Submitted by: Donald Hank
Stupid is really the only word for it.
I have said before that most Keynesian "economists" like most US politicians on both sides of the aisle and like the Fed, actually believe in this hocus pocus.
If Obama didn’t believe that spending on stimulus would work, he sure as heck wouldn't try this trick this close to elections.
Despite all you may have heard, he is not a bit intelligent.
Don Hank
It was all over CNBC this morning, among other places. The common mantra: The way out of this problem is economic growth. My blunt response:  Here’s the problem from a historical perspective, looking at GDP growth .vs. debt growth:
In other words we didn’t “grow output”, we bought it by borrowing more and more money. If you prefer it in “incremental dollars” rather than total outstanding, it’s here: Now it is true that one might try to economically grow out of debt. But in order to successfully do so you must grow the economy while NOT growing the amount of debt outstanding! Here’s the ugly reality – since 2000 GDP has grown, on average, by 4.2%. But debt has grown by 7%, again, on average. So long as there is a spread between debt growth and GDP growth, and debt is growing faster than GDP (through the entire economy) you cannot “grow out of the hole” – all you’re doing is making the problem worse. This is the underlying issue with the so-called “economists” who argue this position – they’re raising a true argument but predicated on a false premise – that we can and will grow the economy while either holding the amount of debt across all sectors (private and government) steady or contracting that total amount. If and only if that takes place – that is, the blue line in the above chart is below the red line and stays there, then one can make this argument. If not, and history says it is not, then any such claim is a fraud.
Lee ADDS: In short, spending and not cutting will results in total destruction of our economy! |
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