Where Your Dreams Become Reality
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Poster: ryan foreman
Subject: RE: Federal loan payments - who do they go to? (please dont delete!)
Wrong. Some federal loans like Pell grants are loaned by the government. Others like Sallie Mae are made by private institutions but the Federal government subsidizes the risk. In other words it is corporate welfare. Its kind of like our healthcare system. Its a confused patchwork of programs.
To student. U.S. treasuries are being bought at close to zero percent for two big reasons: The U.S. - unlike corporations and countries like Greece - have control over their currency and they have a printing press. That means they can effectively guarantee they will pay the loan back, if for no other reason than that they can ultimately just print the money and give it to you. And where else are you going to go to park money in an ultra safe, liquid asset. Europe?
There is no runaway inflation because the world economy is in a deflationary trend if left to its natural course. Its only by governments frantically artificially inflating the economy through radical stuff like Quantative Easing that we have just moderate inflation. The deflation comes from people not spending money or investing so much. For the good reason that they simply don't have money to spend for one reason or another. Wages and benefits have been cut, businesses have gone bankrupt. Moreover there is a fundamental lack of trust coursing through the economy so banks don't want to lend to each other unless the Fed effectively makes them do it.
Who knows exactly what China is thinking. But generally they bought US debt for many years in order to prop up the value of the dollar and conversely devalue their own currency so they could employ their huge labor force through an export economy. Now China and the U.S. are joined at the hip in the current financial mess. China has as much to lose as the U.S. if everyone flees US treasuries.
you are correct. Ryan Foreman is an idiot.[/quote]
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