We could've forgiven the entirety of every single student loan yesterday, but instead -- Fed to Inject $1.5 Trillion in Bid to Prevent ‘Unusual Disruptions’ in Markets

submitted by magnora7 from wsj.com

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[–]ManWithABanana 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (3 children)

That's true, but look at it long term.

When the loans the Fed is making are repaid, the net effect to the economy was zero.

When the treasuries are purchased, you put money back into lenders hands to lend out to whatever needy cause, and you reduce the public debt. This benefit is offset to some degree by the inflationary printing of money you noted.

Compare that to paying off student loans. That is an action that prints money and gives it away from the Fed, free and clear, to benefit the students drowning in debt. The Fed neither gets the money back nor reduces public debt. But it should also stimulate the economy to some degree since you put so much money in consumers pockets.

Man, economics is crazy.

[–]magnora7[S] 5 insightful - 2 fun5 insightful - 1 fun6 insightful - 2 fun -  (2 children)

The Fed neither gets the money back nor reduces public debt.

Actually it would reduce about $1.5 trillion in public debt, as most student debts are owned by the government!

So it's the exact same thing. Only millions of people would benefit instead of huge companies, and the companies have better lobbyists and more bribes, so they're the ones who get what they want, not the people.

[–]realister 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (1 child)

Actually it would reduce about $1.5 trillion in public debt, as most student debts are owned by the government!

If the government prints money to pay off its own loans its not going to do anything for the economy it will just shift burden and responsibility around.

[–]magnora7[S] 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 1 fun -  (0 children)

Then why is it so keen to do that exact thing with the stock market, again and again?