BMW SUVs: a gas-guzzling luxury you probably cant afford.
BMW SUVs: gas-guzzling luxury you probably can't afford. Sjo/Getty

Let's think about this for a moment. As reported by Max Wasserman at the Daily UW, Secretary of Education Betsy DeVos wants to repeal an Obama-era rule, Gainful Employment (GE), that required for-profit schools to be "accountable for the debt-to-income ratio of their graduates." Meaning, after a student graduated from one of these institutions, they found the income in their field (hair dressing, fashion design, what have you) was much smaller than the amount they borrowed to attend the school. For example, you earned $25,000 a year after borrowing $50,000 from lenders—a situation that plunged you into life-long debt service.

Under Obama, it was decided that the lenders (the government being the main lender) would not be allowed to provide loans to students attending institutions that offered programs that did not have, in the real world, more bang for the buck. And what happened? According to the New York Times: "...rather than invest the time and money necessary to offer affordable programs that lead to well-paying jobs, they simply closed up shop."

The business of these schools was simply to pile debt onto students. If they could not do that, there was no reason for doing anything. So they closed.

And now our economy: It is one that has been financialized. In a producer economy, you could expect that a trade-related school might worry about meeting the demands of the market: we need to teach more of this or of that. But in one that has been finacialized, the only game in town, is increasing the debt of (financializing) individuals. We have been doing this for the past 40 years. We did it with working-class homeowners, after middle-class borrowers were saturated; we are now doing it with working- and middle-class car owners—easy money for expensive cars.

Let's look at this CNN story, "Americans are going deeper into debt to buy cars," and see how, step by step, all of this works.

First, demand has to be generated by an aggressive form of social engineering that privileges car ownership over other forms of transportation:

"You can still get a perfectly nice compact car for under $20,000," Caldwell said. Not as many customers want those, though, especially with gasoline prices at historic lows.

This is not about cars or what they do, but increasing debt-to-income ratios:

Last month, car buyers borrowed an average of $31,000 with average monthly payments of $517, the highest so far this year.

What must ignored for any of this to work is, precisely, the future:

For one thing, since a longer loan is paid off more slowly, borrowers will be "upside down" in the car longer — meaning they will owe more on the car than what it's actually worth for longer.

Not only is upside down the underwater of the next crash, but the goal is for the debt to become permanent:

Cars buyers end up owing money on about a third of cars that are traded in at dealerships, Caldwell said. That debt then usually gets wrapped up in the new car loan, making for bigger monthly payments and a cycle of expanding debt.

When your economy works like this, it is overdeveloped.