A recent Krugman post got me thinking about secular stagnation and reasons why demand might not be as strong in the future,
"Instead, the argument is that the sources of demand during the good years – the Great Moderation from 1985-2007 – are not going to be available even when the after effects of crisis have faded away." -Krugman
As a past and prospective student, my spending is curbed by my student loans. I chose to forgo future consumption for present consumption. I am not in the minority either. Low interest rates on loans are not attractive to me. Borrowing several thousand dollars to put down on a house is not desired and probably not even a reality.
As a Millennial, I realize my generation is noted for starting life a little late. The Great Recession bumped some of us back in with our parents and significantly delayed our life plans. Life plans which might include borrowing money to purchase a car, a home, or to start up a business.
The point is what Krugman is trying to contemplate; this magnitude of student debt was not a feature for most of the Great Moderation. People were able to take out loans for houses, cars, start-ups because they didn't have 20k in debt already.
This leads to some interesting questions-
Could student debt reach the household levels of debt (during the Great Moderation) to boost us out of this stagnation?
Once this loan burdened generation pays off their debt, will the stagnation be over? The "putting off" of life plans would come to an end and we could see a spike in borrowing and spending.
Does student debt prevent successful entrepreneurial activity from happening? If so, what are the implications to investment?
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