@Ackad said:
@Jd1680a said:
What would happen if 5 million student loans went into default at the same time? The college bubble will be even worse then housing bubble if it were to pop. How would the government be able to handle a major financial crisis with $1 trillion of loans never come back?
Well, to be exact, the current student loan debt is at $1.4 trillion. As for the debacle, the Federal Reserve can use the Open Market Operations strategy; through discount rates and the purchase of bonds. While the Fed initiates that role, the US Government can reduce its spending and temporarily decrease taxes in order to arouse consumer spending. Correct me if I'm wrong.
This the only solution unless macroeconomists can find an alternative from the Keyne's effect.
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