[apatters]

Also to supply some context for those numbers (this is probably way too simple and wrong in some way though)

The size of the US economy in 2008 (US GDP) was around $20T. There were $1.7T of MBS. That's about 8.5% of the economy which mostly didn't exist, it was all debt for which the collateral was a fiction because the borrowers didn't have the money to pay off their mortgages.

The size of the US economy today is around $25T. So student loans are around 6.4% of the economy at present (and growing) and that money may mostly not exist either, because we know these borrowers are having real problems paying and the economy isn't even doing all that poorly at the moment.

Food for thought.

[avalys]

You’re not comparing equivalent quantities. GDP is an annual figure (Gross Domestic Product), and you are comparing it to total outstanding debts that are paid off over decades.

Total asset value of the US economy is about $270T with about $150T in outstanding debt. So the relative proportions are not as extreme as you’re representing.

[apatters]

I knew there would be some sort of issue with that comparison, thanks!

[the-dude]

If the value disappears overnight, wouldn't it be fair to compare it to the yearly figures?

[ssivark]

If it disappears "overnight", then would the right comparison be to daily GDP? which would increase the computed percentages by a factor of 365.

Clearly it is not sensible to compare two quantities with different dimensions of $ and $/time. It is like comparing distance (miles) to speed (miles/hr). Changing units to (meters/sec) doesn't change the absurdity in any way.

[the-dude]

I run a business. If I had to 'write off' some asset today because it has proved to be worthless, it will affect the yearly report.