| not OP, but taking a stab, since I agree with their assessment: bad monetary policy, in regards to student loans, means subsidizing them in two ways (at least): 1. paying the difference in interest rate compared to going to a regular bank. I can get student loans w/3% interest, but a bank wouldn't give me that money for less than 7%. 2. Making it illegal to disperse student loans in bankruptcy. Both of these are monetary policy decisions that "hide" risk. The higher interest rate is to compensate for the riskiness of the loan, while making loans illegal to disperse is the gov't response to the risk. both of these will hide increasingly large amount of risks, where everything looks like its going fine, until it will all fail, catastrophically. The politicians will claim no one could have seen it coming, but if they'd not allowed the risk to be so hidden, they'd have seen the institution crumbling decades before. edit: formatting |