Doesn’t someone have to pay in the long run?
In: 2
This is mostly philosophical.
The Fed printed literally trillions of dollars during the pandemic, so the idea that “someone has to pay” is mostly rhetorical and not, technically speaking, true. Note the people braying about paying had no problem forgiving PPP loans totaling vastly more nor the Trump tax cuts which cost four times as much as whatever 400 billion worth of loan forgiveness.
Basically, the Fed has as much money as the Fed wants to have at any particular time. The stuff is printed. There is no additional cost (beyond theoretical inflation, but we’d be getting fairly afield here) to the Fed giving itself or it’s prime lending banks another dollar.
Obviously if these student loan borrowers were – I don’t know let’s say Banks betting on risky mortgages – they would get 100% relief TOMORROW – and all the doofus economists lecturing about “having to pay” would just be explaining that this is necessary and will prevent 40% unemployment.
The other piece is just the trash economics of withholding the relief – these borrowers are very likely to spend the difference on consumption which also will generate tax revenue and economic activity that would likely be much more stimulative than just paying the government back.
Tldr: money isn’t real for the government, no not really and student loan borrowers are overwhelming likely to spend the difference on consumption which, from the governments perspective, is just as desirable.
Withholding loan relief is preachy moralizing masquerading as economics.
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