example, this means that if you want to be a doctor the chances of you getting in by going to a public school are very slim. Yes, it happens, but nowhere near compared to the number sent by private schools.

          I also have a Master of Education degree and it it worthless (from an Australian University too!), taught here in Australia and Japan, so I do know what I’m talking about.

        • OutsideTheBox says:

          Greg H

          Asimov was a writer of FICTION.

          Hardy an authority on education systems.

      • otishertz says:

        Oregon just passed a ballot measure to give free preschool at a cost of 1.5% on incomes over 125k and five years later it increases to 2.3%.

        Hardly anyone even has kids any more. This is yet another single mom bailout.

        $1875 a year at minimum $125k is more than I want to pay to sponsor spawn that is not mine. About to throw in the towel here in Oregon and maybe head back to the Florida beach from where I came.

        Income taxes are between 5 and 9.9% here already. The politics are so conformist, intolerant and cognitively dissonant. Nature is all that is worth sticking around for with everything closed… .

        The uhaul one way prices are very telling. Leaving NY or SF costs $2000 more than moving there.

        • otishertz says:

          … 9% Oregon income tax rate begins at $8900 individual and $17800 for a couple. A poor working couple making the combined total above will pay $1602 for income taxes.

          Rent for a one bedroom in Portland is about $17800.

          This dam won’t hold.

        • otishertz says:

          … adding to all that, Portland is in debt about $20k per person, not household.

          Oregon State has a budget surplus though.

          Lots of blue, purple, pink and green Portlanders enjoying the largess.

          I’ll stop now.

        • Cas127 says:

          Let the Nike pontificators pay for it and ditch OR.

          The US is a huge country with 49 other options (some which can be scratched off, a la OR).

      • MCH says:

        To say that our public education has been anything else but a disasterpiece is somewhat charitable. Kids leaving high school without a lick of understanding basic finances is one of the biggest travesties ever. It has created generations that had no clue how to balance their checkbook and gotten more mileage for the banking industry than Madoff and his ilk could’ve ever done with their Ponzi schemes.

        • Old School says:

          My nephew just pulled his kids out of Wake County, NC school system when they went virtual and he saw how poorly instruction was, at least on line. He and his wife are going to home school. They are both professionals and work from home.

        • Cas127 says:

          “no clue how to balance a checkbook”

          That is a feature, not a bug, from DC and the MMT crowd’s perspective.

        • Wolf Richter says:

          MCH,

          “…generations that had no clue how to balance their checkbook.”

          I think I know what you mean, and that you’re using this as a figure of speech, and I agree as such.

          But balancing a checkbook went out the window with online banking and electronic payments, where I can just log in and see if everything is correct, if there are fraudulent charges, etc. and get the instant balance. I write about 3 checks a year. All remaining payments are made electronically, most of them automatically, and they show up in real time. I stopped manually writing into a checkbook and reconciling it back in the 1990s, thank god for the internet.

          Kids don’t need to learn outdated and useless low-level skills, such as balancing a checkbook. But they do need to learn about financial issues and responsibilities in the modern context.

        • Kerry says:

          Most public schools these days would qualify as child abusing entities only a generation ago…

        • MCH says:

          @Old School

          Yes, online school is absolutely distressing because you actually get to see how the kids aren’t doing anything. I think unfortunately, there is an out of sight, out of mind mentality. After all, as said by someone else, public schooling is nothing more than a set of publicly funded day care for the most part. It really is pushed on the kids to want to learn, and then they have to buck against the system to get into better classes that are more challenging. Left to their own devices, most of these kids can’t even get through Algebra. I have doubts about their ability to solve something as simple as quadratic equation. It is a sad state of affairs.

          @Wolf

          Yep, a figure of speech. Two things here:

          One:

          You are correct of course, checks are rarely used except for paying property taxes, checks are used far less often. Another “feature” of our society, the gradual destruction of paper money in my opinion is something that as citizens we must fight against. Because fiat currency in digital form is a guaranteed way to tyranny.

          Let me pick an example that’s not so agreeable to many people, but imagine this, everything is a digital dollar, something that is actively monitored by the Feds and they have “access.” Marry that to our surveillance state, so, now here comes the pandemic, and the government mandate mask wearing. (just using this as a convenient example, you can put any other scenario here) They find that you do NOT wear masks via cameras mounted literally everywhere. Now, the Fed decides as a punishment for not following mandates, your funds are frozen for a period of three days as punishment. What else would you call this but tyranny. The whole point of fiat currency is a form of control, digital currency makes that more likely, not less. The only question is when will governments consider outlawing things like bit coin.

          Two:

          If there is one thing that needs to change is the educational system in the US. When I grew up in the 80s, I thought we got more out of our public schools. But as with anything that gets too powerful, the school unions have gotten way out of control, more in jackass run states, but let’s face it, this is a problem everywhere. The problem is basic math is not taught well, neither is anything related to finances, our kids are growing up pretty much ignorant of the basic things like how its useful not to spend more money than you have, that those shiny credit cards are nothing more than traps designed to make people into debt slaves.

          I think if there is one thing that this country has failed under every administration, it is the area of basic education, and the problem is worsening year by year. There is the usual cry from the jackasses that we are failing basic education and all that BS about not producing enough scientists, but that has never been one of their priorities. The subtext is we need to put more money to the teacher’s unions so that they vote for us. It’s utterly sickening.

        • MCH says:

          P.S. One other comment, Wolf.

          “they do need to learn about financial issues and responsibilities in the modern context.”

          I agree completely, but who is going to teach them? Their teachers are as incompetent and ignorant of these things as the students, this is easily a multi-generational failure.

          I think others have said it the best, the only real line of defense are the parents, and that resource is now being stretched to the limit.

      • cas127 says:

        LH,

        Bravo.

        Every time I hear the Teachers’ (Administrators/Aide/Clerical/Janitorial/Bought Vote) union talk about how it is “All for the Kids”…

        I immediate flash back to Saddam pawing that poor kid in Gulf War 1…

        (Ditto for AARP commercials using children to pimp for SS…)

    • Absur Ditty says:

      obviously lenert is right the federal govt should buy free higher education for every person in America!

      And that free education MUST include! Numerous professors who don’t do much cannot be reached and actually delegate all the teaching to TA’s who barely speak English, Beautiful campuses with immaculate landscaping, free transportation to/from school, free food at school, free housing at school, lectures delivered in person to small groups regardless of youtube, luxurious gyms, multiple olympic swimming pools, social halls, dance lessons, private music lessons, and huge buildings that are barely used.

      And anyone who is rich must pay for this! Anyone in the top 1% of income earners globally must pay for this! (top 1% globally includes anyone earning more than $30k / year)

      • Lisa_Hooker says:

        You forgot the stadiums. Must have stadiums. Big stadiums for sports television.

        • Tankster says:

          Not so fast my friend. Those stadiums and football teams generate tens of millions of dollars for the school. Take a look at my Alma Mater, the University of Florida, or my wife’s, Florida State University. They are very profitable, and fund all of the other athletic programs like gymnastics, track, baseball, as well as almost all Title IX programs. If your school, and others have visions (delusions) of grandeur because you think “if we build it they will come” and the program operates at a loss then close the programs down and move on..

        • roddy6667 says:

          I think that if you look at college sports using GAAP and include the cost of the stadiums, the classrooms, the salaries and benefits and PENSIONS of the staff, you have a losing proposition.

        • Stephen C. says:

          @Tankser,

          Revenue from televised college sports is part and parcel of the ruinous financialization of the University experience, detailed below by Wolf.

        • Chris_G says:

          In Ohio, the highest paid public employee is the OSU football coach. Highest paid by a mile.

          In the meantime, China is sending its best and brightest to our graduate schools of Science, Math, and Engineering. We’re forcing our brightest to become life-long debt slaves because unlike every other form of debt it can’t be discharged in bakruptcy (BTW, thanks for that, Joe Biden).

        • Tony22 says:

          Tankster said;

          “those stadiums fund all of the other athletic programs like gymnastics, track, baseball, as well as almost all Title IX programs.”
          And WTF do those pursuits have to do with education???? The descendants of field hands bred like animals, running around chasing a ball has nothing to do with culture, values or education.

        • KDMaz says:

          Michigan State University’s new vice president/chief diversity and inclusion officer (CDO), Jabbar Bennett, was offered a cool $315,000 per year salary, as well as a $700 “monthly vehicle allowance,” according to The State News.

      • Old School says:

        It is interesting to see how public educations role has gotten larger. When my dad went to school, you got yourself there without a bus and you provided your own lunch.

        Now even when school isn’t in some systems provide lunch. I don’t know if it’s progress or not.

        • Cas127 says:

          Here in LV, the public library system has started providing “monitored” (mm hmm) remote learning/free lunches for school Kids.

          This follows a huge, multi yr ELS push (taking up about 20% of library sq footage).

          They have also, over the last 5 yrs, cut the book inventory by about 30%.

          Bureaucratic entities don’t care about their “mission”…like everybody else, they follow the money.

      • MCH says:

        yeah… sure… the morons can’t even get basic schooling correct, and they want to pay for free higher ed. Where the criteria of applicant is the color of the skin, and not based on any real merit.

        What a joke. Let me know when they kick out the crazy polysci nutjobs in place of some more practical personnel like Algebra teachers, accounts, and chemists. Then I’ll considering supporting such an idea.

        Or better let, let me know when grade schools in this country can produce functional young adults who do not immediately get sucked into the Wall street money machine primed to turn every non-college educated (and a good number of college educated) kid into a debt slave.

    • Bobby Dale says:

      The debt is paid by all, rich and poor alike, via devaluation of the currency which harms the poor more than the rich.
      Why should a person who never has or will attend a university, with it’s upper middle class lifestyle and costs, pay for the future desk jockeys of the world? Many become productive in society in careers which do not require a degree. Ask your plumber or a truck driver if he wants to pay for your child’s 4 years of pampering.

      • Lisa_Hooker says:

        Used to be that plumbers and truck drivers dreamt of their kids going to college. Now they are waking up to degree dilution. Or so says my retired comfortably at 50 electrician. His kids are using Kahn Academy/MIT/Stanford online as they complete their apprenticeships.

      • kristine says:

        Ask your plumber or truck driver if he wants a shortage of doctors, teachers, ready to go military officers, epidemiologists, scientists, architects, civil engineers, and all that other good stuff that college educations make possible. You can’t say you want world class cancer care, bridge engineers, and even paper pushers who can navigate national emergencies to get things where they need to go, etc., and not be willing to supplement higher ed. If you extrapolate your view- why should childless couples and old people help support public schools? Because we all benefit from having an educated populace, at all levels, to fill society’s needs. Are there slackers, self-indulgent naval gazers and societal moochers at the college level? Sure. But they exist at every level of education and income. There are also true geniuses and hard-working highly skilled people at every level of education too. But that does not negate the need for a populace that has an adequate and proper education for the myriad services they expect. Public support of college is also a way in which we put our faith in the American dream, because it aids upward social mobility. (Then college debt due to bloated university infrastructure takes that away…oh the irony.) In any case, I am happy to support all levels of education, because we do not want to slip back into superstition and the dark ages.

        • California Bob says:

          Well said, thanks.

          re: “… we do not want to slip back into superstition and the dark ages …”

          40% of the country is already there.

        • Paulo says:

          Thank you Kristine. I was just too pissed off at the resident education experts to reply.

          I am reminded of the recent joke:

          “My Facebook friends are so amazing. Just 6 months ago they were all constitutional experts and scholars. And now they are epidemiologists.”

          Like I said up above, everyone has been to school so everyone is an expert on education, or at least has an opinion. My 93 year old neighbour often says the same kind of things, but his boogies are doctors and dentists. He likes to exclaim, “Nine out of ten dentists have no idea what they are doing”. My personal favourite, “60% of Doctors don’t know anything”. Arrhhhh,

        • otishertz says:

          I’m OK with giving money away to the poor and disenfranchised, whatever that means, as long as that’s before the trillions given to rich bankers in direct payments and to technofascists in tax breaks.

          Oregon actually just paid reparations to people of African descent, no matter the proportion of said descent. It was around $60-$70 Million if you could prove hardship based on your ethnicity to an independent sympathetic body.

        • Cas127 says:

          “ready to go military officers, epidemiologists”

          Forever war (military Genius, General failure)

          Pandemic.

          When it comes to government in America, just because you pay for it, doesn’t mean you get it.

          Quantitative easing/money printing/fraud writ large means never having to be accountable.

        • OutsideTheBox says:

          Kristine & Paulo

          Bravo and well said !!!

        • nodecentrepublicansleft says:

          Well stated! Thanks!

          And Calf Bob, I watched in horror in the 1980s when the USA started eviscerating public education.

          Fast forward to 2020 and many are getting their “news” from Facebook and most of the GOP believes the Q-Anon BS…. These things make the case for better public education or the whole society goes backwards.

        • Lee says:

          “40% of the country is already there.”

          Are those the 40% going to BLM peaceful protests?

        • QQQBall says:

          The USA wont end w/o free college tuition. Enough with the nanny state. How about we try to balance the budget and then work on the national debt. I know, I’m an old codger. :)

          The craziest part is that it took like 185 years to have $1T in national debt and like 225 years to get to $4T. In most recent fiscal year the deficit was over $3T. That’s what a parabola looks like. Yet, lets pay for everyone!

          BTW, when stores were open, it seemed 1/2 the young clerks cuddn’t count change. Seriously, my GF and i would laugh about it all the time. Sending those morons to college on a free ride is a fool’s errand.

