Daily Ticker Writes: This Is The Next Sub-Prime Crisis

The staggering cost of student loan debt is daunting — it tops $1 trillion.

Now there is new data showing that students are increasingly faltering under the weight of this debt.

The U.S. Department of Education says figures reveal one in seven borrowers defaulted on their federal student loans. The default rate also rose to 14.7% from 13.4% the year before, the highest level since 1995 based on a related measure, according to Bloomberg News. (The report is for the three years to Sept. 30, 2012.)

In the above video, Jim Rickards, senior managing director at Tangent Capital and author of  Currency Wars: The Making of the Next Global Crisis and the upcoming Death of Money, calls the student loan debt load the “next sub-prime crisis.”

Rickards makes his case based in part on the size of the debt and the nature of its underwriting.

I highly recommend you to click on the link above and watch the video. A very interesting perspective on the student loan issue that I tend to agree with.

Basically, Mr. Rickards views Federal Loan Program simply as another avenue for the Federal Government to prop up the economy. They do so by lowering underwriting standards on the student loans backed by the US Government and pump a huge amount of that money/liquidity into the real economy through students and Universities. Most of that money is then spent (college students don’t save) and that by default flows into the real economy. Of course, enslaving millions of students for decades to come in the process.

When you look at it from a different angle, that is indeed exactly what is happening.  In my previous article Why You Should Default On Your Student Debt…Today!!! I suggested that you should default on your student debt if you owe more than $50,000.

I will say it again.  You shouldn’t hesitate to strike back at an entity (even if that entity is the US Government) that is trying to enslave you for the next few decades under the false pretenses and their own self interests. Figure out how to do it. 

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