President Joe Biden’s administration is being pressured by their supporters to erase the exorbitant student loan debt in the United States, which has hit record highs of over $1.71 trillion collectively owed. President Biden has not compromised his original $10,000 per borrower campaign pledge. Democratic senators, including Elizabeth Warren, Majority Leader Chuck Schumer and Ed Markey of Massachusetts are holding Biden accountable in using his presidential authority to pursue a more ambitious goal of cancelling $50,000 in federal student loan debt per borrower.
Student loan forgiveness has been a hot topic on the Biden agenda since the beginning of his campaign and a hot topic in the United States since Occupy Wall Street. The United States has a whopping $1.7 trillion in student debt. President Biden temporarily paused federal student loan payments through Sept. 30 on his first full day in office. In addition to cancelling student loan debt, Biden also plans to eventually mandate free public universities for all families that earn under $125,000 per year.
One would be naive to think debt cancellation will just stop at student loans.
If the government cancels debt for the educated and capable, they will have to cancel other debts out of fairness. Cancelling credit card debt and mortgage debt would certainly help less privileged and less educated people who really need it. Beyond just the individuals who need bailouts, there are corporations, small businesses, state and local governments, universities and foreign entities. American citizens will most likely be unsatisfied until the bailouts hit the trillion dollar mark.
People in favor of the student loan forgiveness program believe people will use their extra funds on savings-oriented goals, such as putting a down payment on a house or vehicle and make purchases that will stimulate the economy. Critics believe the plan is unfair to people who already paid off their loans and low-wage service workers who were hit hardest by the COVID-19 pandemic.
Unfortunately, bailouts for everyone doesn’t mean we’re all going to be rolling in free money. That money comes from somewhere— most notably from taxpayers. Debt never actually gets cancelled, it gets transferred. Not only does it come out of the taxpayer’s dollar, it also diminishes the spending power of that dollar. Debt forgiveness, although it may provide the instant gratification of relief and extra cash, it ultimately sends a message that one can take out loans and rack up all the debt they want without paying it back. This puts the integrity of capital in jeopardy. Nothing in this economic system ever truly comes for “free” with zero cost and when it is— “you get what you pay for.”
With the US dollar weakened by the inevitable inflation caused by this economic stimulus, investing in gold is looking attractive.
With more money to spend, the prices of goods will rise. The prices of industrial commodities already started soaring in December 2020, which affects the prices of other consumer goods. People are inclined to spend more freely when extra cash is available due to debt relief.
The value of gold has increased significantly over time but the value of the US dollar has decreased. There are ways the government can print more money but there’s no way to make more gold (even an artificial process of engineering gold would take thousands of years). When hyperinflation occurs, gold can be exchanged for the new hyper-inflated value it represents. Inflation sends gold prices through the roof. If you’re reading this, you’re likely considering investing in precious metals, or you already are. Make sure you’re always paying attention to announcements of economic policies that compromise the value of the US dollar to get in on the bull run early.