And So the 'Debt Jubilee' Begins

And so the 'debt jubilee' begins... Tens of millions of Americans will get student-loan relief... A story as old as the Bible... Taking from savers to help borrowers... The battle for America... All eyes on Powell... Your feedback on chip implants...

It's not quite a full-blown 'debt jubilee' – yet...

But it's enough...

Today, President Joe Biden announced he will forgive $10,000 in federal student-loan debt for tens of millions of borrowers – Americans earning under $125,000 per year, or $250,000 for married couples or heads of households.

And if you have a Pell Grant – federal student aid – like 27 million people do in the country, up to $20,000 will be erased from your loan balance. This group makes up 60% of the borrower population, according to the White House.

Around 9 million people could have their balances entirely cleared... which is a gift for them, but not without a cost, of course. These loans were made by someone – taxpayers past and present via the federal government. And future generations, once again, will pay.

Depending on who you trust, estimates put the price tag of this debt forgiveness at anywhere from $300 billion to near $1 trillion over 10 years, with the highest end of this range coming from Penn Wharton's Budget Model estimate.

Total federal student debt stands at $1.6 trillion, according to the latest federal data. In other words, the "debt jubilee" has begun in earnest...

We hate to say we're not surprised...

Longtime subscribers know what I (Corey McLaughlin) am talking about. Our founder Porter Stansberry essentially predicted what we're seeing unfold today...

He outlined this precise scenario – record, growing federal student debt and other loans and the likely calls to forgive them. In his book titled The Battle for America, originally published years ago, he called this loan forgiveness a "debt jubilee."

We updated the book for a fourth edition in May 2020 – after the massive government stimulus in response to the start of the COVID-19 pandemic created a larger problem.

(It is available to Stansberry Alliance members and existing subscribers to our flagship Stansberry's Investment Advisory here on the newsletter's "special reports" page. Just search for "Battle for America" or scroll down to find it.)

In one part of the book, Porter noted the record levels of consumer, federal, and student debts in America. He described why this debt "bubble" would eventually burst for a variety of reasons... including that the generation owing most of that debt was about to come of age and make up the largest living generation – and voting bloc – in the country.

Not only that, but history showed current conditions were ripe for a financial reset of this kind. These have typically coincided with times of polarizing politics and cycles of societal upheaval in American history and populist movements.

It's a story that's as old as the Bible itself – redistributing money from savers to borrowers when times get too tough. From the second chapter of the book...

The concept of a Jubilee comes from the Bible (The Old Testament), the Book of Leviticus, Chapter 25.

A Jubilee in the Jewish tradition was said to occur roughly every 50 years. It was a time for total forgiveness of debt and the freeing of slaves.

Pope Boniface VIII proclaimed the first Christian Jubilee in 1300. And rulers throughout history have occasionally used a Jubilee to reset the financial system – especially when the poorest citizens are threatening revolt.

More recently, in the 1930s, President Franklin D. Roosevelt forced Americans to turn in each ounce of gold they owned for $20.67 in paper money. Then he raised the price of gold, wiping out nearly 70% of the savings of anyone who followed the rules...

Today's conditions mirror those in the 1960s. That was a period of anger and resentment and financial crisis, and the U.S. government was having a hard time paying back creditors given the amount of money it had spent to buy foreign goods and services and fight war.

Back then, dollars were still required to be backed by gold. And as our Gold Stock Analyst editor John Doody has written, Fort Knox was literally running out of gold because of the money the U.S. owed.

With an election approaching in 1972, inflation near 6%, and unemployment rising, President Richard Nixon's solution to avoid more of a crisis was to default on our promise to pay gold for dollars to our foreign creditors.

August 15, 1971 was the "day the dollar died," John says. This ushered in the fiat currency era... and, not long after, a period of higher inflation we hadn't seen again – until today.

Today's loan forgiveness makes good on most of a campaign promise by Biden to cancel $10,000 for all student-loan borrowers, who total 43 million. Almost a third owe less than $10,000 and more than half owe less than $20,000.

This time is not different...

The pandemic and ensuing government response – and the inflation that came from that – has been a collective trigger point for an economic nightmare. But we as a country were headed to this scenario anyway given decades of kicking our debt can down the road.

Here's another prescient excerpt from The Battle for America, which talks about the coming demographic and cultural reasons for a call for debt relief...

We are living in a world of two different Americas. For the wealthiest 40% of the population, life is good. They enjoyed a long run of rising asset prices... and wages are finally starting to increase.

For everyone else, life is getting worse...

For the bottom 60% of America, consumer debt is high and wages are stagnant.

And that's especially true for Millennials...

