January Consumer Credit Surges As Government Blows Student Debt Bubble To Epic Proportions

Tyler Durden's picture

One look at the just released consumer credit data would make one believe that the US consumer is getting back into it and the velocity of money is finally starting to ramp up: after all the headline January number came at a whopping +$17.8 billion on expectations of +10.5 billion. Nothing could be further from the truth.  As the first chart below demonstrates, January revolving credit, as in that used on one's credit card, actually declined by $2.9 billion compared to December, and was back to $800.9 billion: the first decline in 4 months as consumers spend less following an already weak holiday season. Yet offsetting this was an absolutely massive surge in Non-revolving credit, i.e., mostly student debt, which soared by $20.7 billion in the month, the highest sequential jump in this category in history, leading to a very misleading print of a major increase in credit. For earlier observations on the soaring student loan bubble see here. And it gets worse: when spread by sources of credit, the only place where credit came from was the US government, which funded a near record $28 billion, all of it going into student loans, even as every other source of credit declined in the month! If this is not the most blatant gaming of headlines, we don't know what is. But yes, America's lucky students get ever deeper into debt slavery, only to realize upon graduation that there are no jobs that pay high enough to allow them to pay off this debt. Thank you uncle Sam - may we have another bubble.

Total revolving and non-revolving credit:

Consumer credit by source:

Government portion of total credit (courtesy of John Lohman). Getting plain ridiculous as the government has now funded nearly 20% of consumer debt, in addition to having nearly 102% of Federal debt/GDP.

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Gully Foyle's picture

Hey now!

The idiot BIL just advised my son to take out student loans because the rates are cheap right now.


trav7777's picture

i wouldn't take on any debt at this point that cannot be discharged.

The gov has moved to garnish SS, vet bennies, etc., over child support arrearages (which in some states are LUDICROUS - judges tell people laid off to just "go find" another job paying the 6 figures they used to earn before their job was outsourced).  So don't have kids either unless you're prepared to kill their mom, I guess.

CharlieSDT's picture

Sarah Lawrence College costs $59,170.

What for? I don’t hear much about alumni from Sarah Lawrence College going on to make a bunch of money as CEO of GE or some other criminal organization like Goldman Sachs. No, Sarah Lawrence is just another one of many of America’s snooty overpriced liberal arts colleges mainly composed of girls (73% of the school is female) who think they’re sensitive and gifted and special and smart and major in Women’s Studies, Victorian Literature, Environmental Policy or some other equally useless bullshit.

A quick perusal of a list of alumni of Sarah Lawrence on Wikipedia reveals very little in the way of business leaders, political figures other than that scumbag Rahm Emanuel, any good musician other than Carly Simon or any A-List actor of today except for Kyra Sedwick. There’s a couple of sort of well-known authors but nobody major except Alice Walker. Really it’s an unimpressive list, especially from the most expensive college in America.



economics1996's picture

Someday, soon, people are going to realize the education offered in a main stream college or university is useless if it has any connect to any of the social or soft sciences.  Pure bull shit designed to get student s to support big government rip offs.

My subjects, economics and government, is pure bull shit.  Students would be better off reading a few books from Ludwig von Mises and saving their money, or spending it on a real degree in engineering.

Will To Live's picture

"Way back" in 1980 you could get an advanced degree in a medical field from a Midwestern State College for about $25 to $30 a credit hour. The Universities were doing fine then.  Just a data point to compare with how screwed up it is now.

TruthInSunshine's picture

Trillion dollar bubble in the peak, you sayeth?

Yeah, I agree (shit is insane):


Education Connection


University of Phoenix Online 


Everest College Commercial 
JPM Hater001's picture

Someone get me a pin.  I'm gonna pop this thing like 14 year olds zit.

Antifaschistische's picture

If a college/university/trade school, etc. can't place 40% of it's graduates into their degree field of work, then the student should not be able to get a student loan for that degree, from that institution.

Maybe the number should be 60% or 80% or 35% but what we have now is absurd.  $100k in debt for total sham degrees is a crime.

Doubleguns's picture

Rahm Emanuel paid nearly 60K for the free pussy. Guess he felt that was some kinda deal.

CrashisOptimistic's picture

In the old normal it was well known that in bad economic times, college enrollment expanded.  There was nothing else for those people to do.

In good economic times, there was too much money to be made and going to college was an opportunity cost.


In the new normal, in good economic times you need to get out of college and stop running up debt so you can work and make money, just like in the old normal, but with the debt avoidance imperative more prominent.

In bad new normal economic times (which is always) you fucking idiot GET OUT OF SCHOOL.  STOP RUNNING UP DEBT.  YOU AREN'T GOING TO GET A JOB WITH THAT DEGREE.

When people choose to make bullets fly, they will target university administration and tenured faculty along with banksters and politicians.

HungrySeagull's picture

Child support? Hah.

Just don't have children idiot.

Buck Johnson's picture

It's because our politicians have destroyed this country.  They are playing with numbers to make it look like things are doing alright when in reality everything is not doing well.  For short term money and power they have been bought by lobbyists to give businesses and financial institutions the ability to do anything that will make them money or not lose money.  And this is at the cost of US citizens. 

Eventually the US will go bankrupt and when it does this country will go insane when the checks don't come and no benefits of any kind is around.

Falkor's picture

Incorporate an offshore entitiy, take a loan of few millions claiming you willl generate employment and never be seen again.


Thats not fraud. That's FED's modus operandi.

youngman's picture

Think of it this way...States are cutting back Higher educations funds...so the federal government steps up with easy loans to cover the gap....and in the future there will be a forgiveness on these loans....so the Government ends up subsidizing the universities....where the states can´t....

