Student Debt On Course To Sink America’s Economy [Dow Jones Industrial Average, Direxion Daily Small Cap Bear 3X Shares]

College graduates living in their parents’ basements are having trouble finding jobs and paying off their student debt. This also means they cannot step onto the property ladder, pay for renovations, or even buy paint, fixtures, furniture, or appliances.

The student loan debt debacle is at crisis levels. And it’s not just housing that is going to suffer. Discretionary income is hard to come by—that means underemployed student debt–laden graduates cannot buy cars and may even have to put off getting married and having kids.

It’s a domino effect. And it goes right back to the source—roughly 90% of outstanding student debt is backed by the federal government. Why? Because banks know student debt isn’t a moneymaker—and they’re getting out of the racket.

If students default on debt, the U.S. government is on the hook. This could force bond prices down, which pushes yields up. Investors betting against the government might want to consider an exchange-traded fund (ETF) that shorts bonds, like ProShares UltraShort 20+ Year Treasury (NYSEARCA:TBT).

It’s a long-term bet, but with the average student debt designed to take 10 years to pay back, there’s lots of room for long-term growth.

This article is brought to you courtesy of John Whitefoot from the Daily Gains Letter.

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