          Obama codified a predatory sickcare system. Now you want the same for college education. USA has highest medical costs and 37th in quality. BTW, both my chillrens did advance and law degrees abroad. Even with the non-resident charges, still much less expensive than comparable degrees here in USA.

        • Tony22 says:

          “Ask your plumber or truck driver if he wants a shortage of doctors, teachers, ready to go military officers, epidemiologists, scientists, architects, civil engineers,”
          What does it matter if he and his family cannot afford the insurance payments to access the doctors, if the school teaches Orwellian brainwashing to villify their family and its history and their father’s job, if the military officers lose pointless wars, the epidemiologists, scientists, architects and engineers are never used to produce anything longlasting for the public good?

        • California Bob says:

          re: “And Calf Bob, I watched in horror in the 1980s when the USA started eviscerating public education.”

          Me too. At one time, California had one of the best public schools systems in the world; I’m a product of that system and feel I had the best education I could handle. UC was recognized as one of the best ‘elite’ school systems anywhere, but the state colleges were as good as, and in some cases better–grad students in computer science at CSU Chico taught PhD candidates at UC Davis because they were the most qualified instructors available –and was generally affordable to most aspirants. Scholarships, ‘student aid’–a realistic loan/grant program–and a part-time job worked for many. I got a free ride because my father worked himself up from near-poverty to comfortable middle class–with my mom’s help–through the system and he believed in education (he finished his career as a career counselor in a community college). Oh, and the community/’junior’ college system is a great stepping-stone, either to the trades–nursing, auto mechanics, welding, etc.–or as an affordable step to a 4-year degree. I recently took a couple welding classes at the local JC; the instructor was not only an incredible welder and craftsman and one of the best instructors I ever had, but he was selected as department head with ‘only’ an AA (2-year) degree. That’s how a ‘merit system’ should work.

        • candyman says:

          we seniors do pay for public schooling. property taxes.

          Wolf..useless skills, balancing a checkbook. is outdated, but the accounting, math skills are not.
          These are not being learned, new hires ($20/hr)here can’t make change for a dollar. Don’t tell me that is useless either as everyone pays via phone. It is the knowledge that is lost. There is no thought analysis, reasoning or understanding how systems work.

      • otishertz says:

        Yes

        • otishertz says:

          Link to recent Oregon reparations because it was unbelievable to me too. I tried to apply but my ethnicity is too vague.

          https://www.theoregoncaresfund.org/

        • NewGuy says:

          Thanks for that info otis. I was unaware. It doesn’t surprise me. Every recent proposition in OR. was passed. Even the decriminalization of hard illegal drugs (meth,LSD,etc.). The people and govt. of OR. have completely lost their minds. It is the land of no personal responsibility. Even the high school drop out rate is a staggering 22%. But hey, they know how to build shelters under highway overpasses. I would move to Montana or Idaho if I wasn’t tied down here.

    • Wolf Richter says:

      lenert,

      I don’t think that’s a complete assessment. Look at who ultimately ends up with that student loan money. Students are just the conduit.

      Look at what happens at universities these days: “student housing” has become a global asset class with its own CMBS, and landlords/investors are (were) getting rich off student loans. Tech companies supplying the equipment and software are getting rich off student loans. Video-game and console makers are getting rich off the student loan money. Universities are on a land-grab, buying properties and building palaces, and they’re getting rich off student loans. All kinds of vendors and retailers and bars are going after this student loan money. This student loan money has created and nurtured entire industries.

      That said, the median (half are over, half are under) student loan debt for ex-students is $17,500. It’s not huge. Only about 10% of the students have huge debts, including $100k-plus which make good click-bait headlines, that skew the often-cited “average” (something like $34K), and these are students that pursued graduate degrees, sometimes multiple graduate degrees, that take many years.

      • lenert says:

        Understood – you’ve covered this in detail. But students have always been the conduit – they have no income and no collateral – no banker in their right mind would make them a loan without a government guarantee. And decades of budget cutting means schools have to “get creative” and privatize and securitize student housing, for example, because we just won’t fund it directly which would cost less. Meantime, as you point out, CEOs, University presidents, Coaches, Athletic directors, and investors get paid while the students end up with the financial obligation and the G covers the bad loans. This is by design.

        • polecat says:

          ‘Ummmm, Tasty collegian nuggets, yomm yomm yomm’

          So saith the 1%+ .. with a whole host of PMCs, and a gullible public at their bidding.

          The kids should be tearing these people apart, but no … let’s ‘build’ some Chazs-n-Chops, instead …

        • polecat says:

          To clarify,
          My point being, that the directional angst that the youts
          are experiancing, are but a deflction of and by the real perpetrators of student debt – the Grift and a Raker Class and their hangers-on, much of which comprises the vaunted persons that we have elected – for decades!! to CONgress .. and in a largely clueless 80+% of the public,who believe a college degree is the key to the Realm’s chocolaty nougat center, if only they DO what they’re told, by berneysian academia’s virtue klaxons ..
          .. and here we STILL are .. at each other’s throats! cuz the Ball is in THEIR court, as always!

        • Cas127 says:

          “And decades of budget cutting means schools have to “get creative”

          Here is the UC system’s own version of financial reality from 1998 to date.

          https://www.ucop.edu/operating-budget/budgets-and-reports/current-operations-budgets/index.html

          Expenditures have quadrupled.

          That does not say good financial stewardship or cost control to me.

          There have been no “budget” cuts from either the State or the Fed (and there are some mysterioso revenue sources that I wouldn’t be surprised to find out are State or Fed, in UC budget drag).

          It is interesting to see what a huge chunk the UC hospital system makes up…it is also interesting to contemplate whether it really shouldn’t be reported/analyzed separately (a lot of skim can be hidden in somebody else’s larger operations).

          And this is the version of finances most generous towards the UC system.

          (Audited? Audit standard? Gvt independent audit?).

          Financials on Pg 2 of 1997-98 report.

          Page (ahem) 175 of 2020-1 report.

      • sunny 129 says:

        How many students, their parents and grand parents know who made the law exempting the student loans to be discharged under the the usual bankcruptcy law available to any one or business in America!

        Our newly elected Joe Biden, when he was VP! As a favor to Banksters! Most of Banks & Us mult-Nationals are incorporated 9many just under PO BOX) in DELAWARE !

        The former vice-president and 2020 presidential hopeful backed a 2005 bill that stripped students of bankruptcy protections and left millions in financial stress
        Guardian

        JOE BIDEN’S ROLE IN CREATING THE STUDENT DEBT CRISIS STRETCHES BACK TO THE 1970S
        As a senator, Joe Biden supported several bills that contributed to the rise in borrowing from $1.8 billion in 1977 to $12 billion in 1989.
        -the intercept

        Biden Tanked Student Loan Debt Discharges For Finance Industry (in 2005) While Complaining About His Own Law School Debt, If It Matters
        -abovelaw

        Both parties serve Corporatocracy!

        • Lee says:

          Don’t bring up facts – it insults the intelligence of the voters.

        • 728huey says:

          Actually it was part of the tax increase during the Clinton administration that was written into the bill by the GOP to try to sabotage it from being passed in the first place. As a result it was passed strictly along party lines with all of the GOP voting against it along with a few blue dog Democrats, with then-Senator Bob Kerrey being the decisive senator creating the 50/50 split in the Senate which caused then-VP Al Gore to cast the deciding vote. Kerrey retired in 1994, which led to the GOP taking that Senate seat which they have had ever since.

      • otishertz says:

        My feel is that making essentials like housing, education, rent, and food more expensive – and to incrementally squeeze juice out of average people, will come back and haunt those who think they can dictate what the level of suffering is acceptable to them.

    • Mario says:

      Almost everything the government gets involved with turns to crap. Less government is the best government.

      • lenert says:

        Do you tell that to your friends in the Marine Corps? Have you ever used Windows?

        • lenert says:

          Jdog, with respect, I’m sure you can come up with your own examples where government does a job that the private sector won’t touch without the government offering large incentives – sure – military contracting. And I’m sure you can recount many colossal business failures – new coke? – as well as companies that wouldn’t exist or wouldn’t be profitable without some kind of direct or indirect gummint support. This categorical is just so tired when in reality the biggest spending lobbyist, last time i checked, was Verizon – which at one time lead the nation in consumer complaints. So maybe it’s not about having less gummint but who it works for.

        • Tony22 says:

          Please list the post 1940s military conflicts that we have “won”, or that have led to peace and stability where they occured. I want to see what I am getting for the 55 cents out of every federal tax dollar that I am obligated to pay.

          Maybe president Biden could elaborate on the half century of his voting record in the senate and Obama presidency?

        • Wolf Richter says:

          Mario,

          “Have you ever used Windows?”

          Touché 🤣

      • Paulo says:

        NASA, NOAA, roads, bridges, military, research………. Gotta love these libertarian memes.

        I get it now. We’ll get that new bridge because some rich guy thinks we need one. Or the Coast Guard ships. Some rich fishing company will protect out shores for us because it’s the right thing to do. And why have courts and a justice system when we could just get together and tar and feather some folks? Maybe buy some rope instead of paying for police.

        Yeah, let’s get rid of Govt as much as we can. Stuff like the EPA. Hell, I never lived near the Love Canal. I don’t drink Flint water. Screw um. It’s interfering with my income stream.

        • Wolfbay says:

          At least in the USA multinational corporations ( which also control media)and the military industrial complex have a huge influence on big government. This is why at least some Americans are not supportive of our ever larger government.

        • lenert says:

          Man, loved my Tacoma public utilities. They always pick up the trash on time. The city sends one bill every two months for water, sewer, garbage, and electric at 3cents a kWhr. They even ran inexpensive, highly reliable internet service before the whiny carriers forced them to privatize it again. On Christmas day 2010 the water main broke in front of our house and city workers came right out and fixed it. Because the system was designed and built with redundancy no one in the neighborhood lost water and we all had Christmas – except for the city workers who left their families for us. But yeah – freedom.

        • IdahoPotato says:

          The American electorate in general wants government to do a lot for us. Where we disagree is whether government should do it for all of us.

          The most vocal libertarians I have met are either farmers or military contractors.

        • OutsideTheBox says:

          Paulo

          Great comment on Libertarians.

          Libertarian motivations derive NOT from well thought out ideaology.

          Libertarians are the way they are due to unresolved ” mommy” issues.

        • Happy1 says:

          NASA, NOAA, roads, bridges, military, research…

          At the Federal level, defense spending is 16% of the budget. NASA, roads, bridges, and all other project spending is another 15%.

          The rest is interest and transfer payments (SS, Medicare/Medicaid, SNAP, unemployment, welfare, etc).

          I would be fine with vastly limited transfer payments and the roughly 30% of spending that actually helps the common good (defense, infrastructure, etc).

          State level spending is more variable but in most states K12 and higher education is 50% of the budget and Medicaid another 25%, and Medicaid has increased vastly with ACA.

          But people always want to talk roads and bridges. If that were what I was getting for my taxes, I would be very pleased.

        • Tony22 says:

          Happy, To whom software does not allow a reply

          ‘Defense spending is 16% of national budget’

          Where did you get those numbers?

          “For 2020, Congress spent $690 billion on the Department of Defense (DoD). That’s just the base budget. There’s also an Overseas Contingency Operations (OCO) fund and Emergency funding in addition to the base budget. There are also many other agencies, such as Homeland Security, that have a role in defending America. To really understand U.S. military spending, these must all be added up.”

          “Other agencies that protect our nation include: Veterans Affairs ($218 billion), Homeland Security ($92 billion), the State Department ($33 billion), and the National Nuclear Security Administration in the Department of Energy ($15 billion). That’s $374 billion not necessarily accounted for in defense spending, plus the interest on the debt that paid for those…”

          TheBalance point com

          Interest payments owed on the national debt are $523 billion.

      • Sam says:

        The FAA & NTSB has issues.
        Though I’d be hard pressed to have
        the private sector do a better job.
        Hint: BA’s front running the certification on the 8200 (aka MAX) comes to mind.
        Jmho from the flt. deck.

      • nodecentrepublicansleft says:

        Let’s just have anarchy! Seriously, the same people who scream about oppression are the first ones crying for FEMA after a disaster strikes.

        Sure, there has to be a balance but the blanket statement that all govt is bad is silly.

        If you have bad govt regulations/etc, you fix them. You don’t throw the proverbial baby out w/the bathwater, imho.

      • Cas127 says:

        Somebody is going to have to explain the Windows reference to me.

        Sounds vaguely similar to Gore’s internet…

        • Wolf Richter says:

          Cas127,

          The way I understood it is this way: Windows is made a private-sector company, and it’s a huge mess (“time suck” is the technical term). This was in response to Mario’s comment that “Almost everything the government gets involved with turns to crap. Less government is the best government.” The reply meant to say that companies too produce crap.

        • Cas127 says:

          Wolf,

          Thanks, that clears it up.

          I have no problem believing companies can produce crap.

          The difference is that it isn’t compulsory crap.

          And companies’ crap self corrects from lack of demand.

          The G’s crap self-perpetuates through the taxing power, control of the fiat, and implicit armed force.

        • Tony22 says:

          All government offices, federal, state and local, use Microsoft based products so that files can be swapped.

    • Jdog says:

      Why should the public, most of whom make less than $50K, pay for overpaid cost of education. Is it the public’s fault that colleges pay glorified teachers $200K a year? Is it the public’s fault that administrators make twice that or more? Is it the public’s fault that pensions are obscene?
      Why do people who never had the benefit of a college education have the duty to provide a free one for someone else?
      The problem with this country is everyone is looking for something for nothing, paid for by someone else’s hard work…

      • lenert says:

        So now college education is beneficial? Even for unpaid athletes?

