Dave Smith and Robbie Bernstein dismantle Biden's student loan forgiveness plan, arguing the $10,000 cap fails to address a $3 trillion crisis fueled by government-backed asset bubbles that inflated tuition to over $150,000. They contend this moral hazard punishes responsible borrowers while rewarding institutions offering low-return degrees, noting banks profit from zero-risk guarantees. The hosts criticize the Fed's market manipulation and dismiss the program as election-year maneuvering that ignores inflation, ultimately suggesting young people turn to socialism because traditional financial paths have been destroyed by systemic corruption. [Automatically generated summary]
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Why Student Debt Forgiveness Fails00:15:17
Fill her up.
You are listening to the Gash Digital Network.
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Here's your host, James Smith.
What's up, everybody?
Welcome to a brand new episode of Part of the Problem.
I'm Dave Smith.
He's Robbie the Fire Bernstein, king of the caulks, COVID.
Jesus, back with us.
It's been a little while, Rob.
I put some guests on.
I've missed you.
How are you, sir?
Good episodes, though.
And I've been porch touring.
So, you know, you've been touring it up.
Very good.
How have the shows been?
Unbelievable.
And this is the last one of the tour.
This Saturday in Denver, Smoke Out Bug Out, which is the live podcast.
I'm doing stand-up.
Shedcast guys are doing a full rap concert.
So show up.
It's going to be awesome.
Sounds very fun.
Definitely go check that out if you're in the area.
All right.
So the big news of the day is this student loan forgiveness plan that Joe Biden just announced yesterday.
And it has gotten a lot of people up in arms.
A lot of people, I guess, on the Democratic side are happy about it.
I'm sure there's some lefties who I haven't seen, but I'm sure are criticizing it for not going far enough.
But anyway, it sparked a whole conversation about this.
So there's a lot of different, I want to do an episode on this and just take the whole thing apart and break it down in the way that only me and you can.
So the whole deal with student loan, student loans, student loan debt, and the issues around forgiveness.
I guess we could start by just saying what Biden is actually doing here.
It looks to me, I was reading over the details of his thing here.
So it's going to be $10,000 of forgiveness for people who make like, what was it, under $150,000 or something like that?
I think it's under $125,000.
Yes, I think you're right.
Under $125,000.
And then I think if you like, if you were eligible for a Pell Grant, you can get a little bit more of a discount than that.
Yes, right.
So that's basically the plan.
It's not, to be fair, what Elizabeth Warren or Bernie Sanders were running on.
It's not this like, we're going to wipe away all your student debt.
It's like 10 grand off.
The thing that's kind of strange about it, I mean, I guess he can brag, you know, that it's something he can say is an accomplishment when for the midterm elections, that seems to be what this is all about, you know, the timing of it.
It's what is it, like 80 days before the midterm elections.
So it seems, you know what I mean, a little coincidental that that's when you decided to do this.
But it also seems like I think just from like a common sense perspective, like most people, if you know someone who's like drowning in student loan debt, 10 grand of forgiveness isn't really going to make that big of a difference for them.
It's not going to make that big of an impact.
So that was just one little kind of detail about this that almost seems to not be getting discussed that he didn't actually go that far with this.
Just worth kind of pointing that out.
It's one of the things that's really interesting about this whole conversation with student loan, with forgiving the student loans, that none of the advocates ever bring up.
You never hear Bernie Sanders or Elizabeth Warren or Joe Biden for that matter, or any of the other people who champion this idea that we should forgive the debt that people have.
It never seems to come up is uh why is the cost so high?
Like, what is the problem here?
Why, why, like, there's so many just obvious fundamental questions staring you right in the face.
And it's at least from what I've seen, it's not even as if they like pretend to have an answer for it.
It's not like they're giving you an answer, and it's like, no, no, no, that's not really the answer.
They just don't bring it up.
Like, some fundamental questions I would think you would ask, right?
Is you'd go, why is the price of college so high?
Why should the next generation of people borrow money to go to college if the fact that there's three trillion dollars in student loan debt and you need to forgive it because they can't pay it off, isn't that pretty clearly telling you it's not worth it to borrow this money to go to college?
So, so how does how does none of that come up?
It's really sure.
And why, why are you forgiving this debt?
Yeah.
Oh, no, that's a that's a completely fair one, too.
I mean, Americans are drowning under credit card debt.
Why, why student loan debt, but not other debt?
And that's a very good question, too, because I don't really honestly, they just don't really have anything to say about any of it.
I don't know, because we feel like we want to do this one.
I don't know, because that's what the cost is.
I don't know, maybe rich people are greedy or something.
I don't know how that, how that factors into it.
College really is a fascinating little uh government program where all these places where they all talk about, you know, like all of these kind of they all try to talk about these deep moral issues.
And these are the centers, uh, you know, of all the crazy woke shit, you know, and everybody's talking about who has privilege and who has been the oppressed and all of the, you know, like all of this stuff comes out of the universities.
Meanwhile, they're them, the people in the universities are charging the students 150 grand and giving them a major in like feminist dance theory or whatever the fuck they're studying.
Like, could you just think of anything more like exploitative than that?
That you would, that no, none of you people there, while you talk about all these like abstract moral principles, none of you have the decency to go, we can't do this to somebody.
We can't charge them this much money for something that's this useless.
And yet, you know, there, it all seems to persist.
I think that should be a critical part of the conversation because the why is it this debt is they're somewhat saying that kids were defrauded out of their money and that they made an investment that's not going to pay them back.