These young Americans owe the bulk of the $1.5 trillion of student loan debt outstanding.

Many of them graduated during The Great Recession into the worst job market in 50 years. And even a decade later, millions of college-educated Millennials were stuck working jobs for which they're overqualified.

And because of these stagnant wages, they're making on average 20% less than Boomers were paid for the same work at the same age.

Because of this, Millennials have delayed major life events like getting married or having children at the highest rate of any generation in U.S. history.

Of course, as wages fell, the cost of living has soared. And even though half of Millennials work two jobs, most are really only getting by with debt, owing tens of thousands of dollars in auto loans and credit cards. More from the book...

So it's probably no surprise that more than half of Millennials have less than $1,000 in savings.

They're drowning – with no escape in sight.

For this generation, the American Dream is dead.

And that is why we believe a Debt Jubilee in America is inevitable.

And so it has come.

The past two years have only accelerated this dynamic. In March 2020, then-President Donald Trump paused the requirements for all borrowers to pay off federal student loans and set interest rates at 0%.

This pause – chalked up to the dire conditions of the pandemic and ensuing lockdowns, rather than the problems that got us here – has been extended several times. The White House extended it again today through December 31, in the same announcement about the debt relief.

In the meantime, inflation has soared and wages haven't kept pace... And the federal government has already forgiven at least $15 billion in federal student loans to hundreds of thousands of borrowers who took out loans to attend shady schools.

And now the big story is that the federal government has decided to simply wipe away tens of thousands of dollars of debts that millions of people owe.

If it were only that easy...

Who's on the hook? Everyone, eventually...

Already we see this decision fostering debate between people who might have paid off their college loans and those who haven't... or those borrowers who qualify for forgiveness and those who don't. Where does the government intervention stop? Where does it go from here?

For what it's worth, two reporters shouted this question ("What about people who paid their loans?") at Biden as he left a press conference to talk about this today, and he didn't answer it.

Some reports say this jubilee won't even help the poorest the most, but mainly the top 60% of earners in America. They're the ones who have accrued about 70% of the debt that was proposed to be wiped clean, according to the Penn Wharton estimate.

For the third of student-loan borrowers owing less than $10,000 and the 20 million or so owing less than $20,000, this decision is a big deal. It's like a Christmas in August that can last a lifetime – if taken advantage of.

But here are some dirty details...

About half of student-loan debt has been racked up by people who went to graduate school... and even $10,000 of relief might not make a huge difference for them.

On average, grad students accumulate $70,000 in student loans, meaning they'd need more relief...

I know doctors and medical students with triple-digit student-loan debt who know next to nothing about personal finance.

My point is, this forgiveness probably won't do as much to close the "wealth gap" as many think... It will more likely take money from blue-collar workers like plumbers to pay for the debt of a lawyer or a doctor.

I hate to even say that, but it's an argument you'll hear a lot as the Biden plan faces public debate. We can expect a sense of resentment among millions of people... pitting some with certain jobs or backgrounds against those who are different.

And, of course, let's not overlook that this decision confirms again that debt and endless money-printing is not a long-term strategy for a stable economy – or world. And, most obvious, it illustrates that college – once the ideal American dream – is just too expensive.

You must take your financial future in your own hands...

On it goes. It's hard to imagine that this isn't just the start. As we reported earlier this month, for example, never have more credit cards been in existence in the U.S. (more than 500 million). Some debt forgiveness will never be enough. Only full forgiveness will...

The calls for a jubilee will continue... Inflation is sticky. Rising pay is not. Nor is a growing economy. The American debt bubble is still growing at the same time that just part of it is starting to pop, as today's news illustrates. As we wrote in The Battle for America...

The ultimate effect of these social programs will be disastrous for ordinary Americans. All you can do is prepare yourself for this inevitability.

Stay away from the most dangerous companies in America today, protect your retirement accounts, invest in a safe, hedged portfolio, own trophy assets and elite, dividend-paying businesses...

If you do that, you will not only survive the jubilee and its aftermath – you'll be among the few to profit from it. If you haven't read The Battle for America yet, give it a read tonight (or reread it) – if for nothing else than our recommendations for protecting your portfolio.

As I said, Stansberry Alliance members and subscribers to Stansberry's Investment Advisory have access to the book. (Again, search for "Battle for America" or scroll down the list of special reports on this page.)

And if you don't receive Stansberry's Investment Advisory and are interested, you can click here for more detail on the financial "reset" that is now underway... and how to get started with a subscription today.

You'll get access to the book and all of the research in our flagship product. This includes a new portfolio recommendation every month, plus a host of special reports and exclusive market indicators from our team that you won't find anywhere else.