      • BrianC - PDX says:

        Because providing for an educated populace is a public good.

        As a graduate of a land grant school, Montana State University (Bozeman MT), I would like to think that the income, the business I run, and higher taxes I pay go some way towards paying for the heavily subsidized education I received.[1]

        Also in todays academic environment no adjuncts or grad students, that actually teach the classes, are making $200k a year. For salaries in that range look to the bloated PMC administrative ranks.

        History Lesson:
        The land grant system was established as part of the Land-Grant College Act of 1862[2]. Also known as the Morrill act. Reference – https://www.britannica.com/topic/Land-Grant-College-Act-of-1862

        [1] – When I attended, the legislature paid ~90% of the tuition. Looks like pretty close to “free” back in the olden days. I could live on campus (room/board) for 3 quarters and carry a full 18 credits for a cost of under $1900. I could stand in the woods and run a chain saw and make $2400 in a summer. This was 1978-1983. Good luck doing that now.

        [2] – Even back in 1862 it was recognized that a public system was worthwhile.

        See also the passage of the GI Bill after WW II. Reference – https://en.wikipedia.org/wiki/G.I._Bill

        Fun to note, as our elites try to destroy the USPS, that our founders explicitly created the postal service to unite the nation. Reference – https://en.wikipedia.org/wiki/Postal_Service_Act

      • OutsideTheBox says:

        jdog

        By your acount…..if teachers have such a sweet deal, why don’t you become one ? Ya know just jump on that gravy train !!!

        We know the real reason you don’t.

        You can’t.

        You just don’t have what it takes….

        • Lee says:

          OTB:

          Here in Oz, if you want to teach on a full time basis you more than likely need a PhD and that is pretty much a requirement all over the country.

          And there are a huge number of applications for jobs when they open up. The last full time job that opened up at the university where my kid works had over 460 applications.

          In fact that university went about a purge a number of years ago in numerous departments that got rid of everybody that didn’t have a PhD even if they had been there for years.

          Sessional work is given to mainly PhD students or sometimes to a special ‘talking head’ that has some ‘superior’ qualities such as being a minority and can lecture on ‘terrorism’ or ‘security’ despite never ever having worked in the area or taken a class in it.

          And if you have a PhD and taught at a university here you are not qualified to teach at the the primary or secondary levels. You have to go back to school to get a teaching certificate in order to learn how to teach!!!

          One problem here in Australia is that a lot of the teachers at the primary and secondary level at public schools are hired on short term contracts which may or may not be renewed so there is a lot of turnover.

          And for those do have qualifications and do want to get a teaching certificate, well, as I was told by a bigwig high level school administrator friend of mine: why would I hire you:

          I can hire two newbies for the same cost.

        • Jdog says:

          Teachers suck, they are the reason our country is failing. Why would anyone want to contribute to that?

        • 91B20 1stCav (AUS) says:

          jdog-c’mon, you can do better than that.

          A geezer’s observation over 70 years is that in the face of disappearing, well-paid&pensioned private-sector union jobs, many found well-paid&pensioned government jobs in the search for, well, well-paid&pensioned jobs-not such a surprising , or consciously nefarious trend if frankly considered.

          An increasingly automated, ‘economically efficient’ world has, and will continue to to increase the desperate competition for a ‘decent’ (admittedly a relative and debatable term) living among our increasing human numbers.

          Entropy never sleeps. Keep one eye open in your own slumbers.

          May we all find a better day.

      • 728huey says:

        I don’t know of many college professors making $200,000 a year, and nearly all of those who do mist likely publish papers or write books to supplement their income independently of what they receive as salary. You should look at the administrators first, or better yet the school’s head football or basketball coach. In fact someone reported a couple of years ago that in 44 of 50 states the highest paid public employee was either the head of the state college football coach or basketball coach. The exceptions were either the land management director (Alaska, Montana) or the gaming commissioner (Nevada).

    • Old School says:

      Read a very long article on Liberty University on Politico, but it probably could apply to nearly any public or private institution. They have somewhere around 120,000 and most have always been remote learning. If I remember correctly they receive about $2 billion per year from student loans. They have if I remember correctly a $1 billion dollar building program underway. The Falwell family has lived a pretty good life on the student loan dime. You can forgive the loans, but the money has already been spent and tax payers are on the hook.

    • Lee says:

      A degree at a university in Oz will now cost you about $A4000 (US$2900) a year in tuition in one of the preferred areas such as teaching, nursing, math, etc. That is a 40% reduction in cost.

      A course in medicine cost about A$11,000 a year – if you can get in.

      And people here still complain that it is too expensive.

      Of course, with the virus and very few international students, it means the universities here are dumping staff and teachers like crazy. The government prohibited the universites from accessing the job subsidy program that they set up for every other business in the country.

      Even the bigwigs are ‘taking a beating’ by reducing their pitiful salaries from A$2.1 million a year to only starvation wages of A$1.8 million a year.

      Australia has some the highest salaries in the world for people in admin at universities, city councils, and state and local government.

      • Anthony A. says:

        You need to compare it to California public salaries if you want a shock.

        • Tony22 says:

          Details:

          “Despite California’s $54 billion budget deficit and $1 trillion unfunded pension liability, there are 340,390 government employees bringing home six-figure salary and pension checks.” Forbes

          [https://www.forbes.com/sites/adamandrzejewski/2020/05/19/why-california-is-in-trouble–340000-public-employees-with-100000-paychecks-cost-taxpayers-45-billion/]

          Let’s get more local:
          Why San Francisco is in trouble – 19,000 highly compensated city employees Adam Andrzejewski | September 2, 2020.
          “We found truck drivers loaded up with $262,898; city painters making $270,190; firefighters earning $316,306; and plumbing supervisors cleaning up $348,291 every year. The mayor, $452,460 etc.

          [https://www.truthinaccounting.org/news/detail/why-san-francisco-is-in-trouble-19000-highly-compensated-city-employees]

    • fajensen says:

      … because rich people don’t want the government to spend the equivalent of 3 tenths …

      No, not that.

      It is because rich people don’t want other people access to the same freedoms and advantages that they had, because of the clear risk that others also may become successful, maybe get new innovative ideas and perhaps become even get richer than they are.

      Look at how hard those softie “flower-power” hippie people came down on drugs use and unemployment as soon as they cloaked themselves in power. They immediately wanted to stop anyone becoming like them!

      Loading “the competition” up with student debt and medical insurances linked to employment provides a nice leash on them.

      The rich people would prefer to just kick the ladder away completely so that nobody “gets in” after they had theirs, but doing that would leave too few people to run their affairs with – therefore the huge investment in “AI” and Machine Learning!

  3. Kasadour says:

    This debt deleveraging cycle that the FED and the media are pushing is an illusion. “Consumers”, or wage earners, that comprise the majority, simply cannot simultaneously drive retail sales AND deleverage. It just doesn’t make sense. Furthermore, the majority of consumers never had the available discretionary income to afford trips, cruises, or foreign vacations, prior to the pandemic. So, it is my opinion that the FED is giving a false impression that these ones are using this discretionary income now – income they never had in the first place- to pay down debt that was taken out to maintain an unaffordable lifestyle, regardless of any meager government transfers payments.

    • BuySome says:

      Creative frynance? Certainly the Fed would not be allowed to misinform the public…such power is strictly allotted only to the Commander-of-Cheats when told to do so by the money thugs skimming the take.

    • YuShan says:

      It’s very simple: households deleveraging happens because the debt is moved to the government, facilitated by the Fed monetising it. There is no mystery here.

      This will probably continue for some time, because everybody now thinks that inflation = wealth creation (“Look! My house has increased in ‘value’!”). Free money, no consequences. We should have discovered this earlier. Why even work? Just print money and buy stuff from China! Even the Chinese love it. Their economy is booming now because of this. Everybody gets rich. What’s not to like?

    • Anthony A. says:

      Once this pandemic is over, I would bet that credit card debt growth increases faster than before. There will be pent up demand for vacations, other travel, more goodies from China (long live Bezos!), and dining out.

      We Americans deserve to have this lifestyle, especially after being punished by the constraints of the pandemic!

      • Lisa_Hooker says:

        We only “deserve” what we are “entitled” to. /s

        • Bluto says:

          Beautiful socio-economic-ethnographic correlation.

          (That’s a real term used by today’s education pedagogy “operant conditioning-adaptive learning” programming.)

      • kristine says:

        I think you are right. But there may be a huge backlash of rent deferrals with millions evicted. Huge corporations are buying up foreclosure housing to turn into rentals. So after this is over, we may see a surge in rentals vs. owners, with local housing market monopolies easily eating up what used to be disposable cash. I think it is no coincidence that there is a surge in camper van sales- this gig economy will give us a generational subset of nomadic workers. Sounds like fun, but then who will build the stable and thriving middle class communities? Will the Levittowns become mostly McMansion tenements with in disrepair? I see a lot less disposable cash to feed pent up demand. But I also see desperate people putting extravagances on credit, because they “need” them, after all of this.

      • Old School says:

        In my opinion the costs of the virus continue to grow and probably will for several years. It’s being papered over by increasing dishonest money as in the money was conjured into existence and affects real saved capital.

        There are going to be winners and losers. Basically if you are getting more money directly or indirectly from the government you are a winner and if you are getting less or paying more taxes you are the losers.

        Overall there is going to be a drop in real income maybe by 10% that’s going to be experienced. It might appear as inflation or deflation but the virus is going to set us back. We have gotten lazy on asset inflation, but a high asset price is not the same as a durable income stream.

        • Engin-ear says:

          – “increasing dishonest money”

          “Dishonest” – you mean unearned?

          I don’t know what is worse: the shower of money or the shrinking of services and products the money can buy.

    • Lisa_Hooker says:

      US government transfer payments are far from meager.

      • Kasadour says:

        What do you mean? I’m talking about ordinary citizens not corporations and banks. My husband and I each got some stimulus money but it wasn’t enough to write home about.

    • Wolf Richter says:

      Consumer spending is way down because consumers spent less on services, the biggie (down 6% from February). Income is up 6% year-over-year because of the extra unemployment and stimulus payments. Here are the numbers — they explain what’s happening to credit card balances:

      https://wolfstreet.com/2020/10/30/do-we-really-need-more-stimulus-to-print-more-millionaires-billionaires-enrich-fraudsters-and-balloon-the-trade-deficit-no-we-dont/

  4. 2banana says:

    Potential free stuff from government is a powerful motivator for behavior.

    If it ever happens, there will be mucho strings attached and qualifiers.

    Those “bailed out” homeowners in the last housing bubble popping should be a warning.

    There ain’t no such thing as a free lunch.

    “The story I keep hearing is that you’d be a moron to make payments on your student loans because they’ll be forgiven anyway. Mmmkay. So existing loans are not getting paid down, and new loans are being added, and the balances continue to balloon”

    • Lisa_Hooker says:

      For your “free” lunch you must consume a lot of beer. Same goes for the free peanuts. If, over the long term you don’t, the free stuff goes away.

  5. Satya Mardelli says:

    I don’t think there is anything inherently wrong with a shift from consumption to saving. In Japan the household savings rate, expressed as a percentage of GDP, is significantly higher than the U.S. yet they seem to enjoy a fairly nice lifestyle. Being frugal is the antidote to debt enslavement. Resist the urge to piss away your paycheck on plastic toys, Starbucks coffee, Chipotle slop bowls and $70,000 pickup trucks. It feels great having no debt after a lifetime of indebtedness. Having a high FICO score means nothing to me because I have no intention of borrowing any money.
    We got into this money trap because instant gratification wasn’t fast enough. Now the bill is coming due and find yourself out of work. Funny how this stuff works.

    • roddy6667 says:

      Freedom from debt is real freedom. My wife and I have been debt-free since 2004. We saved ten years and bought a home cash. I didn’t even have a credit card until the car rental agencies stopped accepting debit cards. I was wondering what my FICO was, with no debt or payments of any kind for over ten years. The first card I applied for gave me a $19,000 credit limit. I guess it’s OK. I never checked my FICO. I don’t care.

      • Zantetsu says:

        I have no debt but I take advantage of all financial instruments available to me. I don’t think you should consider it a badge of honor to limit yourself to debit cards.

      • Old School says:

        I finally got a divorce over debt. At least that was my side of it. I was killing myself to keep it all going so I drew the line in the sand. She wasn’t ready to make a lifestyle change and we couldn’t resolve it. I got completely debt free in the year of separation so that I was free in two ways when I got my divorce. About 15 years of debt free solo living later, it’s pretty good.

    • Lisa_Hooker says:

      Heresy! Saving is sacrilegious!

      • lenert says:

        It’s fine for your household but people confuse this with surplus capital at the macro level. Apple has a metric-butt-ton of savings because they have a government-granted patent protecting them from competition. Otherwise iPhones would cost 50 bucks. Same with pharma – drugs are cheap but we make them expensive so CEOs can get rich trading the stock. But let’s blame the fed.

        • Lisa_Hooker says:

          There are around 130,000 interlocking patents held by various individuals/companies required to build an iPhone. $50 wouldn’t cover the royalty payments.

          Drugs are expensive in the US because of the costs necessitated by the government. I like government mandated drug testing. But it’s not perfect. That’s why I keep a physician’s sample box of Merck’s Vioxx on my bathroom counter as a reminder. US drug consumers subsidize cheaper drugs for other countries. It’s not the cost of drug manufacture, it’s the cost of failures of multiple candidate drugs, and necessary testing.