And so, if you are going to say that kids were defrauded from their money and the taxpayers have to step in because what happens to them wasn't fair, well, then who's going to jail for it?
Who in the marketing departments that sold them degrees that would never see a return on investment?
And who in government that created these policies that was going to basically give the funding over to these institutions to basically fund people getting these educations that would never pay a return on investment?
Heads got to roll.
If you're telling me that this was such an epic fraud, we have to bail out the kids that were suckered.
Well, then you can't just leave the fraudsters in business to continue to sucker new people.
Like it just doesn't make sense.
I would agree with that.
And then even if you were going to say, well, they didn't exactly that, you know, they didn't exactly like commit fraud because at the time it seemed like this would have been a good idea.
And then other external factors happened.
And that's why it's their degrees are no longer valuable or the job market isn't there to support them or something like that.
Even if you were going to say that, well, then at the very least, you'd go, okay, but stop going.
Stop going to college.
Like going forward, do not continue to participate in this scheme.
If that's even from just as soon as you acknowledge that debts need to be forgiven, then you would have to acknowledge that.
Yeah.
Okay.
And this is the bottom line, right?
Which is like, it's the issue when no one fucking understands economics at all, like even the most basic level.
But this is like prices are information.
That's what prices convey to people.
And this is a very important feature of an economy.
Uh is that you?
You know, for example, if something is very cheap, then you kind of know right away that you know there's a decent supply of it.
It's not incredibly difficult uh, to produce.
You know what I mean.
Like, there are these things that you know if something is outrageously expensive, you might know there's really not much of a supply of it, or it's incredibly difficult to produce, or something like this.
Now, if you are defaulting on your student loan debts, there is a lot of information there and the information is that the price you paid for college was not worth it.
If you pay for a four-year college uh experience, where you get this piece of paper afterward and it costs this much money and then, after you do it, you can't afford to pay back the money that you, that you borrowed to go, then it was not worth it from a financial point of view forget, you know your experience there.
However much you value that, but from a financial point of view, then it was not worth it.
And this, to me is is probably the worst part of uh student debt forgiveness is that you're you're covering up this signal, which is like that's what needs to be addressed, the obvious reality of the situation, which is that this does not make sense.
This is not a worthwhile uh transaction for you.
So, um and this has been true with like any loan right, like if you opened, if you took out a loan to start a business, and then you're like, I can't pay back my loan well, what does that mean?
You shouldn't have sunk that much money, that much money, into this business.
This business does not generate enough money to justify sinking this, the whatever you borrowed, to put into it.
If you can't pay back the loan, I think you're essentially uh describing the moral hazard of a bailout.
And so, in this case, it's not a banker bailout, but it is a a student bailout, and then more kids are going to continue to purchase something that's not worthwhile.
I I think another element, uh is that it's such like government pretends like they can help.
That's their big pitch is, hey, we can help you out.
And this one is like one of the ultimate stories of how it just doesn't work is the creation of asset bubbles.
So I know that this isn't like a traditional credit asset bubble, but if you look at the price of college, uh against and I haven't looked at this for like five years.
I did a Robb's Newsroom on this.
But if you look at the price of college against inflation, it significantly has outpaced inflation.
And then if you wonder why it's like well, they made loans available.
It's like simple supply and demand.
A college can only charge what people can afford to pay.
And then government steps in and goes oh, we'd like to help you guys pay for this.
So then college Goes, oh, there's more money available.
And so they charge more.
It doesn't work to just introduce loans and funding to a market.
It literally, it just doesn't work.
All you will do is increase the cost of it.
So, what you really did is you saddled kids with debts that they can't possibly repay.
That's what you did.
You made the students more indebted and you allowed colleges to do more dumb shit of basically empowering them to have study departments and researches in these fields that you mentioned of gender, whatever, gender reveal studies, like just dumb bullshit and pretend like there was going to be money in it.
And then it's like the feedback loop where the government pretends like your college is worthwhile and that you need it in order to get your jobs.
They'll fund it.
And then the colleges, they do the bidding of the government and they create the academic research that supports what the government's doing.
Yep, that's that's basically it.
All right.
So you nailed it.
That's exactly right.
And there's two really important elements to that, right?
So number one is the like, that's basically the long or the short of how we got here.
Why we have this problem to begin with is because government got involved in the game first of guaranteeing student loans and then just outright giving the loans themselves coming directly from the government.
And yeah, of course, this had the, you know, the effect that you would think it would have.
I mean, there's, it's not as if like no 18 year old can buy a house.
I mean, not none, but the vast, vast, vast majority of 18 year olds, right?
If you have no credit history and no income and no money, you know, like try to go get a loan for a house at 18.
Send your 18-year-old and your family down over to the Bank of America and say, hey, I'd like to take out a mortgage to go buy a house.
And you'd be like, they're like, well, what do you, you know, what kind of house do you want or whatever, you know, even if it's something, you know, how's it a little more expensive?
Let's just say for the sake of argument, it was the, it was the same price as college, you know, you find, find a house for 150 grand or something like that.
I don't know if you can find that anywhere anymore.
Maybe you get yourself a very little one.
Yeah.
Okay.
So you want to go buy a shack for $100,000.
And so right away, the bank would be like, okay, well, you have to put 20% down.
So do you have 20 grand?
And they'd go, no, I don't have 20 grand.
Okay, that's a little bit of a problem.
And they'd be like, what's your income?
And they'd go, $0 a year.
I have $0 a year.
I'm a senior in high school.
You know what I mean?
I have no, absolutely no income.
There's maybe I worked a summer job and made two grand or something.
