American Consequences - October 2017


When you watch the news and you see people rioting about race in Charlottesville, Virginia... when you see the inner cities burning in Baltimore... when you see more and more radicalized politics – like resurgent neo-Nazi groups, the rise of Black Lives Matter protests, and college students embracing violence to protest at any conservative speaker – what you’re really seeing is the beginning of the jubilee. These protests may nominally be about race. Or about Donald Trump. But what they are really about is hopelessness. What they are really about is economics. The poor – and especially the young and poor in our country – have no hope of being able to afford the American dream. Not when median incomes are $60,000 and the average college debt is more than $30,000. Not when the average cost of a house is more than $250,000 and even a decent apartment is unaffordable for most college graduates. The jubilee has started in America... The jubilee is a Jewish economic tradition. It is part of the Old Testament. You’ll find it described in the Book of Leviticus, Chapter 25. The idea was simple. At the end of 49 years, all debts would be wiped out and collateral property returned. It was a way of completely “resetting” the financial order, of making sure the wealthy didn’t become too dominant... of making sure their economy didn’t collapse... of making sure there was never a violent revolution.

In other words... this massive debt bubble has mostly been created by the 44 million Americans who have student loans. These are the people in our society who are the least able to manage their debts. They are the most likely to default. In 2016, no payments were made by more than 4 million borrowers against a total of $137 billion in outstanding student loans. This represents a 14% annual increase in the default rate from 2015. On average, 3,000 new people default on their student loans each day. And yet... the issuance of these bad debts continues to soar. Since 2013, the average balance of all student borrowers has increased by 17% to more than $30,000. A Violent Redistribution What happens when the least educated, least “vested,” and most violent members of your society (unmarried men in their 20s)... also make up the largest demographic block... and have the largest debts (relative to income) with zero ability to pay back these debts back or discharge them through bankruptcy? Forty-four million people carry a student loan. Most of them can’t afford these loans. Nor can they default. They can’t restructure. They’re stuck – many with $100,000 loans that absorb more than 100% of their disposable income. What do you think they are going to do? All they can do is fight...

Forty-four million people carry a student loan. Most of them can't afford these loans. Nor can they default. They can't restructure. They're stuck.

28 | October 2017

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