Student Loans: The Blue Model is destroying itself

There's an $80 billion elephant in the room that could be worse than a recession for Walmart, Home Depot, and Costco

The demographic which drives the economy is not the elderly, or even the middle aged set from 50 - 65. The driver is the younger set, starting 
out, marrying, and building family. Twenty years ago this demographic was healthy, and while not debt free, they were not saddled with massive education debt.

​More below.

Today, this demographic is fully, and completely saddled with debt, from the college drop outs and associates degree holders with relatively low debt levels, to the lawyers, and doctors with $125,000 to $250,000 in debt. The problem is few of them can pay off these amounts in a reasonable time. Add another debt holder by marriage, and the debt becomes a form of slavery, tying these individuals to employment, and modest living standards. 

They, like Gilligan, they have no house, no car, not a single luxury. They have debt service. 

Expect this generation to find more pleasures in minor indulgences, and to be far more frugal than their parents. 

While the economy is set to expand sharply with the new social and economic model, the Boomers continue to mine the economy for money. These same people on average have nothing saved for retirement, although the youngest are not in their early 50's. This will not end well. The Boomers as they begin to die off will slowly lose power, and the GenX and Millennials who follow on behind will be unamused that the Boomers have shafted them with massive education debt, and only payed 3/4 of the taxes necessary to fund the spending the Boomers desired. 

The Boomer public debt binge, and the Millennials frugality is likely to collide as the Boomers come hat in hand begging the government for every more money for retirement. Expect the Millennials to shut off this tap, hard. Wealthy Boomers will likely do fine, although they should expect to receive little or nothing in retirement from the government. For them, means testing will limit their take from the treasury. For the less fortunate Boomers they should expect to find an adequate but limited amount of government assistance. 

The correction for the Boomers excesses will likely shock the Boomers who have been given nearly everything they wanted since they won the political struggle in the late 1960s. 

This shift will result in changes to pensions, public retirement systems, the welfare state, local government, and in the end federal government. The structure will be much more efficient and utilize more Uber like employment models, automation, and efficiencies. 

We are moving to a safety net model which will use more self directed personal investment accounts, and fewer government run top down model programs.

The US moved from the First Way the socioeconomic system of the US prior to 1900, into the Second Way welfare state model. But now, we are wealthy enough to begin to move back towards the First Way model. We will move through a Third Way in which we exchange government top down welfare state programs for more individual investment account programs.

It is not clear where we will go from there but likely there will be another step in which society becomes even more wealthy, and finally, there will be very little need for public assistance. At that point we will simply resume the highly efficient First Way model since we will no longer need the inefficiencies of government to weigh us down. 

Progressives are utterly terrified of these changes. They cannot fathom a society without authoritarian government dictating the actions, and lives of every individual. 

Blue Model Continues to go the Way of the Passenger Pigeon

I wrote about this here:

A key reason the economic change is taking so long

Buckle in, the ride will be bumpy, and the progressives will be screaming the entire way!