So that's my income, two grand a year.
Okay, that's interesting.
You go, what's your credit history?
You go, I have none.
I have no credit history.
Okay.
Yeah, you're not getting that loan.
You're not going to get that loan.
And by the way, that's a collateralized loan.
You know, banks kind of have this thing with like where they loan you, if they loan you money for a mortgage to buy a house.
If you default on the mortgage, they get the house and then they sell the house.
So they are kind of covered there.
And yet they still won't do that because it's just too risky.
Right.
So what do you think under anything simulating market conditions?
Why would it be any different if a kid were to go to a bank and say, hey, I want $150,000 to go study books for four years?
I think they want to know what are you studying and what school are you going to?
And then they'd probably look at what the average income is of people that actually get that profession.
Then they'd want to look at your grades and then they'd want to actually study your life habits to see if they think you're one of the people that's going to actually complete the college.
And truthfully, truthfully, Rob, much more likely than that under market conditions, they just say no.
They'd just say no, because that's too much work for me to have to go through all of this.
And I just don't know.
I mean, I'm just saying because it's like when if you, in any other situation in life, it's as a young adult or even as an older adult, if you went into a bank with zero money to put down, if you have no assets, you have no income, you have no credit history, and you ask for a loan, their answer is a unanimous no.
The Crypto IRA Solution00:02:46
Like, no, there's just no, you can't have money.
And they don't go that the government can, I mean, the bank could be like, yeah, I'm not even going to give you free money that I don't have that I will create from nothing for this because that's how worthless you are to me.
You go, listen, I get an endless amount of this money at 0% interest and you can't have any.
You can't have any of it.
And we got tons.
They go, it's just zeros on a computer.
And still, no.
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All right, let's get back into the show.
So anyway, so that's it.
Now, if let's say, let's say hypothetically that the government came in and said, we're going to make loans for starting a business the way we make student loans.
Okay.
So we're going to, the government will guarantee them.
College as an Absolute Disaster00:15:55
And then, you know, later on, the government will just give them out themselves.
So, hey, every single 18-year-old out there, if you want 200 grand to go start a business, you can have it.
In this situation, do you think less 18-year-olds would start businesses, more 18-year-olds would start businesses, or the same amount of 18-year-olds would start businesses?
I'm going to venture to say much more.
Many, many more businesses run by 18-year-olds would start.
Do you think that's a good idea?
No, because they're 18.
They're idiots.
They don't have an idea for a fucking business.
You're just literally telling them, you're just giving them free money.
This would be so basically that's what the government did for college.
And it turned college from what college once was into what college is today.
And what college once was, once upon a time, and not going back that long ago, probably when your parents were kids, definitely when your grandparents were kids, what college was, was a place that very smart or very privileged kids went to after high school to go study more for another four years.
And they, it cost like basically you could work a summer job and pay for your own tuition.
And that was that.
And the vast majority of people didn't go to college.
They went and got jobs.
You graduated from high school, you went and got a job.
That was your next step.
Okay.
That's the way life worked.
And they college was transformed from that, which kind of makes sense.
It kind of makes sense that like, look, there's a small group of people in society who we really want to go away and read all the great books and learn all the great things.
And we need, you know, you need doctors and engineers and like certain things in society that really takes a lot of specialized training.
Okay.
That's that on its face kind of makes sense.
But it was changed from that to being the thing you do after high school, where you go get drunk and party and hook up.
And, you know, you know, maybe you read a few books in the time you're there.
But like, that's basically what colleges become today.
It's just the place where everyone goes after high school.
It's just, it's almost as if instead of school going from kindergarten to 12th grade, it just goes from kindergarten to 16th grade.
You know, like that's basically what college has become.
And this has been just an absolute disaster, an absolute disaster.
It's just, it's for the vast majority of the kids, they come out dumber than when they went in.
They certainly come out dumber than the counterfactual, or if they had just gone into the real world and just gotten a job for those four years.
I mean, there's like, for the vast majority of people, just getting these regular degrees, you know, it's a whatever, not even the ones that we make fun of, like gender studies or stuff like that, but like even just getting like a degree in psychology or like whatever these people go do.
If you come out with that and you have a degree in psychology, you would be more valuable to most companies if you just came out and said, I have four years of industry experience in this industry.
You'd be more valuable to them.
So it's just, it's been an absolute disaster, like everything the government touches.
And then I think the other thing that you kind of got that you touched on there, which is a really important point to make, is that it's not as if even like the left-wing activists who are like, you should forgive this debt.
It's like, okay, they're wrong on the policy because, you know, they're left-wingers, so they can't help it.
But there is some truth to the fact that like these kids kind of are victims.
Like I really do have some sympathy for some of these kids who were really, first off, they probably agreed to this debt when they were, what, 18?
It's like the day after you're like legally allowed to even take on debt.
You know what I mean?
Like it's, it's, I mean, I understand it's a little bit arbitrary.
We have to draw these lines somewhere, but you know, it's like the morning that you turn 18, all of a sudden you're like legally allowed to take on debt.
And then right away, you're going to go into a massive amount of debt.
I mean, dude, like, you know, for, you know, taking out a mortgage, like to buy a house is a huge decision.
It's like a really big decision.
You're like, this is going to be 30 years of me paying this fucking thing off, you know, for, and this is for most like middle-aged adults.
It's a really big decision to take out a mortgage.
It's a huge decision to take out a hundred thousand dollars uh loan or 150,000 loan or whatever it is.
Um, and they're doing this when they're very young.
Uh, everyone around them is pressuring them to do it.
