Debt Fueled Economy

This gives the lie to the Keynesian argument that borrowing trillions of dollars now is perfectly sustainable and right because it “worked” in 1942-45. Borrowing trillions (in today’s dollars) “worked” because GDP skyrocketed along with the debt. But now, we as a nation are borrowing unprecedented sums and GDP growth is at best anemic and at worst mere statistical legerdemaine.



Filed under Economy

6 responses to “Debt Fueled Economy

  1. [This gives the lie to the Keynesian argument that borrowing trillions of dollars now is perfectly sustainable ]

    That’s not Keynesian economics. That’s Reaganomics! Reagan is the one who believed that deficits don’t matter and the Bush administration embraced that lie.

    Deficits during recessions are justified to stimulate the economy. Deficits during all other times have led our country to the brink of collapse. All it needs now is a little push.

    • Good point. Although democrats and republicans alike have gone with the philosophy that ‘deficits dont matter’ for years… Also I disagree with your ‘push’ – line of thought. Politicians ‘push’ will only come from adding on private debt – which cannot sustain anymore (residential and commercial housing market still bottoming) and the deleveraging process taking place. One way to ‘push’ the economy is to keep demand high – which would mean increasing salaries, jobs, and minimum wage through govt paying for these jobs (we could build our infrastructure instead of wars!) – Though I still wouldnt take that path (unless we undertook a massive infrastructure rebuilding, which would be an asset to our country and not necessarily spending) – public pensions and salaries should be lowered to acceptable levels, and not the bloated ones they have today (see Rhode Island Teachers union fired article). Social security, sick care, and defense must all be re-evaluated… not to mention our pathetic education system. Spending on a structurally hazardous economy will only worsen our blow, unless all these things are reformed…. we need a strong president to force these through an incompetent congress… Spending cannot continue also because we cannot fund the spending – due to foreign holders lowering there reserves. Also tax revenue continues to decline, if we continue to spend and buy our own debt wide inflation will hit and interest rate hikes will surely hinder any progress spending did.

      Thanks for your comment! Please comment as often as you can. I appreciate your insight

  2. The problem with this country is BOTH the Democrats and Republicans. Anyone who seriously thinks that one side isn’t corrupt or slaves to Corporate America hasn’t done an adequate job of paying attention. To the Republicans: The GW administration will go down in History as one of the worst administrations. They eroded your constitutional rights, expanded the power of the wealthy elite, invaded countries under false pretenses, destroyed diplomatic relations with the rest of the world, and spent money like it was going out of style. To the Democrats: Obama is a dud. He promised much and has turned out to be another corporate lackey. He made deals with big pharma to ensure you could not get your medication cheaper elsewhere, he flip flopped on military tribunals, he refuses to fix health care properly through nationalization or single payer, he populates his inner circle with more Wall Street insiders, he spends money on bailouts and useless stimulus packages.

  3. Montano

    Shame on you for creating another terrific post! Awesome stuff, keep up the good work. I see a lot of potential! I wonder if you are an active user with any social networking sites like Digg or Stumble Upon?

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