        • Lisa_Hooker says:

          I don’t blame the federal reserve system. I blame the source – the US Congress that creates the requirement and permission to create money. What the US Treasury and FRB does is straightforward (convoluted) mechanics to meet the demands of Congress.

    • California Bob says:

      re: “Having a high FICO score means nothing to me because I have no intention of borrowing any money.”

      And you have no auto insurance, and are not looking for part-time work to kill time and pick up a little ‘mad money,’ and presume you will never, ever have to move and rent a domicile, or take advantage of the ‘20% off your first purchase of furniture, etc. if only you open a charge account’ (you can immediately close after you’ve acquired the merchandise), or co-sign for a kid, or …

      Fair or not–it’s not–your FICO score has a prominent role in your financial well-being (and it’s about as undemocratic as it gets).

      • Old School says:

        There is some truth in it what you say, but it’s been no problem for me. I think the algos for car insurance are pretty smart. My car insurance is under $400 per year because I never have filed a claim and have clean record. Small town life I rent in the gray market. That’s the best market because the black market can get you locked up.

        • California Bob says:

          Try locking-down all 3+ credit reporting agencies (Experian, etc.). You might be surprised how often your credit get checked. I paid cash for my previous daily driver, and the dealership ran my credit and made me sign a loan agreement, in case the check bounced. It varies; I bought a new car a couple years ago and paid cash, and the finance officer didn’t even ask for ID (maybe because my mom was with me).

          After my dad died, we wanted to put my name on her financial accounts so I could manage her finances. This was delayed until I unlocked my FICO score from one of the agencies; even though we weren’t even trying to get a loan or move any funds. No unlocking of report, no co-signing capability (this varies by financial institution, I’m told).

          FICO may be the most powerful and secretive private agency around, and they aren’t accountable to anyone. I interviewed for a job at their HQ, and felt like I was in some top-secret CIA operation.

    • sunny129 says:

      @Satya Mardelli

      Cannot disagree from the core of your comments with re savings, free from debt and minimalistic life style.

      However not everything is hunky- dory in Japan.
      Japan’s economy stagnated in the 1990s after its stock market and property bubbles burst. Companies focused on cutting debt (but NOT enough!) and shifting manufacturing overseas. Wages stagnated and consumers reined in spending – hence high savings rate. Culturally it is a homogeous sociey, somewhat regimented, unlike others. Most of it’s debt held by Govt, their own Cos and citizens – a CREDITOR country. Not a debtor like USA.

      The biggest problems it faces – sinking economy, aging society, sinking birthrate, radiation, unpopular and seemingly powerless government – present an overwhelming challenge and possibly an existential threat.

      GDP per capita in Japan averaged 32621.09 USD from 1960 until 2019, reaching an all time high of 49187.80 USD in 2019 and a record low of 8607.70 USD in 1960. There is however no poverty similar to western countries especially USA.

      • Old School says:

        Japan is a good lesson in debt. You accumulate the debt in good times and when times get bad you go oh sheet I have got to service this debt on less income. Japan has tried to manage it, but it’s like gaining an extra 100 lbs you have carry it around while you work it off by dieting or exercising.

        I don’t like all this fiat and mmt stuff because it gives the wrong signals and incentives and when signals and incentives are wrong you are going to a bad place eventually.

    • Lee says:

      The savings rate in Japan has fluctuated over the years depending on which measure one uses.

      When I lived in Japan the better half managed the yen. It was really simple: she had the purse strings.

      Her allocation was quite simple: 1/3 tax, 1/3 savings, 1/3 spending and in that order. If we didn’t have enough savings one month then we didn’t eat out. Thankfully, that bs only lasted a year or two and the spending portion wasn’t a problem as the income went up.

      I even got ‘pocket money’ like all the Japanese husbands in Japan. Her initial amount suggested was huge and I suggested only 1/4th of that which I hardly ever used anyway.

    • jm says:

      Read Michael Pettis to understand comparisons of national saving rates.
      Japanese household saving is higher because the money to be lent abroad to maintain the trade surplus has to come from the citizens pockets. You can’t run a trade surplus except by lending your customers the money to buy your stuff.

      • Lee says:

        Japanese savings rates were/are also high because the national pension system for most people sucks.

        The “Kokuminnenkin” (or National pension) that self-employed people, housewives, and others that don’t work for a big company or entity work for on a full time basis, has huge monthly payments now and a ridiculous low payout after paying in for 40 years.

        And the amount of the pension is fixed – it never goes up or is adjusted for inflation.

        Another reason that Japanese save more is that their income tax system is generally better than the USA’s (The various pension and national heath care costs ar quite high though.). They get to keep more of their money.

        While the income tax system system in Japan has changed over the years, a person making US$100,000 or so and working for a company that is in the company pension plan, would see a bunch of basic deductions:

        1. Work deduction from income of US$22,000.

        2. Basic deduction for themselves, spouse, and each kid of around $3800 each. And depending onthe age of kid, if they are work, the spouse’s income, etc, those deductions could go up even more. So lets just use three people at basic rate or $11,000 or so.

        3. Unlike in the USA, Japan allows payments for the national pension and national health insurance to be deducted from gross income before paying income tax on that amount. Using the US100,000 salary, the person would probably now pay around $US12,000 a year for that. So another $12,000 off the assement anount.

        4. Then there are other various deductions which could apply including deductions for having life insurance, buying a new house, etc, etc, etc. Too complicated, but many would see some of them.

        So just with the above deductions from income the person would be taxed on income of US$55,000 and not on US$100,000.

        One of the interesting aspects of the Japanese income tax system is that there are certain income levels that impact quite heavily on taxes and pension costs. If your spouse doesn’t work, you’ll get a special spouse deduction and this will fall until they reach a certain level of income at which time you’ll lose all the deductions for them and they’ll also have to pay their own national health and pension costs – which could be substantial. IIRC the levels are around US$120,000 income for you and for them US$12,000 or so.

        With this in mind, this allows companies in Japan to hire lots of women who want to work, but only part time at cheap part time wages.

        And once you reach US$200,000 of income you have to list all your assets and more than likley will see a visit every few years from the tax man………………..

        But anyway, in the situation above it bascially means thatat least the first US$45,000 of income you make is essentially ‘tax free’ from income tax and in many cases even more will be tax free.

        • Tokyo_Steve says:

          The top tax rate in Japan is 45% for national income tax. In addition there is a 10% local (resident’s) tax on all income, bringing the total top income tax rate to 55%.

          The only thing I might say, is that at least you get something for your taxes in Japan. Public transport works, public healthcare is generally good and convenient, homelessness is less of an issue in Japan.

          In your example above, the married filing jointly couple would pay maybe 12% on their taxable income in the US, while a Japanese couple would pay 30%-ish.

    • Engin-ear says:

      “I don’t think there is anything inherently wrong with a shift from consumption to saving”

      The consumption is the economy driver (read : stimulator) that brings you economic expansion, R&D, accelerated technological progress, the accelerated resources depletion, CO2 emission and the climat change.

      Here is my version of what the economic expansion is: it is when Today is better than Yesterday.

      As for the saving, for some complex reason that requires a separate study, those who consume have beaten the savers on every plan (except spiritual).

  6. Cocomaan says:

    We have put my wife’s loans into forebearance and are putting the payments into other debt. It’s working out great, though we have had jobs during the pandemic.

    Student loans might not be forgiven but right now there’s no interest being generated and there’s no payments required. Nice holiday. And if they are forgiven, we weren’t the suckers who kept paying.

    • Mark says:

      “we weren’t the suckers who kept paying.”

      That’s called a deadbeat …… Taking loans you don’t intend to pay….

      Nice morality

      • Cocomaan says:

        Been paying them for years. If the lender (feds) changes the terms, that doesn’t make me a dead beat.

        • Zantetsu says:

          If we all vote to forgive our loans and stiff our creditors, are we dead beats or not?

          I would argue we are since the effect is the same – you screwed your creditor – but apparently you think otherwise.

          I guess if my neighbor on the left tells me it’s OK to steal from my neighbor on the right, then I’m being ethical in doing so.

        • Jdog says:

          When you borrow money, and promise to repay it, and go back on your word.
          You are a deadbeat, or worse.
          Our problems as a country are not financial, as much as they are ethical. You cannot have a prosperity without ethics.

        • Cocomaan says:

          Yeah I just don’t see it.

          If a family member gave me a loan then halfway through said “you know what, forget the rest of it,” I’m going to laugh if someone calls me a dead beat.

          If anyone concerned about student loan deadbeats really felt that strongly about it, they’d be campaigning to eliminate forebearance. Let me know when you’ve called your Congress critter.

        • Zantetsu says:

          That’s not what you’re doing Cocomaan, you’ve admitted it yourself. You have stopped payments on the hope that you end up not having to pay back the loan, essentially taking not only the time period for which forgiveness was given, but the period earlier in which you gamed the system to allow you to avoid paying back even more.

        • Cocomaan says:

          All of that is within the terms of the loan, so again, I’m not sure I see the problem.

          This argument is the equivalent of saying that minimizing my owed taxes is immoral.

        • Old School says:

          It’s deception by politicians in a way. Young people desire to have their loans forgiven but they are really just passing it to other young people. I will be dead and gone and will not be paying it off for you. Maybe it’s just young college grads passing it off to my neighbor Miguel who is 31 and puts up gutters for a living. He is doing pretty well and can afford it.

        • Lee says:

          “I guess if my neighbor on the left tells me it’s OK to steal from my neighbor on the right, then I’m being ethical in doing so.”

          Well as long as what is being stolen are votes and elections I guess it is okay.

        • Zantetsu says:

          Ha ha Lee keep telling yourself that! The world really is out to get you, you know!

        • OutsideTheBox says:

          jdog

          So you are calling Donald Trump a deadbeat ?

          You know…..the temporary President of these United States ?

      • Tony22 says:

        Just doing what other “people,” a.k.a. corporations do my friend. They can welch on their pension obligations, on their taxes, on their local debts and no one goes to jail, at worst, a fine.

        Anything that a corporation can do financially, is also open to individual Americans, by any means possible with no guilt, nor morals nor any kind of religious claptrap associated with it.

        • Happy1 says:

          The consequences for individuals and corporations who don’t pay their debts is largely built in, they are not able to borrow for a few years and in some cases are bankrupted. There doesn’t need to be other consequences, a bankrupted business is often a dead business. That’s one difference between a corporation and a person, most people don’t cease to exist with a bankruptcy.

        • Tony22 says:

          Cease to exist, true Happy, but a personal bankruptcy doesn’t drag down entire communities with it and thanks to President Joe, your student loans will drag the person down with them, even if declared bankrupt.

      • Chillbro says:

        Quit moralizing economic decisions, chief. I never see this logic applied to a legal entity despite them being people who have a right to free speech etc

        Creditor who doesnt get paid shouldnt be in business! Thats called capitalism ;)

  7. Micheal Engel says:

    1) The C/C balance is down from 1090 to 950, or : 140:1090 = 12.8%, still hovering around the $1T peak.
    2) The problem is that balances reductions were shortening their thrust in the last four months, the dots are clustered together. Consumers did whatever they could, but now they are a little exhausted. They cannot keep climbing on the $1T mountain of debt, out of oxygen, in order to reach the valley on the other side .
    3) Unless consumers will benefit from a sudden few pulse of future income, the $1T C/C mountain peak will rise even further due to late fees, much higher interest rates and accumulation.
    4) The momo consumers will typically ignore the risk, when the risk is at peak, and will cont to spend during the holidays, after taking a needed vacations and playing their power games in the stock market, because it’s all about power.
    5) Just in case, their 401K’s are good protection from their chronic debt and their growing obligations.

  8. endeavor says:

    The incoming Progressive rulers hate fossil fuels and will tax the heck out of it to make the truck driving deplorables bear the cost of the transition to electric. The automaker will come to regret their rent seeking ways I fear.

    • Zantetsu says:

      Sounds good to me. Your characterization of costs being borne by the truck drivers is clearly false as we all know that costs of doing business are passed on to the consumer, not absorbed by the vendor. Well, maybe a little is absorbed, but not much.

      So we all pay a little more, the stream of cheap Chinese junk filling our bloated homes gets a little smaller, and a little less plastic ends up in the ocean.

      I see no problems here.

      • Jdog says:

        You will. But by the time you do, it will be too late.

      • Lee says:

        “So we all pay a little more”

        No, you will all pay a LOT MORE and the wealth of the country will fall as well.

        Hopefully, the US Senate will block most everything that the nutters in the House pass.

        • Happy1 says:

          Yeah, 6,500$ a year per household according to some calculations.

        • OutsideTheBox says:

          Happy1

          Are you refering to the biased syncophants at the Heritage Founation ?

          Because they are lying…..again

    • Anthony A. says:

      …truck driving deplorables….?? These are your fellow Americans who drive trucks for a living, not deadbeats. So who will drive those so called electric trucks?

      • BuySome says:

        May be wrong, but think the reference is to personal pick up type trucks not to highway carriers. (Personally I hate weaklings who use taxes as disincentives where balls are called for in standards and regulations. More ’55 Fords and stick the wide-butt rain collectors in the junkyards on Mars for the colony to camp in.)

      • Zantetsu says:

        I am pretty sure “truck driving deplorables” was just his attempt to misrepresent his perceived opponents’ position.

  9. Lisa_Hooker says:

    I am thankful that the chart shows the increase is merely linear. If we spend hard enough can we make it exponential?

  10. Dave Mac says:

    Extinction Rebellion loonies are demanding permanent lockdown to “stop climate change”

    I guess they don’t mind putting multi-millions of people out of work

    Does the FED have a solution for that?

