Americans already reacting to Biden's reported student loan handout plan: 'Highly suspicious'

[Killer Clouds]

https://twitter.com/realDailyWire/status/1562516944594817024

And if Traitor Joe runs in 2024 he will win. This republic is finished.

[Kamaji]

I'll use that line on the IRS when I fail to pay my taxes.

Wouldn't that be nice!

[Hoodat]

I see we're going to play stupid little word games.

No word game here.  It's a simple question.  (And a question you chose to complicate by adding bankruptcy to the equation.)

By 'forgiving' the debt, the borrower came out $10K ahead.  Who ended up paying that $10K (i.e. who took the loss)?

What did the CD investors agree to pay for when they handed their money to the bank?  Did they pay for a loan, or did they pay for a certificate of deposit - an unsecured depositor's claim against the bank?

They turned an asset over to the bank with the promise that the asset would be repaid with interest.  When that asset was not paid back as promised, that asset became a loss to the investors.  The CD holders in essence took a loss of $10K.

Now let's remove bankruptcy from the equation and return to the original scenario.  Let's say the bank had additional assets to repay the CDs with interest.  Then the loss would be incurred by the bank itself.  In other words, "wiping it off the books" involved the bank losing $10K.  So the bank paid off the loan.

[Wingnut]

In completely unrelated news, the nation's colleges and universities announced plans to immediately raise tuition by $10,000.

[Hoodat]

In completely unrelated news, the nation's colleges and universities announced plans to immediately raise tuition by $10,000.

Most certainly.

[DefiantMassRINO]

Will the tots have to pay taxes on the $10,000 debt forgiveness? 

In 2008, many people were locked out of more affordable mortages because they couldn't afford the IRS taxes on debt forgiveness.   

Waa! Waa! I can't afford the taxes on my student debt forgiveness. 

[Kamaji]

No word game here.  It's a simple question.  (And a question you chose to complicate by adding bankruptcy to the equation.)

By 'forgiving' the debt, the borrower came out $10K ahead.  Who ended up paying that $10K (i.e. who took the loss)?


They turned an asset over to the bank with the promise that the asset would be repaid with interest.  When that asset was not paid back as promised, that asset became a loss to the investors.  The CD holders in essence took a loss of $10K.

Now let's remove bankruptcy from the equation and return to the original scenario.  Let's say the bank had additional assets to repay the CDs with interest.  Then the loss would be incurred by the bank itself.  In other words, "wiping it off the books" involved the bank losing $10K.  So the bank paid off the loan.

No, they purchased a certificate of deposit.  That is what they paid for.  The fact that they did insufficient due diligence, and ended up losing their investment because the bank lost its only asset does not mean that they paid for that asset.  It means that they bore the economic risk of loss of the bank's assets and investments - which is precisely the same as saying that they purchased a financial asset with a counterparty that had a known nontrivial risk.

They did not pay for the loan.

That is about as imprecise - and as pernicious - as saying that a certain industry is racist because the racial mix of workers in that industry does not mirror the racial mix of society at large.

Now, if what you're trying to say is that the U.S. taxpayer is going to bear the economic consequences of the federal government cancelling certain student loans that, to-date, had stood as assets on its books, then I agree completely with you, but that is not because the taxpayers "paid" for those student loans.

Imprecise language is the devil's playground.  I had always assumed that we here at TBR were a little better than that.

[Kamaji]

Will the tots have to pay taxes on the $10,000 debt forgiveness? 

In 2008, many people were locked out of more affordable mortages because they couldn't afford the IRS taxes on debt forgiveness.   

Waa! Waa! I can't afford the taxes on my student debt forgiveness. 

Wouldn't that be a kicker?

It will depend on (a) whether the IRS applies the law as written, or gives in to political pressure, and (b) whether, in each individual case, the taxpayer is "insolvent" within the meaning of IRC §108.

[mystery-ak]

He went off script here big time..

https://twitter.com/gregkellyusa/status/1562526034624659457

[Hoodat]

No, they purchased a certificate of deposit.  That is what they paid for.  The fact that they did insufficient due diligence, and ended up losing their investment

So the investors lost $10K.  In other words, the forgiveness of the $10K debt was paid for by the investors.

[Kamaji]

So the investors lost $10K.  In other words, the forgiveness of the $10K debt was paid for by the investors.

Nope.  The investors lost their money because they made a poor investment.  They paid for a certificate of deposit with a bank.

They bore the economic risk of loss for the bank's credit risk, they did not pay for any loan or other asset the bank acquired.

[Hoodat]

Nope.  The investors lost their money because

So the investors lost $10K, the exact same amount as the "written off" loan.

