A recurring theme among economists around the world is how countries should handle the debt of their inhabitants within the territory. A star in the discussions is U.S, with its problem of loans to university students. However, one of the presidential candidates seems to want forgive the $ 1.6 billion. Looking at this we wonder how this event would affect Bitcoin.
First of all, a brief context on the situation with the United States is necessary, highlighting that it will be a brief summary of the issue and may be incomplete. If you want us to make a more detailed article of the debt in the United States, you can leave it in the comments.
In concise terms, continuing university studies in the United States is highly expensive compared to two variables. First the average income of the country’s residents, second would be the rest of the world. This happens because they are constantly raising tuition prices within universities.
The reasons why this event occurs are varied, however, the predominant one indicates that there is a monopoly within the system, allowing to charge high prices. In addition, the price transition mechanism is acquiring luxurious expenses. An example they raise is to change the pool mosaics every year for more expensive ones.
Therefore, the average of the families of the United States resort to financing to be able to afford the high prices. Stressing that these loans can become beyond the life of a person, that is, their heirs.
This process has been going on for years, thus accumulating a student debt of $ 1.6 billion. Highlighting that thanks to how the system is, the debt only grows, some would say that it also expands exponentially.
Returning to today’s news, the presidential candidate of the United States by the Democrats, Bernie SandersHe announced that his plans include forgiving the debt.
Apparently, he wants residents to feel free and not hanged for finances. mishandled from the country. The way in which he wants to carry out this plan is for the central government to assume the total costs of the debt, thus paying the creditor institutions. This implies that the United States debt would increase on the fiscal side.
Once the situation is known, we can analyze what could happen with Bitcoin if Sanders manages to reach the presidency and pays the student debt.
In the short term there could be an increase in the demand for Bitcoin, since people could distribute their income in another way. In this way, it could cause an increase in Bitcoin prices.
However, in the medium term a new problem would manifest itself for the pockets of families, since Bernie also has a plan to pay the US deficit via taxes. That is, it would increase the tax burden on people and their real income would decrease. The impact on Bitcoin is undefined, since it could affect negatively or positively.
Finally, in the long term a vicious cycle would occur, since the root of the problem has not been solved, being the high costs of studying in the United States. In this way, it is highly likely that they will resort again to loans to study.
However, we want to know your opinion on this situation, since it is a controversial issue between economists and the public. Do you think the United States pays the entire debt would be positive?
I am an economics student, interested in innovation and technological development, always faithful that tomorrow will be a better day.