    • Zantetsu says:

      When you focus on the extremists you become an extremist.

      • Jdog says:

        That makes as much sense as saying when you focus on a hurricane you become a hurricane…… If you do not focus on problems, you do not find solutions…..

        • Yertrippin says:

          The difference being a hurricane is real and the forever lock down most likely isn’t. Amplifying outliers does make you an extremist or an extremist tool at minimum.

        • Lee says:

          “The difference being a hurricane is real and the forever lock down most likely isn’t”

          Well in Melbourne we had a strict lockdown for 112 days.

          We will now be allowed to travel anywhere in teh State from tonight at 11:59pm.

          But we are still in effect locked down with numerous restrictions that limit the number of people that can do things such as having only 20 people in an indoor pool at one time.

          Now, I may not be an indoor pool operator, but that number is a money losing number.

          I wonder if the city indoor pool will open and if they do how will the people be allowed in. How long will they be allowed to swim and how much will they charge.

          I for one am not going to stand in line to get into the pool and pay A$15 for a 1 hour swim.

        • Wolf Richter says:

          Lee,

          I follow a guy on Twitter who lives in Sydney. He is an open-water swimmer, like me. It’s free and the ocean never locked down. He and his buddies swim year-round, even when the water gets cold. I’m sure there’s a group in Melbourne like that. It’s a huge amount of fun. You just need to go with people who know what they’re doing, or else you might never come back :-]

        • Lee says:

          Wolf,

          Yes, now that we can travel ‘freely’ in and around the state of Victoria, I can drive to the beach and go swimming.

          WEE!!

          With the 5 kilometer restrictions there was nothing close. With the 25 kilometer restrictions they were just out of reach. Go a few more kilometers and there is a huge choice of beaches.

          WEE!!!

          I will more than likely do that once the water temp heats up a little more. And being retired I can go any time I want.

          Today it is at around 59F in the Bay which is just a little too cool for me and I don’t have a wet suit and won’t buy one.

          I’ll probably try and combine the swim with going to the club or hitting one of the Japanese Food shops on the way back.

        • Zantetsu says:

          Lee your comments are getting easier and easier to skim. Soon they will be in the “don’t even bother skimming” bucket.

          If you really think lockdowns have any chance of being permanent, then well … you definitely deserve the bucket you’re put into.

    • Old School says:

      I didn’t take political science as I thought it was a crazy major, but they must instruct that if you are in politics the go to word is ‘crisis’. Politicians must have identified a thousand. I like when they come full circle. General motors is a monopoly and must be broken up to GM is going bankrupt and must be saved in space of 30 years. Earth is getting too cool to earth is getting too hot again in 30 years. There are too many people being born to there are not enough people being born. We are running out of oil to we must leave the oil in the ground. Shall I go on.

  11. Note how the total Non-Housing Consumer Debt has reached a temporary plateau during this bizarre economic period. Deferring principal and/or interest payments on any debt in 2020 does little for the American Consumer Balance Sheet since one type of debt may decline, like CC, but other categories continue at very high levels and actually are growing.

    There is no margin of error for many American consumers. Partial or full loss of income, without retirement or regular savings as a backstop, is catastrophic, and employment prospects are not overwhelming in a world still plagued by a stubborn and highly contagious virus.

    Consumer spending needs to contract significantly to better an American’s ability to withstand the financial strains that will continue for some time. The Presidential Election was and is a running disaster, and consumers will not have a lot of confidence in our Governments’ abilities to look after Safety & Finances & Citizen Wellbeing with a divide of a magnitude not seen since the Civil War. The overt failure of the Election Process is kind of like the last straw on the camel’s back.

    I borrowed $5,000 from the National Student Loan Program in 1974-75 to help get me through the MBA program at Michigan. I made the last payment in 1986. It is a crime the amounts that students today have had to pay indoctrinating colleges and universities for an often useless education, but the obligations were signed in good faith and monies issued in good faith. A Haircut of 30% to 40% is probably inevitable, but a nation sets a very dangerous course when it selects any group in the country over others for Total Debt Forgiveness.

    • Jdog says:

      Anytime you forcibly rob one person to give to another, it is unethical and immoral. You cannot build a just and fair society by practicing immorality.

      • OutsideTheBox says:

        jdog

        Absolutely !!!

        The hoaders of money have destroyed the futures of the young through HOARDING !!!

        Rich folks…..you are HOARDERS !!!

        Your HOARDING denies the citizens a just and fair society.

        Your HOARDING is immoral !!!

    • lenert says:

      It’s a catch-up payment for 40 years of underfunding public education. But leaving the same system in place ensures continuing income to CEOs and “investors” which they otherwise wouldn’t receive from direct funding.

      • Old School says:

        Got any data on spending per student vs outcome. Government can’t do what a family should do. If parents don’t care, takes a huge slug of money to make up for that.

  12. Joe in LA says:

    I am so tired of this student loan debt debate. I went to the University of North Carolina and paid $400 per semester total for up to six courses per term. It was all government subsidized and it was fantastic. It set me up for a wonderful life.

    Now, I know that the eyes-bulging, red-faced, personal-responsibility crowd will say its horrible that the state provided working kids a free chance to become educated and then pick their own future.

    That’s nonsense. If we don’t take care of each other, we end up in a winner-take-all hoarding culture where there are freaked-out rage-head “winners” living in boxes on golf-courses and a mass of “losers” scrounging around with no future.

    This is a boring way to live. I wouldn’t mind American inequality so much if the inequality resulted in great art or ideas. Instead, we’ve ended up with zombie mega-consumers at the top and depressed people at the bottom.

    This is a boring way to live. The point of having a SOCIETY — is to create an environment in which everyone is empowered to make their best contribution — which may not be strictly economic.

    It’s very depressing to turn on Fox and listen to these angry, self-congratulatory, semi-literate rubes yammer about how their “choice” to blindly follow the dollar makes them better than artists and teachers and care givers.

    This is a boring way to live.

    • MarkinSF says:

      Great comment

    • lenert says:

      There’s more to life than GDP – maybe it’s the least valuable measure of societal health. It was never just about “the economy, stupid.”

    • sunny129 says:

      STUDENT LOANS:

      If there was BANCRUPTCY law allowing for discharge of student loans, BANKSTERS wouldn’t have loaned them without proper fiduciary duty and due diligence. Risk would be too much. Universities wouldn’t have hiked the tution fees. Goct shouldn’t have guaranteed them for banks or colleges!

      Same with housing scandal!

      One can thank our newly elected prez uncle Joe!

      • Max Power says:

        Even if student loans were dischargeable, it wouldn’t make a difference to the banks anyway since most student debt is Federally guaranteed. It’s the taxpayers, not the banks that would eat the loss.

      • Wolf Richter says:

        sunny129,

        The vast majority of student loans are US government loans made directly to students. These loans are carried as an asset on the US government’s balance sheet. Any loan forgiveness or discharge in bankruptcy court is a loss to the US Treasury, and thereby the taxpayer.

        • Mr. House says:

          Weren’t the majority private until around 2008? 2008 was the gift that keeps on giving!

      • David G LA says:

        @max @wolf –

        Sunny’s main point – ignoring a few big errors that you have both pointed out – is that
        if the loans were dischargeable in bankruptcy they would NEVER HAVE BEEN GRANTED in the first place. The whole thing is a racket. (ok, some hyperbole on my part here- for the sake of our discussion)

        • Wolf Richter says:

          David G LA,

          “The whole thing is a racket.”

          Yes, agreed, the whole entire financial-educational-industrial complex is a racket. Students are just the conduit, and the fig leaf.

    • Old School says:

      I did the same at UNCC. Education is important for society and the state legislature should provide funding with over sight. But the education system like the health care system has to eventually compete for limited resources. It can’t keep eating a larger piece of the pie and so it will be forced to give more value.

      I have son that’s a college professorand a daughter that’s a licensed electrical engineer for a design firm. She works about 3 times as much as her brother for the same pay.

    • Lee says:

      Unfortunately what you have at many univesities in the USA compared to say 40 or 50 years ago is not education.

      And lots of people that are going to the universities now should have never been admitted in the first place.

      Not everybody has the brains to study at a university just as many people don’t have the skills needed to be a good bricklayer.

    • jm says:

      Wolf noted that median student loan debt is 17.5k. Average US cost of one year in high school is about 10k. So forgiving that much student loan debt is less than cost of two years in high school.

    • OutsideTheBox says:

      Joe in LA

      Absolutely right !

      Thank you for saying it better than I ever could !!!

  13. MonkeyBusiness says:

    Don’t forget about entertainment budget going WAY UP. Nintendo is forecasting record number of shipment. The new Playstation 5 sold out, and the XBox Series X is also seeing good sales numbers. Activision Blizzard, a video games publisher raised full year forecast and recently reported record profits.

    Americans can’t come up with 400 bucks for emergencies? A lie, they certainly have no problem coming up with 500 bucks for new consoles.

    • 91B20 1stCav (AUS) says:

      Monkey-great observation. Really considering the term “Entertainment Industry”, and it’s portion/effect on the economy might give one more than a little unease (i don’t say this lightly, my sister has worked on Broadway for 40+ years-well until recently-and have discussed this often in terms of where a person’s concepts of the non-virtual world are molded…).

      may we all find a better day.

  14. DR DOOM says:

    Here’s my 2 cents on this. This party will not end as long as the rest of the productive world will keep pouring its productivity into our consuming gullet in exchange for our fiat . Getting something to consume is important. Where and how it comes from is not on the mind of the trained seal’s called the American Consumer. The Empire must deliver or it will consume its self. It’s an old true story ain’t it?

  15. RoseN says:

    If you dig a little deeper, perhaps the real immorality here is the price gouging among colleges. I don’t have student debt, but I empathize with younger people who face outrageous prices for a college education. This is an American phenomenon.

    • MonkeyBusiness says:

      Don’t forget health care. Our injustices are also proportional to our overseas adventures. The more pain we inflict overseas, the more it comes back to bite us. Who says the world isn’t fair.

      • BuySome says:

        Injustice and adventurism–> ‘Gettin’ it done since ’61’…you know what they say, “Twelfth time’s the charm”…four to go and then we’ll know.

  16. Micheal Engel says:

    Big$Mike spent big bucks to be chopped.

    • Zantetsu says:

      From what I have read to a large degree it was a war of attrition, Bloomberg spending money in places that forced his opponents to also spend money in those places, thus reducing their ability to spend in other places.

      Maybe true, maybe not.

      Certainly the overall outcome was as desired, so who can say which fraction of that outcome is attributable to Bloomberg’s spending. If you are claiming you can, then I think you have an agenda.

      • Happy1 says:

        Bloomberg spent tens of millions, maybe even 100 million in FL with nothing to show. I don’t think that was his intention.

  17. Robert says:

    “The story I keep hearing is that you’d be a moron to make payments on your student loans because they’ll be forgiven anyway. ”

    I’m not sure where you’ve heard this story. My understanding is that students take loans as cost of living supplements. They’re encouraged by their teachers because, hey they all have bright futures with jobs that pay well.

    I assume a loan forgiveness mandate will require the republicans to go along.(maybe I’m wrong on this) I don’t see it, nor do I see any meaningful stimulus program until several months into a Biden presidency. There’s no reason for the Republicans to support it. The stock market is rallying on anticipation of more QE, (which Biden can do), not the anticipation of money in people’s pockets.

    • Old School says:

      Got to remember too that there can be some deductions for student loans if you are moderate income. Unless they make a special provision a forgiven debt is income and taxes would be due in the next tax year so they would be giving with one hand and taking it out of your pocket in the old reach around.

  18. Heinz says:

    Wolf’s succinct summary gives a quick look under the skirt of the fraud known as the American consumer economy.

    Funny, everyone has gone nuts and yet we pretend that things are pretty good, in fact, normal.

    If Biden is elected, we can expect Congress and Treasury/Fed (the two are joined at hip by now) to go ape-wild with debt forgiveness and stimulus handouts galore. These fools would merrily lead us down the path to economic hell– devil take the hindmost.

    Even if Republicans retain control of Senate after election, we may not get restraint from potential gridlock in Congress- the wild card would include how many RINO republicans drink the kool-aid and join in a drunken money printing orgy.

    • Old School says:

      They always say that it is always tough for a developing economy to jump the hurdle of about $15,000 income up to a developed economy of $40,000 or so. Maybe the reason is you have be such a money pumper and have so many BS service jobs that most societies just can’t dream that big. You know got to have someone paint your dog’s nails and put a bow in its hair.

    • doug says:

      what do you call what the trillions previously approved by the R’s?
      And their ain’t no ‘IF’…..

  19. Jdog says:

    Unfortunately, the US has become one big confidence game. We have rejected reality, and prefer to live lives of perceived prosperity, and perceived freedom. In truth, we have neither.
    Our lifestyles are based on the perception we can afford what we cannot. We must promise to pay for today’s consumption with next years earnings, or maybe a year or two after that.
    Some people were scared by the pandemic and the damage it did to our economy and that is reflected in the data. Many more prefer to believe we will soon return to the pre-pandemic world.
    The truth is the pre-pandemic economy was an illusion fueled by ever increasing debt and ever decreasing productivity from that debt.
    What we will see going forward is a reckoning. Economically, politically, and culturally.
    Our country is now a different place, we are divided, we are angry, and we have lost the ties that made us a union.
    We have shown the world we are corrupt and the way of life we try to impose upon others, is in reality no better than a third world banana republic. Our democratic process is a sham. It is a fraud. Just like our economy, just like our stock market, and just like our monetary policy.

