headermask image

header image

Student Debt is like Fort Knox for the Feds But Better!

Christopher Matthews at Time magazine asks just what kind of assets does Uncle Sam have lying around. We hear about the debt all of the time, but I guess he figured that it would be worth trying the glass-half-full tack for a bit.

What did he find?

The federal government also has a very sizable stash of gold. In fact, at 261,498,926.247 troy ounces, it’s the largest in the world. And, in case you haven’t noticed, gold is quite popular among investors who fear the debasement of government currencies in this era of worldwide, aggressive monetary stimulus. At the going rate of $1,660 per ounce, that stash is worth nearly $442 billion.

That’s a pretty penny, for sure, but look how big the stash happens to be in student debt. Matthews estimates that the Fed is sitting on $948 BILLION in student loans. Those are fat contracts too with super-fat interest rates. These loans aren’t paying 1 or 2% like the T-bills. Nope. These kids are on the hook for 6, 7, 8 or even 9%. Does that gold bring those kind of returns?

This shows you the power of fiat currency if the people believe in the system. I wonder how long that will keep happening.

Share

Related posts:

  1. Obama plays for the student debt crowd
  2. The size of shadow debt is huge.
  3. Greek student may lose her “right to dream.”
  4. Unpacking the off-balance-sheet student debt
  5. Student loan debt crosses $1 trillion mark

If you liked my post, feel free to subscribe to my rss feeds

Money Making Options

Post meta

This entry was written by admin and posted on February 7, 2013 at 11:34 am and filed under Uncategorized. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.

Share with others

Post Student Debt is like Fort Knox for the Feds But Better! to digg. Post Student Debt is like Fort Knox for the Feds But Better! to Reddit add to stumbleupon Google Bookmark myweb bookmark on del.cio.us newsvine Tailrank magnolia Furl co.mments shadows simpy blinklist

One Comment

  1. Neither the number of 0s on the student loan notes, nor the nominal interest rates shown on the faces that pile of paper, makes any of it worth more than $113/ton it is worth as scrap paper.

    The value of that asset, like the value of any asset, is the net cash flow it will provide over time.

    Since the notes were made by ninjas (no income, no jobs, or assets) they will produce mere pennies on the dollar of face amount in the future.

    “Harvard: Just 6 in 10 Millennials have jobs, half are part-time” by Paul Bedard in Washington Secrets on February 7, 2013;
    http://washingtonexaminer.com/harvard-just-6-in-10-millennials-have-jobs-half-are-part-time/article/2520719

    Therefore, the notes are worth what is known in Bankruptcy Latin as bupkis.

    The only way to confer any value on the debts would be to reintroduce debt slavery, and sell the defaulters to the highest bidder. Want to buy a queer fiction major? Come to think of it, even that might not help.

    The gold doesn’t pay interest, but at least every ounce will be worth one ounce of gold tomorrow. Selling the student loan notes in the scrap paper market would crash that market and they wouldn’t be worth the $113/ton.

    1. Walter Sobchak on February 7th, 2013 at 5:28 pm