All of the experts around them, when it's your the adults in the room are like your college counselor, your parents, the university itself, the banks, everyone's telling you, oh, this is a no-brainer.
You have to do it, you have to go to college.
So, and and then they're, you know, they're completely misled.
No one at these institutions of higher learning, no one, there's no one in these institutions who ever even goes to them like, you know, I don't know if you want to keep paying this rate.
You know, I don't know if this is really worth it for you.
You should at least consider the possibility that this is not worth it for you to be here.
No, no, no.
These people who, you know, like put themselves forward as morally superior to everybody else have no problem gobbling these kids money up and gobbling up their minds also.
So they, so these, you know, so the whole system has really exploited these kids.
And of course, for years, basically what was happening is that the banks were making tons of money off this, right?
Because they loan out the money, as you pointed out, that they get for free from the government anyway.
They get interest on this money.
It's, it's a vicious type of loan where you can't even get out of it through bankruptcy.
They can garnish your wages and they're also guaranteed by the government.
So the fucking the bank has assumed zero risk.
Now they're just given out directly by the government.
But anyway, sorry, go ahead.
Now, I have a bit about, you know, the waste of time that I spent in college.
And I can never figure out this angle, but to me, it's the funniest part of it is that while they're teaching you sociology or whatever else, they have departments to sell you on coming to the school.
They have lobbyists that got the government funding.
And then they got the people that are selling you on taking the loan.
Like that's the shit that they should be teaching us.
Like, these people understand sales and persuasion.
You know what I mean?
Like, they know how to run a business.
They're running a very successful business, which is highly manipulative.
And the product that they're actually teaching you, like, teach me the other thing.
That would actually be worthwhile.
Well, it's, it's funny because when you look at like this stuff is as the cost of college has just skyrocketed to like insane amounts.
So the cost of colleges is so high.
And right, you have all of these people are just padding their pockets.
You have all these administrators who are making six-figure salaries.
Then the colleges have things.
It's not like, oh, any of this money goes into learning.
Like, I don't know.
A classroom is still a classroom.
It's still the same.
You know, you're already reading a great book.
Like, okay, it's not like tuition going up needs to cover that.
So, no, but they have like Olympic-sized swimming pools and they have like cafeterias with 72 different options of what you can eat and all this stuff.
It's just, it's this huge scheme.
And the kids really are preyed upon.
I like, I do have a lot of sympathy for the younger generation, the generation Z or whatever.
I mean, these, these guys, and everyone likes to fucking take shots at them.
There's a lot of like the boomers really like to take shots at the millennials and generation Z.
They just want to shame us after they stole all the money.
Well, that's right.
The greatest wealth expansion in human history.
They're the greatest whiners that ever lived in human history.
They couldn't have had it better.
And then they shamed us.
Like we're the generation with the spoons in our mouths as we constantly face bubbles poppings that they created.
Yeah.
You're literally the biggest assholes that ever lived.
You literally got rich from living in your house.
And then like I, like you said, participated in the in the greatest expansion in the history of the world.
And then what are you handing to the next generation?
Oh, a mountain of debt, just a mountain of debt.
That's right.
You took the greatest inheritance in the history of the world and blew it all in one generation.
And on top of that, there's just a lot of other like social things.
Like, you know, look, they, they like the boomer generation.
And by the way, not all boomers are bad.
There's some, there's some good ones out there, but speaking in broad terms, like the boomer generation, you know, they normalized, they, they normalized divorce for, you know, just because I don't know, we don't like each other anymore.
Not like, oh, there's some horrible thing in the marriage.
We need, we need to get divorced.
Like it was just kind of like, huh, I don't know.
We're bored.
We're getting divorced.
They abandon all types of like traditional values and, you know, feel however you feel about that.
The real issue is they didn't replace it with anything.
And so you have these kids, so many of them is like, look, these kids grew up.
Yes, materially speaking, they were okay.
They had cool toys.
You know what I mean?
When they were kids, they got better video games than previous generations.
And, you know, like they were well fed, you know, like they didn't have, they didn't deal with poverty.
But there are these kids who grew up with no family, like not without an intact, you know, family, didn't have a father in the house.
Kids grew up, you know, without any sense of kind of like meaning or purpose or direction.
Many of them were put on psychotropic drugs from the time they were very little.
And then every person in their life, every adult around them steers them toward this is what you're supposed to do.
You're supposed to go to college.
You're supposed to take out this money.
Then they come out in the post, you know, 2008 world into this kind of devastated economy that's completely rigged against them.
And it's, and you're like, you're, they're going and they got like a job at Starbucks and they're in 150 grand of debt.
Oh, and by the way, the price of a house is like $700,000.
You're like, yeah, and I don't know.
Huh?
No, it's just wild to think the alternative, if you did private school your whole life, the alternative would be your parents could put you into a $300,000 business at age 18 or 24 or whatever the fuck it is.
Yeah.
Well, that's right.
I mean, it's like, yeah.
And so we're all walking through the system.
But then from that kid's perspective, right?
Like, what are they going to turn to other than socialism?
And like, what are they going to turn to?
Whatever form of socialism that is.
And I'm just, I'm using that kind of loosely, like just even this like debt forgiveness.
But like, what do you, dude?
I'm 150 grand in debt.
Okay.
I make 13 bucks an hour.
A house is $700,000.
What's my path here to having a life, to having a family, to go like the only path that you could possibly see that sounds, that, that sounds plausible is like Bernie Sanders going like, well, I'll make your debt go away.
Now you don't have your debt anymore.
I'll make them pay you more.