    • Old School says:

      Yes. I thought today maybe it would be good if the current president did get voted out and then we can say at least we had one president that tried to keep us out of foreign wars. Only problem I see is he funded the military so much that they really have bulked up. And when you you spend a lot on weaponry, it’s going to be easy to be a bully again.

      • Happy1 says:

        This is an underappreciated benefit of the current administration. Better than the former on that count, Nobel Peace Prize and all…

      • 91B20 1stCav (AUS) says:

        Old-a sad and historically-rhyming fact is that a world power that doesn’t periodically put its military through sincere preparation and genuine live-fire exercises will have it’s a** handed to it by another that does.

        This doesn’t mean that the strong temptation of wanting to play with the new and more-destructive toys using a weak geopolitical pretext doesn’t always hover in concert with the above.

        Tuchman’s ‘The March of Folly’ a good read, here.

        may we all find a better day.

        • Lee says:

          “Old-a sad and historically-rhyming fact is that a world power that doesn’t periodically put its military through sincere preparation and genuine live-fire exercises will have it’s a** handed to it by another that does.”

          Comments:

          1. In other words most of the military around the world are nothing more than a bunch of ‘boy scouts’.

          Look at Germany – a pathetic military that couldn’t even get its people ready for a war games.

          Japan – one of the Japanese military officers I worked with when I was on AD was the one who called his military ‘boy scouts’. They like to play army, but have no real field experience.

          2. One of the biggest problems with the US military is that they are top heavy with a bunch of politcal a** kissers and brown nosers that value their own careers above their troops and their country.

          I wonder if there even more than a dozen current Generals in the US Army that have actually carried a rifle and been involved in combat and actually engaged the enemy in the field.

          And no, a combat patch for sitting in tent or A/C office in a ‘war zone’ doesn’t cut it.

          For example, a recent announcement about being abole to wear one:

          “American soldiers have been cleared to wear combat patches for serving in Saudi Arabia since September’s rebel attack on oil infrastructure there.

          Army Chief of Staff Gen. James McConville approved the wearing of the shoulder sleeve insignia by soldiers who served in Saudi Arabia during the period beginning Sept. 14, 2019, when a drone and cruise missile attack hit two key Saudi oil facilities, with no set end date.”

          Now how many soldiers were involved in combat operations in Saudi when that attack happened?

          The answer: zero

          How many were in danger during that attack: zero.

          The awarding of a combat patch in this situation is a crock of S***.

  20. Eric Livingston says:

    A lot of great comments, but the most important fact underlying the entire game is that the U.S. Dollar is the reserve currency for the entire world. As long as that remains true the Fed can issue unlimited amounts of dollars to fund everything (including government deficits). If and when the U.S. Dollar is no longer the world’s reserve currency, the entire game will change.

    • sunny129 says:

      TRUE!

      Meanwhile the purchasing power of US$ keeps going DOWN each year but the rate of wage growth is relatively stagnant since late 80s. It is a problem for wage workers in the bottom 90%, NOT for top 10% who own nearly 90% of Wall St wealth!

      The effective ‘real rate’ (considering inflation around 2% per uncle sam but a lot more in reality) is somewhere NEGATIVE 1 or more likely 1.5% that’s before, before TAXES!

      CAPITAL is winning the LABOR keeps losing all over the world!

    • sunny129 says:

      ‘when the U.S. Dollar is no longer the world’s reserve currency’

      TINA!
      US$ is the least dirty shirt compared to others!
      But Saudi Arabia has started selling OIL for Chinese YUAN! recently.
      Other countries trying to find alternate, away from the $.

      Treasury has to issue 3-4 Trillions in the coming months/years to cover for deficit/debt (replacing the maturity ones+) Taxes collected so far in ’20 fall short of deficit/debt for this year. There is less and less foreign buyers for US treasuries. The tresury mkt is so big now ( even for primary dealers) FED is the only choice.

      Interesting days are ahead!

    • Wolfbay says:

      Even if we are still the reserve currency what if the dollar falls 10-20% against other currencies? We import so much that we could get serious inflation.

  21. Tony22 says:

    Any old or sick person who dies without an outstanding credit card balance up to his or her credit limit, is not planning ahead.

    Pay them off to save on the interest if you are young. Or, build your credit limit up, then burn out each CC after living well, buying items of real value for your children, your relatives or friends.

    • Wolf Richter says:

      But before you die, make sure you have no assets left, and no money in the bank, and no home or stocks or whatever, because creditors can and will sue your estate.

      • Tony22 says:

        Of course, but careful estate planning, title transfers and hand offs of physical objects makes that the first thing that gets done. Just like a corporation looting itself, indebting itself, dumping money onto stocks to raise their value to hand off to CEOs, who cash them out, granting bonuses, then declaring bankruptcy, screwing the workers and taxpayers, the individual on his way out practices the same thing as I mentioned. It’s the new American way.

        Besides, it’s just a civil matter between human beings and corporate “people.” The fed can just create more money as long as the wet paint doesn’t reach their feet in the corner.

      • Lisa_Hooker says:

        You make an excellent case for holding unrecorded gold as a final asset. I’ve thought of this for some years, but only thought. I’ve never been a gold bug.

    • Old School says:

      Read the book “Die Broke” 20 years ago and it helped me get out of the rat race. Bottom line kind of was there are a lot of miserable middle and upper class people really unhappy at work as they are struggling to achieve an illusive goal of having enough money. Gives good instructions on how to break free.

    • TXRancher says:

      A wise man once told me that the ultimate financial planning is to have credit cards tapped out and write your last check to your undertaker and have it bounce.

      And as Wolf said make sure there are no other assets left in your estate.

      Of course you may have to answer for your ethics soon thereafter in another heated way.

      • Tony22 says:

        Perfect entreé for this quote:

        “Capitalism without bankruptcy is like Christianity without hell.”

        Didn’t jesus drive the money lenders out of the temple? Where in the bible does it say that stealing from a money lender is a sin?

        Stealing from. people is a sin. Corporations are not people, no matter what the supremes say.

    • drifterprof says:

      Can’t get a credit card in Saudi Arabia if you are over 60.

  22. RSHA says:

    Eric’s point is spot-on: the current paradigm will not change whilst the USD is preeminent. Most Americans do not realize it, but USD is utilized FAR more externally than internally (interbank transactions, commodity pricing, nations pegging their currencies to USD, etc.). Think about it, why do major, former British colonies (AUS, CAN, HK, NZ, SING, etc.) call their currency ‘dollar’? (I don’t think it was in reverence to the Spanish Empire)…
    When will the USD be dethroned? Nobody knows, but it will probably require a major war, but even then, and considering the magnitude of transactions requiring/priced in USD, the USD may last centuries afterwards akin to the continued usage of Byzantine bezants, Venetian ducats, and Spanish pesos in global commerce long after those empires’ glory days.

    • Old School says:

      I think big picture is US wealth creation has pretty much peaked to 1999 levels or so. China has been rising power during that time. We have spent a lot fighting useless wars and keeping military weapons a decade or two ahead of competiton but standard of living for a 100 million or so Americans is pretty low. I thought we were finally making progress as work force numbers were incredibly good before covid hit.

      We can say what we usually can say at least we are not as bad as Europe.

  23. Where is this money derived from paying down debt going? GFC was caused by the loss of secured collateral, which was literally ripped away from the underlying securities, causing the mother of all margin calls. We know how the 1% manages tax shelters, but the working class has no offshore cookie jar. Most likely they are going to get be caught holding cash when hyperinflation works its magic. When Buffett said before the pandemic he wasn’t buying stocks because of valuation, and stocks promptly rallied back to their old highs, while the underlying economic indicators flash red. What were his motives when he started buying stuff like airlines and gold, that he always considerd poor investment? I see the wealthy paying a premium for assets, to get rid of cash.

    • sunny129 says:

      ‘Most likely they are going to get be caught holding cash when hyperinflation works its magic’

      Before hyperinflation there has to be deleveraging DEFLATION to ‘get rid’ of Trillions and Trillions of loans in the PRIVATE sector.

      Govt can monetize the debt for public sector but NOT for private sector, unless there is debt jubilee. But who is left holding bags for all these outstanding private loans? – Banks, Pension funds, hedge funds, MFunds, shadow bankers private investors++!

      Wolf : Correct me if I am wrong!

      • Wolfbay says:

        I believe this is Dr. Steve Keen’s basic arguement.

        • Tony22 says:

          Jdog, Wolfe’s personal history sure is compelling.
          Economics is fascinating. This guy Henry has been around for a long time. His financial analysis of what led up to WWII sure puts a different spin on why it was necessary that “we” had to defeat “them”.

          “The Nazis came to power in Germany on 1933, at time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began. “

          Henry C K Liu
          World Order, Failed States and Terrorism
          PART 10: Nazism and the German economic miracle

      • Wolf Richter says:

        sunny129,

        There have been cases of hyperinflation that were preceded by all kinds of things. But one thing always comes first: regular inflation, then more inflation, then hard-to-control inflation (30%, 50% a year), maybe years of lots of inflation, and then more inflation, and then it rises exponentially to become hyperinflation. So you have this process and the time period that precedes it.

        Most cases of hyperinflation that I’m aware of were caused by government (or central bank) money-creation to cover deficits at a time when no one other than the central would want to buy the debt – at an interest rate that the government could survive – because of the already rising inflation.

        But it’s not clear-cut: there are plenty of cases where years of government money-creation and high deficits have not yet caused high consumer price inflation – though they created lots of asset price inflation.

        The cause of inflation is not just a mathematical formula. The reason inflation is a little tricky is because it’s IN PART a confidence game. When people lose confidence in their currency, you tend to get inflation, which causes confidence to deteriorate further, and as confidence spirals lower and consumers and businesses do everything they can to not hold the currency even for short periods of time (for example, they’ll sell the local currency for some other currency), you get more inflation, and when confidence collapses, you get hyperinflation.

        • Jdog says:

          Show me a single case of hyperinflation that was not caused by a shortage of goods or production.

        • Wolf Richter says:

          Jdog,

          The Weimar Republic. There were plenty of goods, and there was no shortage. But many people couldn’t afford the goods because their income and savings got wiped out by inflation. People with hard assets, such as owners of productive facilities, did just fine and could buy anything they wanted to, because their income from production kept up with inflation and their debts were wiped out.

          Hyperinflation is not caused by shortages, though you can get shortages AFTER hyperinflation sets in because you can no longer import what you need because no one wants to take your currency.

        • Jdog says:

          Wolf you are 100% wrong. You need to brush up on your history.
          Following WW1 reparations imposed by Europe stripped Germany bare. Almost all factory production was confiscated for reparations along with agricultural goods. The people were so desperate they were willing to pay whatever to get what they needed. Europe and the US tried to blame the inhuman calamity on monetary policy, but in truth it was the fault of the Allied powers imposing reparations in the form of confiscation of goods that caused it, and was the reason the same policy was not followed after WW2

        • Wolf Richter says:

          Jdog,

          You’re hung up on something. Yes, hyperinflation is a monetary event. No, it’s not a production or shortage event, though as I pointed out, hyperinflation can CAUSE shortages and production issues because you cannot import products and equipment needed to produce, and because the payment issues can cause economic problems. But that’s an effect, not a cause.

          My dad, youngest kid in his family, was born in 1911. There were 8 kids. The oldest and only other sibling making it into adulthood was born in 1901. My grandparents were born in the early 1870s. They lived through WW1 and the Weimar Republic. They were immigrants from the Kingdom of Bohemia (at the time part of the Austrian Hungarian Empire, now Czech Republic). My grandfather, an engineer, ran the Nuremberg Works of Siemens through this time. The parents of my mother also lived through the Weimar Republic, and she was born in 1925.

          In addition to what’s written in the history books, I have boots on the ground testimony of what it was like. As I said, there was no shortage of goods. And as I said, many people got stripped clean by inflation and could no longer afford to buy a number of things that they used to be able to buy.

          My dad’s family experienced no shortages during the Weimar Republic. Yes, their savings got wiped out. But they had a house, and he had a good job in a privileged company. My dad went to school and then university in the Weimar Republic. He went to pubs and got drunk and belonged to a fraternity and did all the things young people did. He had everything he needed.

          The real shortages came at the end and after WW2, when food was rationed, money was gone, and a form of food stamps allowed people to buy some basics, and when people with money (foreign currency such as dollars) or valuable goods-to-be-bartered (such as cigarettes, butter, real coffee, etc.) could buy stuff on the black market.

          In Nuremberg, WW2 carpet bombing had destroyed much of the housing stock. After WW2, people were forced by the local government to share their apartments with others. If you had a five-room apartment, you could keep one room to yourself and had to make the remaining rooms available to others.

          My dad, after he’d returned from France in 1947, where he’d been sent as prisoner of war, had a room in a situation like this for several years.

          My father and mother had met in Austria during the war, and got married in Austria in 1949. My mother lived in Innsbruck at the time. She came to Nuremberg to be with him, first time in the city, and saw the bombed-out city and the rubble everywhere, and it shocked her, and she left and went back to Innsbruck the next day. Couldn’t handle it. Innsbruck had mostly been spared, and she was a mountain girl and tomboy anyway.

          The construction and rebuilding boom started in the late 40s. My parents lived apart for a few years, and wrote letters to each other, documenting all this, which we still have. In the early 50s, Siemens, where my father was working, made a small apartment available to them, and she moved to Nuremberg.

          By the time I was born, there were still ruins all around us, and we used to play in them (though it was forbidden). The shortages and food stamps were gone by then, but things were still tight, food was basic, and we 3 siblings shared a tiny room.

