1.5 Trillion!

[BmorePat87]

I've addressed this in at least 2 threads already in the last 2 days.

The Federal Reserve did not give away $1.5t. They gave out short term loans that are completely backed by treasury securities. They do this by purchasing those bonds from financial institutions with an agreement that the institutions will buy them back with interest. The $1.5t was 2 sets of $500b 3 month loans and 1 set of $500b 1 month loans.

This is part of open market operations and is the main way that the Fed funds itself. By purchasing bonds, they increase the money supply during times when financial institutions need more liquidity.

This money they used was not available for congressional appropriation. They did not need Congress or Trump's approval for this. They operate independently.

When AOC and Bernie tweet that we could have spent this money on M4A or student loans, they are intentionally misleading voters to fire their base up, considering that one has been in Congress for decades and the other has an economics degree. It's irresponsible and what we all criticize Trump for doing.

[SunsetBengal]

(03-14-2020, 01:25 PM)Dill Wrote: STudent loans have helped millions through college, helping the nation in general.

Why are they irresponsible debt?

I guess that would be more of my opinion, than anything.  I'll use myself as the "good example of a bad example".  Back when I was in HS (class of '87), the guidance counselors just hammered us with the idea that we MUST have a 4 year degree, in order to be competitive in society.  Not sure if it was the same everywhere else, but they made it seem like settling for anything less than a 4 year degree was selling yourself short, and that two year and trade school programs were setting oneself up for a life of being a peon.

So, after drifting from crappy job to crappy job for a couple of years after HS, I eventually decided that college must be the way to go.  I really wasn't interested in it, but discovered that it was a great place to have a blast and avoid responsibility for a few years.  Eventually I graduated with a pretty much worthless degree in Mass Communications and a job in radio that wouldn't even afford me to fund my own place to live.  I eventually ditched the job in radio for a trade that I worked for many years.  Thanks to the Student Loan programs, I'm still paying for that degree, today.  Even though I went back to school during the recession to learn a new skill, and paid cash at a Community College.  I now have a salaried position with an Engineering firm.

Had anyone really looked at my aptitudes back in HS, they could have efficiently directed me to a more effective path than pursuing a 4 year degree.  I call it irresponsible on my part, as I should have realized that my heart wasn't into the 4 year college degree and changed my own path back them.  However, the lure of guaranteed student loans to provide for my fun existence in college was just irresistable.

[Belsnickel]

(03-14-2020, 01:40 PM)BmorePat87 Wrote: I've addressed this in at least 2 threads already in the last 2 days.

The Federal Reserve did not give away $1.5t. They gave out short term loans that are completely backed by treasury securities. They do this by purchasing those bonds from financial institutions with an agreement that the institutions will buy them back with interest. The $1.5t was 2 sets of $500b 3 month loans and 1 set of $500b 1 month loans.

This is part of open market operations and is the main way that the Fed funds itself. By purchasing bonds, they increase the money supply during times when financial institutions need more liquidity.

This money they used was not available for congressional appropriation. They did not need Congress or Trump's approval for this. They operate independently.

When AOC and Bernie tweet that we could have spent this money on M4A or student loans, they are intentionally misleading voters to fire their base up, considering that one has been in Congress for decades and the other has an economics degree. It's irresponsible and what we all criticize Trump for doing.

I actually confronted one of the ardent Bernie supporters in my city with this stuff, yesterday. I'm so sick of bad faith arguments.

[GMDino]

(03-14-2020, 04:16 PM)SunsetBengal Wrote: I guess that would be more of my opinion, than anything.  I'll use myself as the "good example of a bad example".  Back when I was in HS (class of '87), the guidance counselors just hammered us with the idea that we MUST have a 4 year degree, in order to be competitive in society.  Not sure if it was the same everywhere else, but they made it seem like settling for anything less than a 4 year degree was selling yourself short, and that two year and trade school programs were setting oneself up for a life of being a peon.