I'll make the, you know, them give you a free house.
I'll make them get like, it's the, it almost becomes an inevitable conclusion of this that they're like, well, if this is capitalism, then I'm for whatever the fuck the opposite of this is.
So it's like, I do recognize that a lot of these kids really are victims of the college scheme.
They're victims of a lot of things about our culture and our society.
However, debt forgiveness is the worst possible solution to all of this.
You know, it punishes the least guilty people.
Like it punishes the people who, look, you could say, okay, that 18-year-old was kind of taken advantage of, but he did still take out the money and get to go to college with it, right?
Or go to college with it.
You know, who's who really shouldn't be responsible for that is the 18-year-old who was smart enough to not take out that loan and not go waste it on a degree that wouldn't be able to pay it back.
So now that guy's got to subsidize the guy who made the bad decision.
And likewise, look, a much better situation, a much better solution to this problem would be to have defaults on these loans.
And then maybe if you wanted to help these kids, like I wouldn't be opposed to maybe like cracking down on the way financial institutions can collect from them or can hold it over their heads or something like that.
But look, what you have here, right?
This is what happens with all Wall Street products is that it's not, you know, it's not like in the olden days when, you know, there were basically two parties in a loan.
So there was the lender and the borrower, right?
So you had the bank and the person who took out the money.
Now, of course, as you know, Rob, right, like these things become securitized, they get chopped up into a million pieces.
They get sold into every single fund, everyone's retirement.
So student debt is like all over the place.
It's owned by lots of different people.
However, it's still more reasonable to punish those people than to punish people who had nothing to do with it.
So in other words, if you own a mortgage-backed security, or in this case, a student loan-backed security or something like that, you still did buy that voluntarily.
If you took out the debt, you still did take out that debt.
It's more just that you're punished than the people who didn't make this decision at all are punished.
And it's very interesting to see how much outrage this has generated because people are really pissed off about this.
And rightfully so, but also it's, you know, I tweeted something about this today ago that I just said, like, it's kind of crazy.
You're like, I'm as against the loan forgiveness as anyone, but it's kind of crazy how much outrage this is generating, especially, you know, given that I said something like every billionaire in the country is on welfare.
And over the last two and a half years, we've had the largest corporate giveaways of tax money in human history.
So like, okay, you know, you may be against people getting 10 grand of forgiveness, but like it's just a little weird that there's so much more, like there seems, this seems to generate more outrage than that did.
So there is something about that that I find kind of fascinating.
And there were some interesting responses that I got to that.
We could talk about in a sec.
I don't know.
Is there anything in here you want to jump in on or add anything to?
There is a lot, but let's go with that last point, which is why is this creating more outrage?
And I think it's like the universal basic income that when people heard that, even your, even people that are very pro-socialism or pro-like government paying for your health care, even that, they were like, that's too much.
So I think people have a vision for what capitalism is supposed to look like.
And even if they will like, they might even support fake capitalism, where they think like we have open and free markets and then you earn what you keep.
And then sometimes the government comes in with the safety net.
But they at least like to have the idea that like there are winners and I can earn what I keep and I get to keep what I earn.
People like in America, I think they somewhat still like that vision.
And so things like universal basic income, everyone, you know what I mean?
Young Americans for Liberty00:03:22
It's common sense to go, oh, well, that's the end of that other model.
I think this creates the exact same problem because like when money goes to the banks, it's like just a number on a spreadsheet.
We don't really think about it.
So yes, is it better that the banks are getting bailed out?
Or is it better that like there's a taxism system that favors the elite?
Of course not.
But when someone actually said yes to a loan, they took on the debt.
And then you just say, well, this guy's not, everyone's intuitively like, well, that's not fair.
Like even if like a banker gets access to something I don't, well, I kind of get, well, he's in the elite, you know, and we got a system with the elite.
But when you tell me my neighbor is going to get something that I'm not going to get, people are like, well, fuck that.
Why is he going to get that?
And they just realize that that's the A, it's the end of our vision for even like pretending like we have capitalism.
And B, where does this end?
So like this is a very new, you know what I mean?
This is a very new entitlement.
Yes.
I just did our three more billion dollars to Ukraine.
You know what I mean?
They keep pretending like it's the last payment and then they go, here's more money.
So like, do you think that this is actually the end of them wiping away debt?
Or are we moving towards some new culture in which this is the beginning of government being able to just wipe away debts?
And then where does that go?
How does that end?
That is an interesting question.
And I think that's one of the real questions that comes out of this is like, okay, but then are, so are we just now committing to, again, if you're going to keep saying, encouraging kids to go pay these prices and keep taking out loans, like, so what's the plan for the next, you know, batch of student loan debts?
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All right, let's get back into the show.
So just on this general topic, about the thing I tweeted, Chris Rossini responded to me.
He's, if you don't know Chris, he's great.
He's a great economist.
He co-hosts the Ron Paul Liberty report on Friday with Ron Paul.
It's usually Dan McAdams.
But then on Friday, he comes in and they talk a lot of economics and stuff.
But he wrote this, and I thought it was really thoughtful and really interesting.
He said, you never know what will animate people.
Interest Rates and Capitalism00:10:40
It usually comes from the most unexpected places.
People are used to getting ripped off by the rich, quote, elites, but getting ripped off by your neighbor and having to pay his debt causes outrage.
Fascinating.
I think there's really something to that.
I think there's really something to the idea that, okay, yes, we know these like powerful people are ripping us off and the system is rigged against us for them, but seeing your neighbor down the block who you know damn well was going on vacation every year when his kids were in college and you didn't go on vacation all those years so you could make sure to pay back the debt.
