Every day the headlines come. And every day they are a mixture of real news, propaganda, and claptrap. CNBC — ‘Biden cancels $10,000 in federal student loan debt for most borrowers’:
‘Nearly 45% of borrowers, or almost 20 million people, would have their debt fully canceled, according to the White House.’
Isn’t that nice of him, dear reader? Of course, it wasn’t his money. And cancelling the debt won’t cost him a penny.
But Biden’s generosity is a big step forward in financial history. For thousands of years, we humans have been plagued by debt. And now we have the answer — just ‘cancel’ it.
Free at last…free at last…
And now it’s time for Our Saviour to take aim at all the other disagreeable debits in our lives; he should cancel auto loans…mortgage loans…payday loans…revolving loans…government debt…pawn shop loans…bank loans…credit card debt…margin loans…social obligations (‘they invited us…we need to reciprocate’)…loans for solar panels and EVs…child support…alimony…gambling debts…and bar tabs too.
Thanks to the Fed’s ultra-low interest rates and its ‘money printing’, our economy is burdened by US$90 trillion in debt. And Mr Biden has just shown us all how to get rid of it.
And why stop there? Why should we have to return the umbrella we borrowed from the Merrion Hotel during a sudden downpour in Dublin…or the serving platter Ms Jones left with us when she brought over some cookies? We also have a nice little rental car in the driveway; we’d like to keep it.
Thank Divine Providence, our president is on the case!
Robbing Peter to forgive Paul
Only Fox News dared to ask: If the people who got the service don’t have to pay for it, who does? Education is a service. It has a cost. It must be paid by someone. Biden’s act of largesse means that the freight will be paid by people who didn’t ride the train, many of whom didn’t go to college and don’t earn as much as the people who did. In other words, the law clerks and bookkeepers will have to pay for their bosses’ professional training.
Is that such a good idea?
But don’t worry about the US’s middle class. The housing market may be rolling over. Mortgage payments may be going up. But at least, according to the mainstream press, the job market is still ‘red hot’. Here’s the most recent monthly report, from The Wall Street Journal: ‘July Jobs Report: U.S. Added 528,000 New Jobs as Unemployment Rate Fell to 3.5%’:
‘U.S. employers added a robust 528,000 jobs last month, helping the economy recoup the 22 million positions lost early in the pandemic, as hirers clamored for workers despite a slowdown in economic growth.
‘The labor-force participation rate—or the share of adults working or seeking a job—ticked down to 62.1% in July from 62.2% a month earlier. While the economy has recovered all the jobs it lost since February 2020, there are still 623,000 fewer people in the workforce…
‘Wage growth was stronger than economists anticipated in July, with average hourly earnings rising 0.5% from June and 5.2% from a year ago.’
Let’s see, wages are rising at a 5.2% rate. But prices are rising at an 8.5% rate. Doesn’t that mean that workers are worse off? Yes, of course it does.
And what about all those people who don’t have jobs? David Stockman at Contra Corner:
‘According to the BLS, 243,000 workers dropped out of the labor market in July and 449,000 abandoned the search for work since March. In turn, these fugitives from the jobs market have caused the participation rate to fall to just 62.1%—the lowest level (aside from the Lockdown plunge of April 2020) since April 1977!’
Working class rip off
Since February 2020, the adult US population has grown by about six million people. But the labour force is actually smaller — by 623,000 people. That must mean that there are 6.6 million MORE adults without jobs than there were two years ago.
And here’s another part of the story worth mentioning: Inflation.
Economists long ago noticed that inflation seemed to correspond with lower unemployment. From there it was a hop, skip, and a jump into error: that a little inflation was ‘good for the economy’ because it brought higher employment.
The French economist Jacques Rueff saw the scam immediately. If inflation lowers unemployment, he pointed out, it was only because it rips off the working class by reducing their real wages.
So aren’t we lucky? We live in an enlightened Republic, where we are encouraged to borrow so that we can study gender fluidity and ‘intersectionality’ — rather than get a job and learn how to be a competent welder…
…where we are lured to borrow money to install solar panels on our roofs and drive a spiffy electric car…
…where we are less productive and earn less money…but we have a ‘red hot’ labour market…
…and where we can run up trillions in debt…and then, the government cancels it!
For The Daily Reckoning Australia