Bubble, bubble, toil and trouble

According to the Wall Street Journal (1/27/2016), the student loan market is starting to heat up.

It’s good news for big financial institutions, which expect to make a mint when Trump lets the private sector take over a larger portion of the student loan biz.

Of course, we’re already on the hook for about a trillion dollars in loans — money that we’re unlikely to ever see again.

Part of the cause is that, when the government throws money at something — like college tuition — prices inevitably go up. Just like housing prices rose during the 2001-2005 housing bubble (thanks largely to Bill Clinton. Andrew Cuomo and George W. Bush’s policies of promoting home ownership by minorities).

While I’m waxing eloquent on economics, I’ll explain why the housing bubble burst: The Federal Reserve raised its interest rate from mid-2004 to mid-2006. In 2006, housing prices started to decline. That led to the subprime mortgage crisis. By December 2007, we were in the midst of a recession. Q.E.D.

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