How to play student loan pause?
Even though other people seem more focused on the fed rate and other shit, I believe that the actual driver of inflation is the student loan pause.
I don’t believe for a second that the stimulus could drive inflation the way it currently has. A part, yes, but we haven’t had a stimulus in a long time which would only cause one time effects.
Others want to point to oil prices. Remember last year when gas was still cheap? Inflation was still up. Gas is coming back down. Inflation is still up.
No, the biggest driver of inflation is the demographic most likely to spend money: educated folk with higher incomes.
This demographic has literally had extra monthly income for the past two years that they have been using on travel, luxury goods, and whatever else. You can see this with cars where the share of luxury new cars sold has grown since the pandemic.
Someone with $40000 in student loan debt (typical college) has an additional $400 each month to spend. Or $4800 per year.
Someone with $100000 (typical masters) has an additional $1000 each month to spend. Or $12000 per year.
Unlike poor people, they don’t need to save this money. Instead they are spending.
So when the student loan pause ends, demand will drop, inflation will drop (with very little to do with fed rate).
So how do you play the market? Will markets decline due to decline in demand?
Or will markets rally due to inflation being controlled?
Thoughts my fellow regards?
TLDR: Demand and inflation will crash when student loan pause ends. How play?
Submitted September 08, 2022 at 06:35PM by fartknocker2022
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