So, after drifting from crappy job to crappy job for a couple of years after HS, I eventually decided that college must be the way to go.  I really wasn't interested in it, but discovered that it was a great place to have a blast and avoid responsibility for a few years.  Eventually I graduated with a pretty much worthless degree in Mass Communications and a job in radio that wouldn't even afford me to fund my own place to live.  I eventually ditched the job in radio for a trade that I worked for many years.  Thanks to the Student Loan programs, I'm still paying for that degree, today.  Even though I went back to school during the recession to learn a new skill, and paid cash at a Community College.  I now have a salaried position with an Engineering firm.

Had anyone really looked at my aptitudes back in HS, they could have efficiently directed me to a more effective path than pursuing a 4 year degree.  I call it irresponsible on my part, as I should have realized that my heart wasn't into the 4 year college degree and changed my own path back them.  However, the lure of guaranteed student loans to provide for my fun existence in college was just irresistable.

My story starts the same as yours.  Class of '87.  Told we HAD to get a degree to get a "good job".  But I always wanted to go to college.  In fact I'm the first in my family to get a four year degree.  I was destined to be, as my father once put it to a guy he worked with at the factory, a "pencil pusher".  So I went straight to college after high school while working at McDonald's in the summer and on campus.

I wanted to be an attorney but a recruiter changed my mind and I went for accounting.  (That lasted about half of the first semester...my advisor was a law whiz but had trouble adding and I lost interest.)

Got out of school in 91 with a BA in Communication all the while we were THEN being told that we HAD to have a Masters if we wanted a "good job" but I wasn't going there.  I was done.

And within a year was working in radio...making no money.  Left radio in 95 and progressively made more money at each job that, while using my major, was not in the media.

I went to a private college and my TOTAL four year bill was $48,000.  I paid $160.75 a month for ten years to pay it off.  Along with a second loan that was $90 every three months for three years.

Next Fall our son starts college at a local branch of Penn State.  $13,000 a year before loans and scholarships.  Hopefully, with his choice of majors, he will make enough to quickly pay back whatever we have to borrow.

College is NOT for everyone.  It was for me.  I had no skills other than a love of math and the gift of gab.  Somehow I turned one of those into three different careers post college AND was able to pay everything back with (relative) ease.  But I know that's not everyone's story.

[BmorePat87]

(03-14-2020, 05:09 PM)Belsnickel Wrote: I actually confronted one of the ardent Bernie supporters in my city with this stuff, yesterday. I'm so sick of bad faith arguments.

Yea I got into it with my buddy who will defend everything Bernie does. This guy even works at a bank, so he knows better.

He tried to shift it to “well we should be talking about those things” and said Bernie never tried to imply to his audience that the money could have been spent on M4A or student loans

[NATI BENGALS]

(03-14-2020, 01:40 PM)BmorePat87 Wrote: I've addressed this in at least 2 threads already in the last 2 days.

The Federal Reserve did not give away $1.5t. They gave out short term loans that are completely backed by treasury securities. They do this by purchasing those bonds from financial institutions with an agreement that the institutions will buy them back with interest. The $1.5t was 2 sets of $500b 3 month loans and 1 set of $500b 1 month loans.

This is part of open market operations and is the main way that the Fed funds itself. By purchasing bonds, they increase the money supply during times when financial institutions need more liquidity.

This money they used was not available for congressional appropriation. They did not need Congress or Trump's approval for this. They operate independently.

When AOC and Bernie tweet that we could have spent this money on M4A or student loans, they are intentionally misleading voters to fire their base up, considering that one has been in Congress for decades and the other has an economics degree. It's irresponsible and what we all criticize Trump for doing.

I still don’t fully understand it. “Backed by treasury securities”? So if they loan this money out to someone who doesn’t pay it back what happens? Say one of the many companies who are currently losing money at a stupid rate, who takes a loan, makes a shitty business decision and then files bankruptcy.

They were going to hand this money out pretty quickly I thought? So there isn’t a lot of vetting and determining if there is a good business plan?

We have the self proclaimed king of bankruptcy leading the federal government. I can guarantee some of his cronies are funneling in some of this money. And if the orange anus can become prez after bankruptcies out the wazoo.

