By J. DeVoy
Before I started law school, I considered getting my student loans in Yen. Japan’s Yen, long a stable currency that reliably stayed around 110-120 Yen-per-US Dollar – however badly we devalued the dollar under the reigns of Bush (weak dollar policy to boost exports) and Obama (“quantitative easing”). This use of the Yen and other stable, low-interest currencies to make other, high-gain investments – which is a stretch when discussing higher education – is referred to as a “carry trade” in financial circles.
Well it’s a damn good thing that I couldn’t make this work in 2007, or this would be a personal financial armageddon as well as an ecological one. Becuase of massive repatriation of Yen, the US Dollar is only worth around 75 Yen. Check out this pronounced decline. If I a) had actually done this, b) was in finance, c) lived in 1930’s New York City, and d) had any sense of shame, I’d throw myself out a window for essentially increasing my debt 50% overnight. At least if I did that through reckless spending, I’d have a fun car or sweet vacation or show for it.
So, law students, don’t think you’re smart with money just because you day trade or own a few shares of GOOG. Not to impugn your intelligence, but this stuff can seriously ruin your life in ways you cannot foresee, protect against, or get out of on your own. Right now, the smart move seems to be using GradPLUS and using IBR to push off payments until the whole system inevitably collapses – probably sooner than anyone thinks.