All Eyes on Powell

As we wrote on Monday, this week's central-banker confab in Jackson Hole, Wyoming will end with a highly anticipated speech from Federal Reserve Chair Jerome Powell on Friday morning.

Stansberry Research senior analyst Matt McCall gives his take on what to expect in the latest episode of his Making Money podcast...

Click here to watch or listen to this episode right now. And to catch all of Matt's shows and more videos and podcasts from the Stansberry Research team, be sure to visit our Stansberry Investor platform anytime.

New 52-week highs (as of 8/23/22): Cheniere Energy (LNG) and ShockWave Medical (SWAV).

In today's mailbag, your feedback on yesterday's Digest, which began with a look at a man who recently implanted his Tesla keys in his hand... Plus, another subscriber shares an "investing origin" story. It's not too late to share yours. As always, send your notes to feedback@stansberryresearch.com.

"I'll see your 60 years (Jetsons) and raise you two centuries. The apostle John foretold the control of people in the future by means of a 'mark' they will have to receive in their foreheads or hands in order to engage in any commerce. This is in the book of Revelation, chapter 13, verse 16. What has sounded like vain babblings from Christians for years turns out to be yet another of many very unlikely (when they were made) predictions coming true." – Paid-up subscriber R.B.

"Speaking for myself and my wife, we are horrified at the prospect that a company is testing the implant of chips in a beta group of about 100 people.

"We knew it was only a matter of time given the rapid advance of chip technology and the general breakdown of social as well as religious norms.

"Revelations 13:16-18 of the King James Holy Bible speaks to this time. It clearly refers to such human implants 'so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name.'

"Once such technology is advanced, it will soon follow that we all will be required to carry the mark so that we will become slaves of the State. We humbly believe that such technology is immoral and contrary to our Christian beliefs.

"We also recognize that Mr. McLaughlin is only reporting on this 'technological' advance so our strong feelings in this regard should not be considered any reflection of our thoughts of him.

"We would, however, caution anyone wishing to sell or promote their services from endorsing such action as it will likely repulse those that similarly hold our beliefs.

"You asked for our thoughts, and they are respectfully offered. Thank you for the opportunity to respond." – Paid-up subscriber Michael R.

"Implanted chips are obviously unnecessary and just as obviously are a foot-in-the-door to get the public used to the idea of being treated like cattle because the governments see people as no better than their heard of cattle. The convenience of waving a chip could just as easily be done with the chip (as is already done without implantation) in a credit card type format or a ring, watchband, your CROSS pen, or other piece of jewelry... Oh but you weren't supposed to think of that, and few people do." – Paid-up subscriber Raymond B.

"You know, they don't use digital currency or chips in The Jetsons. There is that scene in the theme song [where] he gives his wife cash, and his wife takes his wallet. Just saying." – Paid-up subscriber Jacob G.

"Oh brother Corey, Criminals aren't rocket scientists and to them, the end justifies the means. I'm afraid with a chip embedded into a hand, wrist and/or finger, well let's just say I'd rather hand over a card or keys, rather than ah, err, quite literally a hand." – Paid-up subscriber Steve R.

"Bet car hijackers/thieves will appreciate this techno assist. Just point, hold up the driver's hand and you are good to drive off into the night. Ain't technology great!" – Paid-up subscriber G.W.

"Wow, pretty cool hand chip implant app technology! One question: Does it come with a warranty for a free replacement hand when the side-effects kick in a few years down the road? Hey, not a problem, though! The additional convenience of never having to clip my fingernails anymore sounds keen." – Paid-up subscriber Gary S.

"Ok, ok, I know I'm late to make some noise here but here's my story anyway: I graduated high school in the 'business' curriculum and then went to a junior business college and then graduated from the University of Richmond business school.

"The best, most influential, courses I took were in that junior college... 'Money and Banking' and 'Credit and Collections.' I learned how money works and what to avoid that would lead to failure.

"My point is that I have been preaching that these courses should be taught at high school level! A classic example of money management is the young guy I was talking to at the gym I frequent. He said his habit was to now go to the convenience store, buy a copy of the paper, get a cup of coffee and maybe a sweet bun and pay for it with a credit card.

"He was complaining that his card bill was so high each month. When I explained to him what he was doing he understood and stopped.

"Just like in Vegas, you turn over your hard earned cash for little plastic chips to play games with. But after a while they are just that, little plastic chips that don't resonate as $$$ flying away. That's why it's called 'Lost Wages'.

"Cripes! The kids today don't even know how to properly write a check! I could go on but [your] space is limited as is your time." – Paid-up subscriber Phil M.

All the best,

Corey McLaughlin
Baltimore, Maryland
August 24, 2022