Filed under: Capitalism, Economy, Law, Politics, The United States | Tags: Debt to GDP Levels, President Barack Obama, Spending Like a Drunken Sailor
“The U.S. has become the single largest debtor nation on the planet, as welfare dependency rises, government spending continues to increase and economic growth slows. However, what is ironic about this situation, is that it is the continuing increases in debt which is directly responsible for the decreases in economic growth. ” This chart shows government debt as a percentage of GDP compared to the annualized rate of change in economic growth: From Zero Hedge. (click to enlarge)
“The most disturbing sentence uttered during the debt ceiling debate/government shutdown, that should raise some concerns by both political parties is:
“Since the beginning of 2009 very little of the increases in government debt, which was used to fill the gap created by excess expenditures, returned very little in terms of economic growth. In fact, as of the second quarter of 2013, it required $5.61 of debt to create just $1 of economic growth.” (click to enlarge)
“We must increase our debt limit so that we can pay our bills.”
In other words the Keynesian idea of pumping money into the economy to breed and multiply is horsefeathers. Janet Yellen, newly nominated to head the Federal Reserve is, we are told, a devout Keynesian.
President Obama said in his remarks following the resolution of the shutdown, that one of the three things the government should focus on in the short term is budget reform. I think he means raise taxes so he can spend more. I just don’t think he can conceive of a presidency where he does not generously spend. I hope I’m wrong.
U.S. debt jumped a record $328 billion on Thursday, the first day the federal government was able to borrow money under the deal President Obama and Congress sealed this week. The debt now equals $17.075 trillion, according to figures the Treasury Department posted online on Friday. The $328 billion increase shattered the previous high of $238 billion set two years ago.
The giant jump comes because the government was replenishing its stock of “extraordinary measures”— the federal funds it borrowed from over the last five months as it tried to avoid bumping into the debt ceiling.
Under the law, that replenishing happens as soon as there is new debt space.
I’m not big on charts in general, but these two are pretty explanatory and reward a little study. The real battle lies ahead.