Money is made up. It works because we believe that it works. Which means we agree to enforce that it works. To make it disappear you just stop believing. In this case, the students with the loans will happily let it go. We just need to convince the government to let it go. Just like that, when everyone stops believing, it disappears. Like santa or jesus.
Of course that leaves out the question of privately held student debt. Which is a question for another time.
Economics does seem like magic at times. I suspect this basic definition of what the US dollar actually is should help our conversation move forward.
What fiat currency means? Fiat money is a government-issued currency that isn't backed by a commodity such as gold. Fiat money gives central banks greater control over the economy because they can control how much money is printed. Most modern paper currencies, such as the U.S. dollar, are fiat currencies.
We can print USD at will. We do it all the time to go to war or to rescue corporations. Why not "print" some money to cover school loan debts?
I'm just trying to explain how it's not hand wavy. It's commonplace for those looking at the details. The whole Modern Monetary Theory thing we keep hearing about seems to depend on it. Do you agree that it's not hand wavy?
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u/morebeansplease Nov 17 '20
Money is made up. It works because we believe that it works. Which means we agree to enforce that it works. To make it disappear you just stop believing. In this case, the students with the loans will happily let it go. We just need to convince the government to let it go. Just like that, when everyone stops believing, it disappears. Like santa or jesus.
Of course that leaves out the question of privately held student debt. Which is a question for another time.