CrashisOptimistic's picture

There was a time and a window in which I thought there might be a debt forgiveness of student loans.

But at 16 trillion, that can't be done.  At 1.3Trillion/year, it can't be done.

The more likely event is a law will pass billing such loans to estate at time of death, and if they exceed the estate size, the heir will inherit the loan.

TheFourthStooge-ing's picture

CrashisOptimistic said:

The more likely event is a law will pass billing such loans to estate at time of death,

That is already the case. Outstanding student loans at time of death get first claim on any estate.

and if they exceed the estate size, the heir will inherit the loan.

Don't give them any ideas.


Comay Mierda's picture

look at all that debt that cant be written off in bankruptcy. the next generation is literally bankrupt and will spend the majority of their adult life as debt slaves working shit jobs.

i hope when they graduate they are at least smart enough to recognize how the govt has screwed them by bidding up tuition prices with grants and easily obtainable loans.  and i hope they realize the fed's central job in destroying the USD and eroding the middle class.

SheepDog-One's picture

IF theyre LUCKY enough to be able to land a shit job!

NotApplicable's picture

By the time most graduate, they're so firmly entrenched within the system they have no choice but to believe in its lies. Otherwise, they have to admit to have taken the largest dead-end road in their lives.

czarangelus's picture

I didn't realize that until 2 years into my $32,000/yr school. Lucky me.

q99x2's picture

I filed out my FASFA statement yesterday. It is still not to late for 2012.

brewing's picture

how many thousands in textbooks?  what a fucking racket that is...

object_orient's picture

I'm thinking of going back to school and getting as much financial aid as possible. In present circumstances it might be best to learn a specialized trade and a foreign language at the same time. That way, if there are no jobs after graduation, you can ditch the non-dischargable debt and start over in another country.

HungrySeagull's picture

Don't do it. You are gonna be sorry to learn that THEY come here learn, graduate AND THEN GO BACK OVERSEAS TO HOMELAND and TEACH OTHERS.

YOU, the AMerican are not welcome or wanted.

aerojet's picture

Don't you read?  You might better learn all of that on your own and not run up the debt.  The fucking un-dischargeable debt that ties your hands and keeps you from having valid choices in life.

mick_richfield's picture

Are you getting a liberal arts degree?

Cut and paste this sentence 100 times: "It is still not too late to go to a two year school."

Fifty bucks for the spelling lesson, kid.

GeneMarchbanks's picture

Stay away from groupthink and debt. I just schooled you.

lizzy36's picture

Groupthink is fascinating.

It is natural to want to be part of a herd. Kids are raised and socialized to want to be "part of the crowd".Thier parents preach "if johnny told you to jump off a cliff", yet those same parents are absolutely enamoured with keeping up with the Joneses.

The reality is being a contrarian is lonely, difficult and more often than not, a path chosen by very few. 


GeneMarchbanks's picture

'The reality is being a contrarian is lonely, difficult and more often than not, a path chosen by very few.'

Yes but you speak with the Gods themselves.

Comay Mierda's picture

you hit the nail on the head.

the contrarian often is the outcast who most people think is crazy but at the end of the day comes out ahead

aerojet's picture

What I have come to learn in my life is that being part of the crowd was never any kind of advantage.  The truly successful people are the standouts, the holdouts, and the iconoclasts.  Keeping up with the Joneses is bullshit and it always was. 

viahj's picture

it's easy to be alone when everyday you discover yet another reason to hate humanity.

sessinpo's picture

"Groupthink is fascinating."


I whole heartedly agree with this comment. You don't know how many people of the older generation that insist that a higher education is the ONLY way to go. They are from a different time and haven't done the calculations of current cost compared to real benefits. It is a sad thing because even my folks suffer from this - pure hubris - my father has a PhD in inorganic chemistry and my mother has a masters in education. Products of the greatest generation - pampered by veterans of WWII and think that a depression can't happen again because the people in control are to smart and have learned from the mistakes of the past.


Very sad.

Harlequin001's picture

I'm a contrarian, me too!

No you're not...

taniquetil's picture

iBailout incoming.

Deep79's picture

Yup this is going to end well



SheepDog-One's picture

WOW now everyone in the country is a fucking PHD and cant even land a job as nite sweeper at WalMart.

trav7777's picture

i know/knew a chick workin at ANF who has a degree in biology

tekhneek's picture

Is that where you buy your abnormally tight t-shirts, or do you just go there to hit on bitches?

SheepDog-One's picture

Aber and Fitch? Nah, thats where the assless jeans guys hang out. 

piliage's picture

Aber and Fitch sounds like the world's worst vaudville act...evah.

SheepDog-One's picture

Yep and my friends daughter with an 8 year degree has been working at an ice cream shop for a year, just because she looks good too.

Moneyswirth's picture

Her surname isn't Fluke by any chance?

azzhatter's picture

is she hot? that's all that matters

Maghreb's picture

There are lines to get in outside the ones in the U.K. Young topless men standing around like bouncers, I might try shop lifiting there just for the experience of being chased through a shopping mall by a bunch of semi nude teens. I think they decided to take the GAP buisness model a step further and actually use a full gay nightclub as a place to sell clothes. Next step is to get a bunch of really freindly black guys with dyed blond hair selling E while dancing with you at the check out.

HungrySeagull's picture

PHD's can work in walmart, they just wont stoop to taking orders from a wart faced manager to stack pallets quick, chop chop before their actual work starts.

aerojet's picture

The myth about a PhD is that you make lots of money.  In reality, most PhDs make less or they don't work in their field at all.  I now leave mine completely off my resume.  It's never worth going into debt for.  You might still do okay as an MD, if you don't mind the hours.  Law degrees are practically worthless unless you are connected or have a real plan for what you are going to do.