You know what I'm saying?
And then he comes in and gets a bailout.
That really messes with people in a different sort of way.
There's something about that that there's just, it's the psychology of it all.
Like there's something about knowing the guy who's getting one over on you.
And even just conceptually going, hey, there's a problem that the system favors some people.
So we're going to fix it by expanding the group that gets favored.
Well, then, of course, the people are like, wait, so now the system's really fucking me.
Like, in other words, you're admitting, you're admitting to the problem, which is that the system favors some individuals over others.
And now you're actually telling me that the system is going to favor even more people at my expense.
So, of course, I'm going to be outraged about that.
You're not trying to fix the fact that the system favors individuals.
You're actually trying to punish me and push me more into the out group and have more people that get to be favored and robbed from me.
You see what I'm saying?
Like, that's a drastic, almost like, it's like, I don't know.
It's like the government's playing offense against you in terms of increasing the amount of people that get to rob from you.
Like, of course, that's going to be alarming.
Yeah.
Yeah.
No, absolutely.
And there is, I mean, it's there is something that, you know, is justified about that.
And, you know, thinking about people, this is like the problem with what the government always ends up doing.
It's that we were making this point just when we were talking about like, you know, manipulated interest rates and artificially low interest rates, which by the way, I someone, someone said to me on social media at one point that they go, now that rates are going up, I'm going to have to stop saying artificially low interest rates, which is not true.
We still have incredibly artificially low interest rates.
There's still, they say this thing where it's like, oh, the highest interest rate, you know, increase in 15 years or whatever.
But it's like, yeah, but it's like, what is where are the rates at today?
There's still, we should have, we should have, and we would have under market conditions, very high interest rates in America right now.
And it's easy to know that because we have no savings.
People who have no savings, then you're going to have high interest rates.
That's how it works in a free market.
Interest rates are a result of saving.
So if there's a ton of savings, then banks have a lot that they're sitting on a lot of money.
They can loan some money out for low interest.
But if there's very little savings, then it's going to, the rates are going to go up.
Anyway, that's kind of a side.
The point that I was bringing up was that, you go, in this low interest rate environment, it's like, it's not just that it favors some people and doesn't favor other people.
It's that it favors the people who went into debt and it screws over the people who saved.
Like the exact opposite of what you'd want.
You know, you're coming in and helping the people who did all the wrong things and then punishing the people who did all of the right things.
And this so like so much of our whole goddamn system is so poisoned and broken and corrupted because at every single turn, the government comes in and rewards the people who do all the wrong things and punishes the people who do all of the right things.
You know, as you see this all, as soon as you start looking for that, you see it everywhere throughout, everywhere throughout our society.
Oh, you're not working and you're sitting on ass on your ass and you're having a bunch of kids with, you know, four different fathers.
Here's a check.
Oh, you started a business and you're trying to give your kids a better life.
Here's a bill.
And then you know what I mean?
Like that's the whole system.
It changes everything to playing the government game.
And so what I mean is like exactly what you're describing is that these kids felt like they did the right thing by going to school and then they realized that the system screwed them.
So they start advocating for socialism.
They're not really advocating for socialism.
They're realizing that bettering themselves doesn't bring them financial security.
Hijacking the government for their own self-interest does.
And so all of a sudden everyone starts to, it's like the same thing with like in finance with like, don't fight the Fed, which is true.
How many people when you're making investments are actually looking at like P ratios, returns on the market.
It's got nothing to do with anything.
It's all got everything to do with Fed money.
It's exactly what you, I mean, you were describing just the interest rate being a signal, but it's like all of a sudden we live in a universe where it's like, there is no ability to kind of save or try and live my own life because the real consideration is, how do I get in with the government so that they're stealing somebody else's money for my benefit versus taking my money for someone else's benefit, which doesn't actually create goods or services.
That's not creating a business.
That's not creating value.
That's doing nothing.
We're all like, in other words, like we're all almost trying to merge with the parasite.
Yeah, well, that's right.
That's right.
It's, you know, you'll see if you ever like, if you read like the Wall Street Journal or if you watch CNBC or something like this, you'll see this.
It's like they kind of admit this without ever like really, you know, very, very rarely do they actually like examine it or question whether it should be this way.
But there's almost just like an admission that like, look, obviously they all know that the market hinges on what the Fed's going to do.
And like they'll be like, well, look, the, you know, the S ⁇ P or the NASDAQ or whatever, it went down, you know, 200 points because of something the Federal Reserve Chairman said.
Not even anything they did, but if he just says something, this can have a huge impact on a market.
And all of them know that the Fed chairman could crash the market with words.
Like he could just say something that would absolutely devastate the markets.
No one would deny that.
But then if you like actually examine that, you're like, so what the fuck is that then?
This is supposed to be capitalism.
That's what our system is.
We're calling this capitalism, where one person, you know, in an institution created by an act of Congress appointed by the president can just utter some words and that just could level an entire economy.
Because, you know, so we're thinking about bringing the interest rates up like 15%, you know, or something like that.
We're thinking about bringing them up 15 points.
Everyone would sell.
Everyone would dump.
It would just shred the whole thing just off one guy's words because the government put him in that position to be there.
And this is, this is supposed to be free markets.
And I think people are going to discover the problem is it's not going to take them a while.
This isn't going to actually help the people who are in debt because there's a good chance that they might go on and take out more debt.
But it's not just that.
I mean, they're saying that it's not that inflationary when they all go out and now have $10,000 more.
