Wednesday, January 14, 2015

The Economics of the Education Bubble

This was a request, but it came out better than I thought.  Was able to link "Chang" in China directly paying "Tina" in Suburbanite SWPL America to major in something stupid because US Dollar Reserve Currency:


Anonymous said...

Finance writer for Yahoo kristi Culpeper has a different view of education bubble. She states it is a myth that English degrees are driving the bubble. I am just trying to sort out the truth.

Anonymous said...

Great points, as always. Although I'm not sure the Fed will want to hold student loan debt on their books (and print money to purchase it). They were willing to hold mortgages since there is an asset behind that - a house. There is NO asset backing a student loan. Remember, the Fed has member banks, each expecting a dividend to be paid to them (6%/year). Purchasing completely worthless loans that students are not paying back will not help. I think, instead, a Loan Forgiveness bill will be passed that outright forgives or lowers the student loan debt that the US government holds.

Troy Lee Messer said...

Ok. I understand minimalism. But that tie.. Jesus. I need to scrub my eyes. If you can get your dick wet with that tie....... If your girlfriend loves you, get a new fucking tie.

Celtic Tiger Dad said...

Politicians say "Everyone deserves a house and a college education whether they can afford it or not. Vote for me.". So, financial institutions are first forced to lend money to people for these things, and later subsidized to do so. This causes home and tuition prices to skyrocket since more and more money is available to pay for them. Bubbles and crashes are inevitable.

The big difference between the housing and tuition bubbles is that a house is at least a physical asset that can repossessed by the lender. How do repossess an education?

I remember Hillary Clinton calling for a program to grant $5000/year for all college students to help pay for their tuition. What would be the effect of such a program? In two or three years average tuition prices would increase by, oh, about $5000/year.

Obama's free community college plan will have a similar effect. The price of a four year tuition will increase sharply. With so many people getting their first two years for free, four year colleges can charge a hell of a lot more for their last two, and the market price of a standard four year stay at college will also go up.

Scott Sparkman said...

At 8:25, Clarey mentions the term for a victim (or sacrifice) of a cult being content with being the victim in a cult sacrifice. He can't remember the term for this, I don't either, but in behavioral psychology, we call this "learned helplessness": a person or animal realizes, conscious or otherwise, that his or her painful situation is inescapable, thus he or she accepts the suffering, even if it's fatal. Learned helplessness can happen to groups of people.