Undue Optimism on Economic Predictions and Trends
Peter Schiff Is Not Shy About Sharing His Thoughts
The markets are driven by optimism. It appears that a lot of investors think the economy is doing well. Prices are not rising as rapidly. It's also a common belief that rate hikes by the Federal Reserve are complete. Peter Schiff provided an explanation of why this investor confidence is not grounded in reality in his podcast.
Last week, Federal Reserve Chairman Jerome Powell participated in a panel discussion and said the Fed isn’t even thinking about rate cuts. Peter said the markets clearly don’t believe him, and he thinks it’s “a lie on its face.”
Because he really wants to make sure that the markets take seriously the tough talk about inflation. Because he keeps reiterating how far inflation is from their 2% target, how much higher it is, and how much further they have to go to bring it back down. So, part of that is to not even let the market think that they’re discussing rate cuts when, of course, they’re discussing rate cuts.
This is all just BS. You’ve got to talk tough because, at the end of the day, they don’t have any stick at all, let alone a small stick based on how indebted the economy is — everybody, from the government, to the corporations, to the household sector.
Powell also talked bout the “resilient consumer.” But is the consumer really resilient? Sure, people are still spending money. But they’re running up massive credit card bills to do it. And Peter pointed out that you have to ask why they’re spending.
These “resilient” consumers are buying groceries with credit cards and paying nearly 21% interest on top of the higher food price.
Peter said there is one thing that has no limits – price inflation.
So, all of this economic optimism is unwarranted. It is based on an illusion. But at some point, reality will break through. - Lew Rockwell
Bankrupt Futures: Addressing the Student Loan Crisis in America
Fox Business reports A growing number of Americans are filing for bankruptcy in order to offload their student loan debt after a three-year payment hiatus.
In a news release released on Thursday, the Department of Justice stated that 632 borrowers filed for bankruptcy between November and September, up from previous numbers, in an effort to get their student debts discharged. In contrast, the average yearly rate prior to the pandemic was approximately 480.
Since March 2020, federal student loan payments have been frozen due to the pandemic, making the surge "significant". However, that break came to an official end at the start of October, potentially causing millions more Americans to experience financial shock.
Collectively, borrowers are to resume paying about $10 billion a month, according to an analysis from JPMorgan.
This is just another indication that the economic policies in place from the current administration are not working. It is true, many of those graduates are using their degrees, and work ethic, to add value to our society.
Reasons for the Rising Cost of College Since 2000
The cost of college has risen significantly since 2000 due to various factors. Some of the reasons for the increase in college costs include:
Cost Disease: The concept of cost disease, where productivity gains in the overall economy do not benefit higher education and other services, has led to higher costs for colleges over time. This means it costs colleges more to produce an education, resulting in higher prices for students.
Rise in Administrative Costs: Greater administrative spending at colleges, known as "administrative bloat," has contributed to rising college costs. While professor salaries remained fairly flat for decades, spending on services like admissions and registration increased, leading to tuition increases.
Financial Aid: An increase in financial aid has also been linked to rising college costs. Some estimations suggest that for every new dollar of federal student aid, tuition increases by up to 65 cents.
Increased Student Services and Faculty: The need for increased student services, faculty, and higher salaries for faculty has also contributed to the rising cost of college. The demand for college has increased significantly, leading to a never-ending cycle of supply and demand.
State Funding Cuts: Higher education funding cuts are responsible for a significant portion of tuition increases. According to a report, 79% of tuition increases were caused by higher education funding cuts.
Other Factors: Other factors such as an increase in the cost of living, lack of funding from the state, and increased need for faculty have also played a role in the rising cost of college.