I think in my own humble opinion, I think they're underestimating that because I think there's a drag on the economy that some kids were fucked over by college and so they're not actually looking to take on new debt.
And that's going to make it, I mean, the housing market doesn't reflect this right now because it's at all time highs, but we're seeing how that's coming down as the interest rate goes up.
But I do believe that there's a fair amount of people that are uninterested in buying homes after what happened to them in terms of the debt from school.
And government kind of lives in the system where prices can't come down.
They can't have college tuition coming down because they go, hey, we're not going to fund this anymore.
And then they can't have the baby boomers not being able to sell their houses because everyone that's leaving college is too indebted to go buy it.
So they're somewhat invested in.
And then I bet there's also an issue at the banks that, you know, they're having a problem with some of maybe that these loans just like they don't want to write them down type thing.
Like they don't want them to be defaulted.
So I'm saying the winners here are probably the system at large and not these individuals who are going to be getting the 10K.
Well, yeah, I think that's true too.
I also think that, look, I mean, I don't know how, you know, it was under the Obama administration when the loans just started coming from the government and not from financial institutions backed by the government.
But a lot of these people holding this debt are probably from before that.
So this is, I mean, I'd have to actually look at exactly where all of the, you know, like the like who is the holder of the of the debt.
But in all these cases but this is kind of a banker bailout of sorts, like there there are going to be a lot of financial institutions who got that.
You know what I mean like that, because it's not again, it's not as if the debt is wiped away.
The lender is going to get paid back.
It's just going to $300 billion is going to be going back to the banks, right?
So this is another little banker bailout uh, of sorts.
I, you know, I don't know exactly how much of the money is going back to them, but you know, ten thousand dollars may not be that much to one person drowning in student loan debt, but you know, every single one of them, having ten thousand dollars kicked into some big financial institution, probably adds up to something.
Here's a a funny one, just in terms of the people that are going to be complaining.
Hey, that's not fair.
There's a lot of people right now I think I could be wrong on this, but I read there's a lot of people who think that they just got a ten thousand dollar reduction.
But some of the people that did the right thing of trying to restructure that debt also means that it's no longer owned by government or the banks, and so that's actually not so like the people that try to consolidate their debt to figure out how to pay it off uh, might not actually be able to benefit from this ten thousand dollar reduction.
That's interesting.
That's interesting.
Look, there's also other questions that some people have raised about the constitutionality of, you know, the Biden.
I understand it's not, but they're just not gonna be able to fight him on it.
Yeah, it's just um, the.
The issue here that you had this is, this is how politics works.
You know we talk about this all the time.
Constitution is just a piece of paper um so yeah, I mean okay, who's gonna fight him on it?
The democratically controlled Congress.
He's doing this to give them something for the midterms.
He's literally doing this to help them politically.
So you know uh, it's just whatever doesn't really matter that it's blatantly unconstitutional, it's he's going to be able to do.
This would be my take.
I have some college advice to pay forward.
Professional Advice on College Costs00:05:31
If you, if any young listeners out there, or if you know kids that are young uh, if you get into an Ivy League school and you're a good student uh, it's probably worthwhile.
You'll probably see returns on that if you have particularly wealthy parents that can afford that next level of school underneath Ivy League, like your NYUS, your bus, your Brandeises, like you're not the Ivy League student but your parents can pay for, like that and they can just pay for it.
It's not a big deal, might still be worthwhile if you're not one of those people and you're not a great student.
Firstly, the best hack in the world and nobody tells you this is you can literally fail out of high school.
You can go to a community college and get a 4.0.
Getting a community college 4.0 is not as difficult as doing well in high school.
It just isn't.
And then you can go to any college in the world and you can get it for basically half off because you only have to go there for two years and it's easier to get into them.
It's much easier to get into Harvard as a transfer student than applying from college, and nobody tells you this.
But this is the hack Of the system, you go to high school, you mean, yeah, yeah, yeah, because they don't because it doesn't get uh, it doesn't go to the admissions thing, like their rankings are based off of how many people they reject, but that doesn't include transfer students, so they have much easier uh um standards for being admitted as a transfer student.
And so, if your credits apply, you're literally saving 50% from what it would cost to go to that college at the beginning.
Uh, but you got to get a 4.0.
Like, if it's anything less than a 4.0, it's not as easy to do.
Uh, and then lastly, I went to a state school, it was not fun, I hated college, it wasn't a good experience.
Socially, I got nothing out of it, I was miserable while I was there, but at the end of the day, it cost me I think six grand a year or something.
Like, and I'm not saying I'm pro state college, the whole thing was a sham, wasn't worth it.
They're all state colleges, you know.
Yeah, if I could look back and then I would have rather have not gone because it wasn't a good experience, and I left there thinking I was dumb and rather depressed, it wasn't a good experience for me.
But I'm just telling you, if you're thinking about going, like, yeah, you'll have a lot of fun at these party schools, uh, but unless you have rich parents that like literally can just write that check and it's no sweat off their back.
Like, if you got your dad's a doctor making 500 grand a year and he feels good that he sent you to a party school, go for it.
Anyone else out there, just like it's just not worth it, it really isn't.
Yeah, I would always say to people, I go, if you're like, it's just such common sense, right?
Like, if you just take it down and someone goes, I'm gonna go pay whatever, I'm gonna go pay uh 50 grand a year to go to this college.
You go, Oh, okay, so you're 18 and you want to invest 200 grand over the next four years into this.
You go, okay, what's the plan?
What's your detailed plan for how this is worth it?