          If you could still ask anyone in my family, it was the period at the end and after WW2 that was full of shortages of even basic stuff, and not the Weimar Republic. But hyperinflation during the Weimar Republic — price increases outran income increases, and savings were gone and pensions were crushed — made it very difficult for many people to be able to afford even basics.

        • Wolf Richter says:

          Jdog,

          You need to read the history of money printing in the Weimar Republic. That’s what caused hyperinflation.

        • sunny129 says:

          Isn’t Fed trying fuel inflation beyond 2% since March of ’09?
          Or Japan trying to boost inflation over 2 decades, EU trying to do the same since 2015 – ALL with ZRP or even NRP, still going no where in fueling worrysome inflation?

          Yes there is inflation in assets, healthcare, housing(+ rent equivalent) and education. There is also ‘real’ life inflation ( beyond 2% may be 5-10%!?) in grocery (meat, fresh, organic) foods.

          The median income and the rate of wage growth is relatively stagnant since late 80s.

          My question how does the inflation manifest, when there is much DEBT in private sector? Does it disappear? who own the debt vs the creditor?

          Yeh. Fed is supporting Corp credit mkt but the defaults of CMBS have been postponed now, But how long? Stock (Wall St) mkt is completely disconnected from the real EConomy(Main Street) and currently masked by data chaos and 3 trillions spigot from Fed!

          Next 3-4 months without big stimulus will uncover the reality imho.

          How many businesses/ jobs will be there in SPRING provide income stream to provide the debt servicing of various private sector loans – Home mortgage, HEL, Commercial loans, CC, Auto loans student loans++!

          Fed cannot print jobs or give money directly to citizens. Digital $ is just a talk. Insolvency cannot be addressed by providing liquidity, in the long run. Increased debt is causing reduction in velocity of money. Where does the hyperinflation to come from?
          Cannot compute!

        • MonkeyBusiness says:

          I wonder how our stock market will do in the event of hyperinflation. The FAANGS are not necessary good hedges since most people theoretically can live without them.

        • Mora Aurora says:

          My grandfather, Muxy, told of wheelbarrows of cash to buy bread in the early twenties Weimar Republic. People were carting around huge suitcases of Mark banknotes and some poor fellow had his suitcase stolen…but they left the paper Marks behind!
          Now, if your transport ‘platform’ (insert modern analogy here) is stolen…?
          Hyperinflation Canuck style (2014 numbers):
          – 2012 – 2014 one dollar Loonie coin, 91.5 % iron, metal value = 1 cent
          – 1987 – 2011 one dollar Loonie coin, 91.5 % nickel, metal value = 14 cents
          – 1968 – 1986 one dollar Voyageur coin, 100 % nickel, metal value = 32 cents
          – 1935 – 1967 one dollar Voyageur coin, 80 % silver, metal value = $12.73 cents
          If you exchanged metal for metal, in 2014 it took $1,273 ‘Loonie dollars’ to buy one pre 1968 silver dollar.

        • Lee says:

          Mora Aurora:

          No doubt that the same could be done with the US coins as well.

          I recall some commentator talking about hoarding the US penny or was it the nickel as the metal value was more than or close to the face value of the coin.

          I think there are laws in many countries that prohibit coins from being melted down, but that didn’t stop lots of silver US coins to be melted after 1964 and then later when the Hunt brothers forced the price of silver up.

          One benefit of the USA is that the size and shape of most coins hasn’t changed over the years nor has the currency changed either.

          Here in Oz they went from the pound system to decimal system which means that you’ll never see one of those pre-decimal coins in circulation.

          The ONLY silver coin that was released for general circulation since then was in 1966 when a partial silver 50 cent coin was minted.

          It is easy to see the difference between this coin and other circulating 50 cent coins: it is round. All the others are dodecagon shaped coins.

        • Lee says:

          People that made/have fortunes in Japan were the ones that were able to buy land in the big cities after WWII.

          Others were able to trade their services for goods that later appreciated in value.

          I had a good friend in Japan who was quite well off and used to visit him on a regular basis. He had a nice big, western style living room with the usual furniture and some paintings on the walls.

          Often around tax time there would be heaps of papers all over the place as he would be audited quite often.

          One day when I went to visit him I noticed that the painting that had been on the wall for years was gone so I casually asked him about it.

          He said that he had loaned the painting out to a museum as they were having an exhibition of the artist’s work going around Japan and that numerous paintings from abroad had also come into Japan for it.

          I knew the painting from a class I had taken in university and had always assumed that it was a typical fake.

          It was an original and at that time worth at least a couple million bucks.

          Was it insured? No?

          Why not?

          Because the painting was given to the person’s father after WWII in payment for services as the person didn’t have any cash.

          After the father died the painting was not included in the will nor accounted for tax purposes…………………

        • Mora Aurora says:

          Interesting comments Lee,
          It always bothered me about the ‘face value’ of sovereign PM coins. For instance:
          – The 2020 1 ounce troy 99.99% gold Canadian Maple Leaf coin says 50 Dollars on it!
          – The 2020 1 ounce troy 99.99% silver Canadian Maple Leaf coin says 5 dollars on it!
          – The American 2020 gold Eagle coin says 50 Dollars on it! It does contain a troy ounce of gold but is alloyed to 91.67% gold, 5.33% copper and 3% silver, thereby making it ‘larger than life’ in appearance!
          My point being that if these PM minting countries pull an ‘FDR Executive Order 1602,’ will we receive face value or is it to just understate the ‘book’ value for ‘accounting’ reasons…and will that be in Canadian or American dollars!?
          I’ll stick to ‘bar’ assets!
          Please pass the Cuervo gold!

        • Tony22 says:

          Mora Aurora

          If you pay for things with gold coins does the recipient owe taxes on the income of the face value, or the value in precious metals? Your plumber for example works for two long days at your house in exchange for a $20 gold piece. What’s his taxable?

        • Mora Aurora says:

          Tony22,
          Good question and I see what you are getting at but have no definitive answers.
          It’s always best to clear these and similar issues with both a good lawyer and an even better accountant but this knowledge sometimes is so esoteric, their understanding may be no better than a lay persons.
          Then there is the tax man and the official things that they are concerned about. You know the old saying…some things cannot be avoided so it’s best to have good, squeaky clean, legal and accounting advice (see first comment!)
          With coins, I hear gifting and tipping is very practical and very much appreciated but for obvious reasons limited to those relatives and individuals that can be trusted.
          With physical PM’s, it all comes down to personal choices but best to buy and hold, treat it like precious collateral, never sell unless desperate and store in a safe and secure place, like a safety deposit box at your bank of business (I know, I know…Executive Order 1602). Here’s why…
          For a long time in my youth I had a one ounce Maple Leaf coin and when I went to the bank for a loan they always would ask first, ‘Do you still have that coin?’…’Yes it’s right behind you in that secure room at the other end of the bank.” The questions were always easier after that and I always got the loan.
          PM’s are magic that way!

      • The vanishing collateral during GFC could still reappear. The Fed was worried enough about the issue to print new $100 bills and institute strict money laundering rules to prevent those dollars from returning. Money funnelled to Caribbean banks by Abramoff and Delay did show up in Jeb’s Superpac 2016. The venture capital industry helped provide cover. The collateral hole is opening again, they put money in consumer accounts this time. A second round of double printing money will hyperinflate goods and services as well as assets. As Wolf suggests, hyperinflation follows a long periods of subliminal inflation growth, in this case superceded by slow economic growth and downward wage pressures from outsourced labor. Global wages balance out, GDP picks up, with frontloaded monetary expansion, and to the moon, Alice.

        • Tony22 says:

          Therefore IF one has money, savings, cash, they should stock up on non perishables and durables that they might need, or barter with, now while they are relatively cheap, and still available before further supply disruptions? For example, need a new roof in a few years? Do it now.

          The BIDEN DEPRESSION is going to be long, dark and deep. Many harsh miles to go and political promises to keep; where’s our medical supplies? How about bailouts for main street? Where’s the medical care we didn’t get under Trump? How about the employer provided healthcare system? Will covid surviors be hit with ‘prexisting condition’ charges?
          Where’s black people’s reparations? Biden is speaking now and he hasn’t mentioned any of that yet, except in politically draped and abstract terms.

      • Old School says:

        First page of my finance book is there is real stuff like a factory and then there are legal securities to make ownership easy (stocks and bonds). We keep growing the securities so that the ratio of assets to GDP is 6.2 : 1. The Fed has facilitated this. They call it the wealth affect.

        In some ways it’s a Con game to get people to spend. It’s pretty obvious to savers that having a million dollars isn’t the same as 15 years ago. Same is going to be true for stock investors except many do not know it yet but the Gapp earnings yield (inverse of PE) being under 4% is a clue.

        • Lisa_Hooker says:

          I recall when a friend of mine was very wealthy. She had a very diversified collection of Beanie Babies.

    • Old School says:

      You have Buffet wrong. He is all about safe discounted cash flows. He or one of his asset managers bought a gold miner I am suspecting because he thinks that miner has a good margins with gold at $1900. He bought airlines because the long term prospects were good until the virus hit and he dumped them..

      He bought back a lot of shares in his company this quarter which tells me he is settling for a mid to high single digit return because he can’t find anything of value. His big three are property and casualty insurance, utilities and a railroad plus his stocks and cash. He is just doubling down on what he knows best.
      He is still holding way north of 100 billion in cash waiting for bargains. We are way overdue. Buffet not buying at the dip tells you the Fed stopped the stock market fall before things got cheap enough to give attractive long term returns.

  24. Martha Careful says:

    Hyperinflation is a hyper-joke!

    Anyone who believes inflation is in the cards isn’t watching the 2 year Treasury yield. Low yields will be with us for a decade, if not far longer. Between weak productivity and weak consumption, disinflation is what you’ve been seeing in real-GDP for many years. Going forward, growth is headed nowhere …

    • bruce says:

      There’s already been hyper inflation in housing and other assets (i.e. stock market).

      What does the USA produce anymore??? How can you compete against someone in China who is willing (or compelled) to work for less than a $1 per hour???

      Can’t even pay the payroll taxes for $1 buck and quite honestly probably cheaper than slave labor. And Chinese companies have MOST of the technology they need to make anything they want.

      I see more asset inflation, more people in USA living a 3rd world lifestyle as more jobs leave (i.e. people living 10 to a house, renting out living rooms, ect)

      • sunny129 says:

        ASSET inflation, yes!

        Capital ( which can move across globe, looking for profits, exploiting global labor arbtration, without regard to local environmental or labor laws) ias winning the the each country’s labor is ‘trapped’ and losing!

      • Heinz says:

        Agree about aggressive inflation in most major asset classes these days. But not hyperinflation, not yet.

        According to Investopedia, “Hyperinflation is a term to describe rapid, excessive, and out-of-control price increases in an economy, typically at rates exceeding 50% each month over time.”

        As Wolf points out, US dollar reserve currency hegemony is a confidence game. Once a malevolent black swan appears (or even just relentless grinding inflationary pressure) and causes the con game to go south, it is all bets off.

        The contemporary MMT crowd will no doubt push pedal to metal and take us to brink of hyperflation in time. When that happens is unknown, but will probably happen in most of our lifetimes.

        As Hemingway is often soberly quoted– when asked how he went bankrupt, he replied: “Two ways. Gradually, and then suddenly.”

    • Old School says:

      Hussman had an interesting take on inflation. It’s definitely not something predictable and don’t expect the Fed to forecast it. It’s really just a measure of confidence in the government paying you back. That can change pretty quickly. What if the mmt professor becomes the new economic adviser? Could be a confidence trigger, but would probably take more than that.

    • Crush the Peasants! says:

      Interest rates have an inverse relationship to inflation, and so to argue that there is not inflation and point to low interest rates as proof seems a bit strange. The price of assets (housing, equities), education, healthcare, for example, are and have been increasing. For a good read on where we are heading, and how neither party will try to stop it: https://www.nakedcapitalism.com/2020/11/michael-hudson-on-financialization-and-deindustrialization.html

      • Max Power says:

        Interest rates have an inverse relationship to inflation

        Sorry, but that statement is complete nonsense.

        • Old School says:

          Not really. It’s got an inverse relationship to asset inflation and if you are young or poor and don’t have assets you feel it.

          How many hours does the average Joe have to work to buy a house, a share of the SP500 or an ounce of gold compared to 30 years ago.

          I do agree low interest rates signal nominal gdp growth is going to be low.

        • Crush the Peasants! says:

          Not sorry that it is your statement that is complete nonsense.

          There is a general tendency for interest rates and the rate of inflation to have an inverse relationship.

          https://www.investopedia.com/ask/answers/12/inflation-interest-rate-relationship.asp

        • Even the Fed finally acknowledged that lowering interest rates does not increase inflation. The Volcker moment came when inflation and yields were out of sync, and pulling them together, albeit at much higher levels, allowed the economy to stabilize. Rates and inflation run together.

        • Max Power says:

          @Crush the Peasants!, the graph on the page which shows interest rates and inflation is in contradiction to the verbiage on the same page. As a general trend the actual data, as displayed in the graph definitely shows interest rates trends and inflation being positively (rather than inversely correlated). There is a little bit of inversion in the very right hand side of the graph, but even it is incomplete, with inflation trending in a very narrow range throughout the change in rates in that small portion of the graph. Not sure what idiot that wrote that ext interpreted from that graph what they did, because the data shows the opposite.

        • Crush the Peasants! says:

          Definition of Inversely Related: Two variables are inversely related when an increase in one variable causes a reduction in the other variable.

