Drop Student Debt

By  Thom Hartman,

Never in the history of the developed world has an entire generation had to go into debt just to get an education and a job. Until now.

Back in January, 31-year-old Tony Muzzatti, who at the time owed around $60,000 in student loan debt to Sallie Mae and always made on-time payments, was told that he had to immediately make a payment of $10,000, or face asset seizures.

That's because his grandmother, who also happened to be his cosigner on the student loans, had just died.

Christopher Kibler was also told by Sallie Mae that he had to immediately pay back nearly $22,000 in student loan debts after his father, the cosigner on his loans, had passed away.

Muzzatti and Kibler are just two of the many victims of what the Consumer Financial Protection Bureau refers to as "auto-defaults," or when banks immediately say that private student loan debts are in default after the death or bankruptcy of a cosigner.

What if we default on our debt?

“Sitting on the Pavement, Thinking About the Government” –

What if we default on our debt?  (Dylan, “Subterranean Homesick Blues”)

 Bill Barclay.

The debt ceiling, the dollar and hegemonic currencies

Let’s begin by clearing up a possible lingering misconception about debt and defaults.  If Congress does not raise the debt ceiling and we default, does that mean the U.S. is broke?  No.  The U.S., like any country that 1) controls the creation of its own currency and 2) issues its debt in its own currency, cannot go broke.  However, political calculations can impose deadbeat status on such a country. 

What about other countries, why don’t they have this problem?  The answer is equally simple.  With the exception of Denmark, no other wealthy industrial society has a debt ceiling – and Denmark’s is set at over twice their actual level of government debt – and it is not a political football.  So yes, the U.S. is, as our national meme says, exceptional.  The debt ceiling – and any associated problems – are our own creation.