That this is not, and not only does it have to be that, not only does it have to put you better than where you are right now, it has to put you better than where you are right now compared to what else you could do for four years that wouldn't cost 200 grand, right?
Like, that's that's it.
And if you don't have a clear answer to that, then do not do it.
You know, go work for free, and I mean that.
Like, uh, you got to do it when you're young, figure out like, and maybe do it for a year until you figure out like that it's not going to work.
But if you have a specific field that you want to go work in, that's what I've done in comedy and podcasting.
You just go do it for free for a whole lot of years, and then all of a sudden you're a professional and it pays you.
And it's better than school because you didn't have to pay to do it.
I mean, comedy, I guess, in the early years with Open Mic, I did, or, you know, you got to pay for train rides, but it's not like school tuition.
And if you're 18, you might be able to find a guy, even a financial firm here, like, I mean, it's not going to happen for like doctor or lawyer because like there's a, you know, like there's credentials, there's licensing laws, but there's a lot of fields that you might like, you might be able to go basically just be the fucking gopher for some film director and basically get film school out of that.
Like it exists in the world.
That is true.
No, look, my advice for young people, like if you're like, uh, if you're like 18 to 25 or something like that, in that range or whatever, there it's like this, right?
This is professional advice, like advice for your professional life.
The whole game is finding out what you're going to do.
Like that's kind of the game.
But don't like put that much pressure on yourself.
Like 20s are for experimenting with that and figuring it out.
You're not supposed to have everything figured out, you know?
If you can, if you find something, what you're ultimately looking for is finding something that you like.
And if you're really lucky finding something that you love, that you're good at.
And when you find that, you go all in on that.
If you find something that you really love and you're good at it, then you go all in on that.
Do not fuck around with other shit.
Once you've found that, you dedicate yourself to that, because that's how you win ultimately in life, is if you're doing something that you love and you're getting paid to do it.
That's what professional success really is all about.
That's what you're searching for, is to find that.
If you can find that, then you're going to be a winner ultimately in this world.
So that's what those years of your life should be spent searching for.
You know what I mean?
This is just professionally, not like romantically or other areas of your life.
But professionally speaking, that's what those years should be about.
And then you got to like say, like, well, is going, is going to college and going into all of this debt, is that bringing you any closer to that goal?
Is Four Years Worth It00:04:23
Is it?
Because again, if college, look, even if college was just a, let's say it was free, even if college was just a place that you went for four years when you're 18, you're still spending four years of your life there.
There's still the question of like, is that, is it worth investing these four years of your life into that?
But it's not only just that, it's not only like these, these really like important developmentally four years of your life.
It's also coming with this enormous price tag next to it.
So the onus has to really be on like demonstrating that this is clearly worth it.
And if it's not, don't do it.
That's my, that would be my advice.
Okay, before we get out of here, let's just in case anyone thinks that, you know, the maybe there's a good side to, you know, the other argument, the argument for the program.
Let's check in on our good friend, the White House press secretary, Jean-Pierre, who I'll be honest, she makes a strong case for the other side, gets asked a direct question, gives you a direct answer.
That's what you can always count on with Jean-Pierre.
Let's check in.
And that, again, here's what we have done.
Here's what we thought about how much it might cause, it might not cost.
Who is paying for this?
What we are saying is the work that this administration has done, the work that the Democrats in Congress has done is actually there.
And you see that the $1.7 trillion deficit deduction that you see is going to benefit us in being able to do something for the middle class, to do something for the middle class.
This is about doing something for people who make less than $125,000, $1.7 trillion.
That's what we've been able to do.
But when you forgive debt, you're not just disappearing debt.
So who is paying for this?
And then I'll give you the second part.
We lifted the pause, right?
We're going to lift the pause at the end of this year, which is going to matter, right?
Which is going to offset a lot of what we're doing as well.
When you think about the $4 billion that's going to go back into as revenue back into this process of folks paying their college tuition, that matters as well.
So we are doing this in a smart way.
We are doing this in a way that's going to be effective.
We are doing in this a way that keeps to the president's promise on giving people who need some breathing room, who needs to bring their room.
I just laid out for you.
No, Peter, I just laid out how we're seeing this process and why this matters.
Again, I just laid out, I just, I just laid out because of the work that we have done.
It's literally like talking to a three-year-old.
Like, I just don't know what he's just like, asking the most simple questions.
You can't even pretend to give an answer anywhere.
So that's.
We have a government.
What was she saying?
The 1.7.
Like she's saying that since we have more of a deficit now, we can afford more.
I don't know what was she saying there.
It was incomprehensible gibberish.
You know, who's paying for it?
We're doing something.
If you look at what we did, we're doing something for people making under 125 grand, 1.7.
How's that for inflation, by the way?
That's now the middle class.
Like it used to be like 55 grand and under.
Now it's 125 grand and other under is considered you need financial assistance.
Yeah, it literally was rich.
Four years ago, if a friend of mine was telling me they were making 100, I was like, what the fuck?
You making 125.
You've made it, dude.
Yeah.
No, and now you're like, oh, geez, are you holding on?
Are you able, are you able to keep your head above water?
You know what I mean?
You need me to lend you money for good eggs.
No, but it used to be, look, it used to be like if someone made 70, 75 grand a year, you'd be like, oh, they have a great job.
This is somebody who has a great job.
They're comfortable.
You know what I mean?
They're really like never marry.
Yeah.
Now it's kind of like, oh my God, if you're like, you have two kids and you make 70 grand a year, you go, well, what do you do?
What like, what do you, how do you make this work?