“Eradicating [student debt] sets up a huge problem for our money system.”
– SBC Founder Eric Sepanek

Biden’s monumental student loan debt forgiveness plan has kicked up a whirlwind of questions, concerns, and opinions. There’s a lot of confusion and uncertainty among average Americans about the financial ripple effects of this exorbitant bill.

Watch the video to hear Scottsdale Bullion & Coin Founder Eric Sepanek and Sr. Precious Metals Advisor Steve Rand explain the ramifications of the plan, how it plays into modern financial policies, and who’s going to pay for it all.

How Student Debts (Should) Work

Every year, the federal government determines how much financial assistance will be provided to students in the form of loans. This process starts out in the House of Representatives before going through the Senate and finally to the President. The government spends hundreds of millions of dollars annually on this process and the resulting grants.

There are 10 different loan management companies owned by the federal government that are responsible for collecting student loan repayments in addition to interest. This interest is intended to cover the costs associated with providing student loans above the principal amount, effectively giving taxpayers a return on their investment.

Nothing is Free

American taxpayers are the driving force behind this outsized federal grant program for students. In theory, the interest paid back on top of student loans should provide enough of a return that the investment in future generations and higher education is worthwhile and fiscally responsible.

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Biden’s $300 billion student loan debt relief “solution” flies in the face of this plan by eliminating the demand for beneficiaries of government grants to repay in full. This effectively robs the American people who funded the program of their rightful returns. It’s forgiveness for student debts at the expense of hard-working people without any input from those affected.

What PPP Suggests About Fraud

The Paycheck Protection Program (PPP) has made it painfully clear that large spending schemes by the US government are extremely vulnerable to fraud. Millions upon millions of dollars were misappropriated by people who didn’t need or qualify for the loans, and the government didn’t have the necessary safeguards in place to protect against misuse.

It’s reasonable to raise similar concerns about the Biden administration’s colossal student loan debt relief bill. Conservative estimates put the cost at around $2,100 per taxpayer. This is an absurd amount even under the assumption that every dollar is going to the right people. However, recent history has shown that to be a pipe dream.

The Problem With Modern Monetary Theory

If you follow the path of poor financial decisions made by the government, all roads lead to Modern Monetary Theory (MMT). This destructive school of thought ignores the negative effects of debt and assumes throwing money at a problem is always a viable solution. In the past few years alone, MMT policies have grown our money supply by 40%.

As much as the federal government bases its decision on MMT, everything is eventually reconciled with the real world. The unprecedented spending has to be funded somehow. As the IRS is beefed up with 87,000 new employees and the government eyes higher taxes on middle and upper-middle-class Americans, investors are starting to see where the real cost lies.

Learn More About MMT

Understanding MMT is crucial for making sense of our current economic instability. These woefully misguided policies have laid the groundwork for domestic and global financial turmoil. US hegemony has ensured these policies have been adopted around the world which exacerbates their negative repercussions.

Learn more about the MMT and its far-reaching implications here.