this post was submitted on 06 Dec 2024
28 points (74.1% liked)
Asklemmy
44067 readers
1106 users here now
A loosely moderated place to ask open-ended questions
If your post meets the following criteria, it's welcome here!
- Open-ended question
- Not offensive: at this point, we do not have the bandwidth to moderate overtly political discussions. Assume best intent and be excellent to each other.
- Not regarding using or support for Lemmy: context, see the list of support communities and tools for finding communities below
- Not ad nauseam inducing: please make sure it is a question that would be new to most members
- An actual topic of discussion
Looking for support?
Looking for a community?
- Lemmyverse: community search
- sub.rehab: maps old subreddits to fediverse options, marks official as such
- [email protected]: a community for finding communities
~Icon~ ~by~ ~@Double_[email protected]~
founded 5 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
The image is a poor analogy because unlike when someone creates an image or any form of art, when a borrower takes out a loan, the lender records a receivable as an asset and the borrower's account as an offsetting liability. Once this happens, the loan cannot then just be magically erased—somehow, some way, the lender must be made whole again. In the case of loan forgiveness, it comes out of the tax payers' pockets. Whether that's theft or not is a separate topic, and I think another commenter covered it well by comparing it to any other government program or subsidy.
No it can be 'magically' erased, it was 'magically' created out of thin air with nothing backing it. The money doesn't actually exist, the asset for non existent money can simply have zero value. Loans are erased this way literally constantly. In fact more loans are erased this way than actually paid, if only by volume and not purported value. This is what happens when you default and no value is reclaimed on a loan, or when one defaults on a healthcare bill with an arbitrary price tag.
There is absolutely no reason, whatsoever, the lender has to be made whole. That's not a thing in other circumstances where loans lose all value and the money created for them disappears.
When a borrower becomes insolvent and the loan cannot be repaid, the lender records it on their books as a loss. They cannot just pretend the loan never happened.
Of course, now we're mixing subjects because OP asked about student loan forgiveness, which would necessarily come out of tax payers' pockets (not the same as when a lender takes the L because the loan cannot be repaid).
It doesn't have to come out today tax payers pockets, that's the entire thing. The money doesn't exist, the debt doesn't exist.
We made up this system specifically so we didn't have to keep exact books, that's the point of fiat currency over backed currency. If we don't use its primary feature for good, ever, we may as well go back to the gold standard which would elimate nearly all banks and lenders at this point in the capitalist finite curve.
Fractional reserve banking does not mean the debt does not exist. The debt very much exists. Nobody takes out a loan and just sits on it. As soon as the loan is created, goods and services are traded. At the end of the day, each party to downstream transactions can go to the bank and withdraw the balance of their account in cash. The fractional reserve system only works as long as not everyone does this at once.
Except it's new money that's made up, and in the case of student loans, most of that money isn't traded for goods and services, instead more than 3/4s of the money created goes back to the lender.
Looks like we are not going to agree on this, which is okay—I enjoyed the discussion nonetheless. Have a nice day.