[BmorePat87]

(03-15-2020, 12:58 AM)NATI BENGALS Wrote: I still don’t fully understand it. “Backed by treasury securities”? So if they loan this money out to someone who doesn’t pay it back what happens? Say one of the many companies who are currently losing money at a stupid rate, who takes a loan, makes a shitty business decision and then files bankruptcy.

They were going to hand this money out pretty quickly I thought? So there isn’t a lot of vetting and determining if there is a good business plan?

We have the self proclaimed king of bankruptcy leading the federal government. I can guarantee some of his cronies are funneling in some of this money. And if the orange anus can become prez after bankruptcies out the wazoo.

They gave them the money and the institution gave them treasury bonds worth the same amount. If they can't buy it back, another bank will. Banks do the same thing with each other every single day: they exchange money when they have more than they need to banks who need more liquidity with the agreement that the lender will get more money back. 

They aren't lending it to failing companies, they are lending it to any financial institution who have the collateral (bonds) and needs more liquidity. The point is to ensure that there's enough liquidity to fund day to day lending. When the Fed then need to decrease liquidity, they will sell bonds (which they were planning on doing after the tax season once tax checks are cashed and the banks need less on hand).

Banks keep a chunk of their money tied up in bonds because they're backed by the Fed. It's safe and helps prevent collapses.
The Fed operates outside of Trump. 

[BmorePat87]

Two great articles:

https://www.vox.com/policy-and-politics/2020/3/13/21178457/1-5-trillion-stimulus-loan-fed-federal-reserve

https://slate.com/business/2020/03/federal-reserve-bond-market-wall-street-trillion.html

[Dill]

(03-14-2020, 04:16 PM)SunsetBengal Wrote: I guess that would be more of my opinion, than anything.  I'll use myself as the "good example of a bad example".  Back when I was in HS (class of '87), the guidance counselors just hammered us with the idea that we MUST have a 4 year degree, in order to be competitive in society.  Not sure if it was the same everywhere else, but they made it seem like settling for anything less than a 4 year degree was selling yourself short, and that two year and trade school programs were setting oneself up for a life of being a peon.

So, after drifting from crappy job to crappy job for a couple of years after HS, I eventually decided that college must be the way to go.  I really wasn't interested in it, but discovered that it was a great place to have a blast and avoid responsibility for a few years.  Eventually I graduated with a pretty much worthless degree in Mass Communications and a job in radio that wouldn't even afford me to fund my own place to live.  I eventually ditched the job in radio for a trade that I worked for many years.  Thanks to the Student Loan programs, I'm still paying for that degree, today.  Even though I went back to school during the recession to learn a new skill, and paid cash at a Community College.  I now have a salaried position with an Engineering firm.

Had anyone really looked at my aptitudes back in HS, they could have efficiently directed me to a more effective path than pursuing a 4 year degree.  I call it irresponsible on my part, as I should have realized that my heart wasn't into the 4 year college degree and changed my own path back them.  However, the lure of guaranteed student loans to provide for my fun existence in college was just irresistable.

But Sunset, surely you acquired some writing and communications skills that help in later life? Would you say your literacy level was unchanged by your years in college?  If you graduated, you must have had to read some books, write some papers, and the like, and so gained some valuable knowledge, even if you could not monetize it later.

I took out college loans back in the day when they were more for students' than banks' benefit, and state legislatures had not yet begun to defund public universities. So I managed to pay mine off--about $5,000--inside four years.  Best investment I ever made, for sure. I was never interested in making money or "being competitive" and ended up making more than my parents or siblings. (To be fair, my parents weren't much interested in money either.)

I had two sisters who wanted to be nurses. One went for two years, became an LPN and began earning right away, the other took out loans to study two more years and became an RN.  Over the next 35 years, she earned over a million dollars more than the one who became an LPN.  That's how it works out for a lot of people.  Overall, the college degree is much "value added" to lifetime earnings.

A side note: College education should raise students' understanding of the world around them, its past history and current global economy; neither students nor the rest of us should view it as just higher level job training.