[Kamaji]

So the investors lost $10K, the exact same amount as the "written off" loan.

In this case, as a matter of coincidence, they did.  That is because they did very poor due diligence.

[Hoodat]

Coincidence?  Seriously?  It was simply a coincidence that the amount of money investors  lent just happened to match the amount borrowed by the borrower?

[Kamaji]

Coincidence?  Seriously?  It was simply a coincidence that the amount of money investors  lent just happened to match the amount borrowed by the borrower?

In the real world?  Yes.  If you want to construct unrealistic hypotheticals, then you have to realize that drawing analogies from them is not particularly relevant.

[The_Reader_David]

No one can "cancel" debt, but it can be transferred. In this case, from those who incurred it to American taxpayers.

Yes, debt can be cancelled:  you print money and pay it off.  It doesn't transfer the debt to anyone, just inflates the currency, making everyone, tax-paying or not, poorer.  Depending on whether or not the Fed can actually reign in the resulting inflation, even the beneficiaries of the debt forgiveness may end up poorer in the long run than they would have had it not been done and they paid their debts.

If the 'Rats understood economics and were serious about fixing the problem of unsustainable student loan debt,, they'd fix the problem by making student loans into debt on an equal footing with mortgages, credit cards, and business loans:  dischargable in bankruptcy, rather than inflating the currency for an election-year sop.

[The_Reader_David]

Will the tots have to pay taxes on the $10,000 debt forgiveness? 

In 2008, many people were locked out of more affordable mortages because they couldn't afford the IRS taxes on debt forgiveness.   

Waa! Waa! I can't afford the taxes on my student debt forgiveness. 

Not happening this time.   The Democrats already put legislation in place that any forgiveness of student loans between when the law they passed went into effect and some date in 2026 (I forget exactly when) would not be treated as income.

[Kamaji]

Yes, debt can be cancelled:  you print money and pay it off.  It doesn't transfer the debt to anyone, just inflates the currency, making everyone, tax-paying or not, poorer.  Depending on whether or not the Fed can actually reign in the resulting inflation, even the beneficiaries of the debt forgiveness may end up poorer in the long run than they would have had it not been done and they paid their debts.

If the 'Rats understood economics and were serious about fixing the problem of unsustainable student loan debt,, they'd fix the problem by making student loans into debt on an equal footing with mortgages, credit cards, and business loans:  dischargable in bankruptcy, rather than inflating the currency for an election-year sop.

[Hoodat]

In the real world?  Yes.  If you want to construct unrealistic hypotheticals, then you have to realize that drawing analogies from them is not particularly relevant.

The only part that is unrealistic is the premise that simply erasing assets off 'accounts receivable' has no cost to anyone.

[Kamaji]

The only part that is unrealistic is the premise that simply erasing assets off 'accounts receivable' has no cost to anyone.

I never said it had no cost to anyone.  For somebody who gets his undies in such a twist elsewhere about people putting words into his mouth - https://www.gopbriefingroom.com/index.php/topic,478214.msg2699095.html#msg2699095 - it would behoove you to avoid doing the same thing to other people.

[Hoodat]

Yes, debt can be cancelled:  you print money and pay it off.  It doesn't transfer the debt to anyone, just inflates the currency, making everyone, tax-paying or not, poorer.

In essence, it costs everyone who holds dollars by deflating the value of those dollars.

But in a scenario where the money supply is fixed (i.e. the government couldn't print money to solve their problems), then the government would incur a loss by eliminating assets on the books.  In the future, when government would rely on the repayment of those assets to fund future student loan lending, then the government would have to come up with some other way to come up with the money to issue those new loans.

[Hoodat]

I never said it had no cost to anyone.  For somebody who gets his undies in such a twist elsewhere about people putting words into his mouth - https://www.gopbriefingroom.com/index.php/topic,478214.msg2699095.html#msg2699095 - it would behoove you to avoid doing the same thing to other people.

I have asked you repeatedly who it cost.  Still waiting for an answer.

[Kamaji]

I have asked you repeatedly who it cost.  Still waiting for an answer.

No, you asked who paid for it.  Look back over your own posts.

And I have already said that in your silly little hypothetical, the CD investors ultimately bore the economic risk of the bank's failed loan.

[berdie]

So the investors lost $10K, the exact same amount as the "written off" loan.

I hesitate to ask because ya'll are far more knowledgeable....but wouldn't the CD holders be covered by FDIC insurance?

So the taxpayers would cover that....much like the case of the student loans (which I, just for the record am totally against.)

As an aside, I am sick to death of the "Joey" stories.

[Hoodat]

Watching Karine Jean-Pierre on TV right now.  She also refuses to say who will pay for this.