          There are many sources that claim an inverse relationship between interest rates and inflation. Interpreting the cited graph without accounting for the time it takes interest rate policy to take hold is leading to your erroneous conclusion.

          Whilst I hate analogies, here goes: Pouring water on a house fire reduces the fire, but if you looked at a graph of the fire increasing, and the proportional response of increasing the water poured on the fire, using your logic, you would conclude that water causes the fire to grow. But, in fact, increasing the application of water reduces the fire.

          Here is another source claiming an inverse relationship: https://www.wallstreetmojo.com/inflation-vs-interest-rate/

          The example given in this very definition of inverse relationhip also validates this. “When the interest rates increase, consumers are less willing to spend and more willing to save.” Under an unchanged supply, the decrease in demand will cause prices to drop – an inverse relationship between interest rates and inflation.

          https://www.myaccountingcourse.com/accounting-dictionary/inverse-relationship

          This may be a rare example where common sense and economics actually agree.

        • Max Power says:

          @Crush the Peasants!

          I know what an inverse relationship means.

          I care about data. The interpretations are an economic theory. We’ve seen how well these hold up in the past couple decades. /sarcasm

          Anyway, looking at the graph in you link it is patently obvious, interest rates and CPI generally move in the same direction at roughly the same time, not inversely. I don’t know what else one could conclude from looking at the graph.

      • otishertz says:

        “Interest rates have an inverse relationship to inflation.”

        Part true. Depends on where you are in the business, debt, and political cycle. There are inflection points. Tricky part is identifying them before the fact.

        Low inflation means less inflation premium built into the interest rate leading to lower rates. Same with high inflation necessitating higher currency risk premium attached to interest rates. That’s evidence of a positive correlation.

        Traditionally, your statement applied to periods before high inflation. Lower rates stimulated economic growth which later led to wage/price inflation in a cycle.

        Then, high inflation was brought down by higher rates. It’s important to consider where a country is in the economic cycle and where we are in history.

        Lots of economic theory taught in college applies to the times of asset backed money which tended towards deflation in hard times because physical assets are more scarce than fictional fiat, the latter being only limited by imagination.

        This and is completely invalidated by current reality and the current state of affairs including:

        Fiat money, monetary expansion, interest rate suppression, monetization, over financialization of assets, fictionalization of markets, and non-stop bailouts of plutocrat owned insolvent businesses.

        What we see today has broken from tradition.
        Most of the old laws of economics don’t really apply anymore. Axioms are just theories about truth.

    • andy says:

      But, have you lived thru times when money turns to paper?

  25. dr spock says:

    We have both bad employment numbers and bad inflation numbers like South America. Speaking of SA, has anybody noticed that Walmart yesterday announced that it sold its Argentina division. Walmart prices have taken a massive jump this year. Maybe Argentina can’t afford the “new WM”.

    • Anthony A. says:

      Yesterday, I picked up a 1/2 gallon of house brand bleach at WM. Price was $2.98. Before the pandemic, I paid $0.99 for that bleach. And the shelves were stuffed with bleach containers. No shortage.

      I do the household shopping as my wife is handicapped and it’s a chore for her to do so carrying an O2 machine. Prices are up in WM and Costco for most groceries we buy.

      The new WM has arrived in Texas!

      • dr spock says:

        I was at the new Walmart a week ago, The price of their standard, basic model gym shoe is up 50% in the last 6 months, Their sturdy and decent Wrangler jeans are up 50%. Their “leather” belts are up 50%, but I was lucky enough to get one made with real horse hide. Their over the counter meds have doubled. Ask Zion Williamson about the quality of new sneakers in general.. Their food is out of this world.

  26. David Pape says:

    My parole officer told me to expect a increase in fees.

  27. dr spock says:

    The American Medical Assn (AMA) is one of the strongest unions if not #1, so to have a universal health care system in the US, unfortunately, is not likely.

    • Happy1 says:

      The AMA is a shadow of what it was in the 1960s, it is largely supported by academic medicine and I know of no physician members in private practice, the doctors aren’t the reason for the lack of a universal health care system.

  28. Mkkby says:

    How much of this debt pain is a self inflicted choice? Many less well off people have a “need” for a $70k truck, 1100 phone, 200/month cable bill, eating out every day, gourmet coffee every day, living in an expensive city, etc…

    You can have a huge student loan, or you can go to cheaper alternatives and work part time. You can enjoy nature and sports for free, instead of getting your entertainment from restaurants and bars. Many lower income people have a great life, debt free.

  29. Henry Ford says:

    This site is bullshit. Don’t support it with a beer or iced-tea donation. It allows comments that only agree with the content.

    • David G LA says:

      Yes, it’s the epitome of fake news, MSM around here. All the readers and commenters agree with each other and the author/moderator. It’s interesting the site left your comment calling it bullshit.

    • Happy1 says:

      Not been my experience.

    • TXRancher says:

      That is not correct. This site allows points of view from all sides without the typical personality bashing. I have never ever been censored over the years although I do not always agree with the content or commenters.

      Perhaps you should practice your rights to go somewhere else.

    • nodecentrepublicansleft says:

      I’m a chickenshit but am full of bullshit.

      How is this possible?!

    • 91B20 1stCav (AUS) says:

      Henry-my goodness!

      But, hey, given the wonders of modern technology you could soothe your seemingly-tortured soul by starting YOUR OWN, perfectly-produced-and-curated site site, couldn’t’cha?

      may we ALL find a better day.

  30. breamrod says:

    I agree with Wolf! Hyperinflation happens when there is a loss of confidence in the government. We’re on our way! Why should ordinary folks worry about debts when Wall Street gets a bailout. Run em to the limit folks!

  31. George W says:

    On an individual basis paying of debt is a good idea. When everyone does it at the same time it is detrimental to the economy that is depending on you to buybuybuy.

    Another dismal day at Amazon. Things should be picking up as Xmas is around the corner, Black Friday is only 3 weeks away.

    127 packages, 81 stops all to the U of U. The driver next to me noted he only had 40 stops. Yesterday, I saw I the first sign of route consolidation.
    Amazon has yet to call “no joy” and is still hiring for the Xmas season.

    I often feel like I am driving through the eye of a storm.

    • Old School says:

      My believe is consumption by debt growth is a one time sugar high. Now when debt growth slows the economy grows. MMT is really slavery by deception.

    • Bobber says:

      You mentioned delivery route consolidation.

      Route consolidation has to be a huge open opportunity right now to make delivery more efficient. There are trucks delivering to my neighborhood every 10 minutes. I’m looking at an Amazon truck now, on a Sunday morning, delivering a hand held package. Given the volume of deliveries, these trucks must be delivering single items to our neighborhood 100 times a day. This does not appear efficient or environmentally friendly to me.

      I wonder if all these drivers are mostly delivering for Amazon. If so, you’d think Amazon could come up with a more efficient method.

  32. Wisoot says:

    Have these FED stats been independently audited? Not suggesting they magic them out of thin air to control public opinion but have the FED proven themselves to be trustworthy transparent ethical operators?

    • Wolf Richter says:

      Wisoot,

      The Fed is the #1 bank regulator and gets the balance sheet data from the banks. It publishes weekly the bank balance sheet data, assets and liabilities, including Treasury holdings, C&I loans, the whole bit. Then on a monthly basis, it publishes the credit card debt and revolving credit held at banks and securitized. It then publishes quarterly the data on auto loans and student loans. Because there are also non-banks involved in those three (credit cards, auto loans, and student loans), the Fed cannot get all the info from bank balance sheets. For example, the vast majority of student loans are held by the government, not by banks. And so it has to reach out to those entities.

      • sunny129 says:

        Why is Fed resisting AUDIT in the recent years??

        “A few years after the 2008 financial collapse, the Government Accountability Office (GAO) got a rare opportunity to peek behind the curtain at the Federal Reserve.

        Although the review was limited in scope, the GAO was able to audit the agency’s emergency loan programs. What it found was troubling to say
        This rare audit found conflicts of interest and no-bid contracts. It also revealed that the Fed authorized $16 trillion in bailouts to businesses and banks without so much as a whisper in the Capitol hallway to Congress. Unsurprisingly, the Federal Reserve would prefer not be audited further with any degree of substance by the GAO, especially on interest rate decisions. Yet the Federal Reserve insists its reluctance is centered on fears of political interference.
        TheHILLcom/blog

        • sunny129 says:

          FED’s excuse for fearing political ‘interference’ is indefensible. Mr. Powel (a Republican) accomodating in increasing financialization benefitting the WALL ST while at the same, financial REPRESSION hurting the retirees, those on fixed income, the savers – the MAIN STREET!

          “Whereas previously the Fed financed itself by purchasing only Treasuries and therefore avoiding carrying credit risk on its balance sheet, post credit-crisis the Fed has expanded credit initiatives carrying unsupervised, short-term, potentially risky non-Treasury securities increasing substantially the credit risk to the Fed and ultimately the tax payers. In the absence of decisive Congressional action to address our fiscal malaise, the Fed has undertaken expansive credit initiatives without clear objectives and in the absence of clear mandates. Without a clear and guiding fiscal plan restoring growth to the economy the Fed has tried to compensate for continued Congressional confusion and in a catch-22 position the Fed has strayed dangerously into the fiscal lane threatening the very independence that is essential to its operation…’
          Economist21 org

          IT is high time it should be held accountable to the bottom 90% of the society!

        • Wolf Richter says:

          sunny129,

          People tend to co-mingle everything concerning the Fed. The audits, which I covered at the time, were about the bailout decisions of the Fed, particularly the New York Fed, that implemented them.

          This data here comes from the Fed’s Bord of Governors, the government agency and banking regulator and data provider, similar to the FDIC. The Fed is not this monolithic thing.

        • sunny129 says:

          Recently in an article in WSJ on July 24th. Mr. Ruchir Sharma ( A Morgan Stanley Analyst) has argued against the actions of the FED and it’s long term ill effects on the CAPITALISM:
          ” RESCUING RUINS CAPITALISM”

          Our good ole genuine ‘American Free Market Capitalism’ got ‘murdered’ in the March of ’09 and got replaced by CRONY Capitalism, under which currently top 1% hold nearly 50% and the top 10% nearly 90% of Wall st wealth and the bottom 90% less than 7%. Is this good for a healthy society?
          This is NOT good for the Country or the long term health of the Economy.

  33. historicus says:

    Well Wolf…
    How long will Powell be Fed Chair….and who is the next.
    Guessing Kashkari … the MMT guru.

    • MonkeyBusiness says:

      Rafael Bostic would be a symbolic choice.

      • Minutes says:

        Perhaps the best possible candidate should be picked not someone who checks boxes that people like to fit people into. That would be a welcome change from groups of people who see nothing but race and gender in everything.

    • JP isn’t going anywhere. Obama and Bernanke? Powell is flexible, implementing digital accounts. He takes notes at the hearings. Biden has a lot of appointments to make and Senate will block some of them. The market is up 4% today. Powell just put his feet on the desk and said, I am the greatest Fed chief ever.

  34. Yort says:

    It seems we are inside the eye of the financial storm for consumers who have little to no savings. I understand there will be future “chosen” government winners and losers via bailouts and stimulus, yet I do not think even the Fed can print us all out of this situation in the entirety without negative unintended consequences that breeds futher instability on both social and economical levels.
    Therefore, now might be the perfet time to start saving for future rainy days as it seems somewhat naive to think the financial hurricane has passed…

    Per CNBC:

    In all, the stimulus package helped lift 18 million Americans out of poverty in April, according to Columbia University researchers.

    But financial distress grew throughout the summer as households spent their stimulus checks and after the $600 unemployment benefit lapsed in July. By September, 4.6 million more people were living in poverty than before the pandemic, according to the Columbia study.

    Making everything worse is the fact that so many Americans had little to no savings to fall back on.

    “If we think about the various lines of [financial] defense, the most important one by a long stretch is savings…

  35. Lee says:

    Question for the experts:

    With all this talk of inflation/hyperinflation is the so called ‘tax-free threshold’ for cpaital gains on the sale of your primary residence indexed for inflation?

    If not that US$250,000 per person amount is meaningless and a lot of the gains will be taken by tax if you sell……………..

  36. William King says:

    I love your site. Keep up the good work.
    Cheers from Chiangmai, Thailand

    • joe2 says:

      I like the south around Patong Beach, Krabi, and the Islands. Seafood is fabulous. But it is really hot there and a lot cooler up north in Chiang Mai.
      I envy you, best of luck.

  37. joe2 says:

    I have got to get me another one of those student loans. I must have been a moron when I paid off my loan 40 or so years ago.
    How stupid can the government be if they give out new loans and announce the loans will be forgiven. AND I can go to school in Oregon and it seems legally buy drugs from Mexican cartels with the money and live in a tent on the street. Woo Hoo! What’s not to love about democrats. Now that’s capitalism.

    Seriously Wolf, who’s holding the bag on those?

  38. Randy says:

    This is the world of fiat. Create more debt and try to inflate your way out. Currency reset is coming all debts will be forgiven. There’s no way governments can pay off there debts.
    Education head crammed full of useless facts. By there mid 20’s they have no practical skills but can parrot propaganda. Saddled with huge debts they will never get a job to pay off. Our education system is just a brainwashing system. Totally useless except to put you in servitude to your masters. Wear a mask, stay away from your friends, wash your hands and enjoy the propaganda media machine. You’ve been brainwashed and it’s been going on for thousands of years. It’s pretty pathetic people still belief in such nonsense. “You can fool some of the people all the time. These are the ones you need to concentrate on” George W. Bush
    Did I hurt your feelings. To damn bad, wake up and smell the stench that is your government.

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