Quote from jem:
This is a teachable moment.
The ridiculous spending causes massive inflation.
Massive inflation...
http://www.usinflationcalculator.com/inflation/historical-inflation-rates/
Has our economy really grown in the last 20 years.
I think so...
<img src="http://www.usgovernmentdebt.us/usgs_line.php?title=US%20Gross%20Domestic%20Product%20GDP%20History&year=1950_2010&sname=US&units=b&bar=0&stack=1&size=m&col=c&spending0=293.7_339.3_358.3_379.3_380.4_414.7_437.4_461.1_467.2_506.6_526.4_544.8_585.7_617.8_663.6_719.1_787.7_832.4_909.8_984.4_1038.3_1126.8_1237.9_1382.3_1499.5_1637.7_1824.6_2030.1_2293.8_2562.2_2788.1_3126.8_3253.2_3534.6_3930.9_4217.5_4460.1_4736.4_5100.4_5482.1_5800.5_5992.1_6342.3_6667.4_7085.2_7414.7_7838.5_8332.4_8793.5_9353.5_9951.5_10286.2_10642.3_11142.2_11853.3_12623_13377.2_14028.7_14369.1_13939_14526.5">
and
<img src="http://4.bp.blogspot.com/-cOLHaJP2uBw/TaEkvR06ZrI/AAAAAAAAPLI/23zHYVsID7s/s400/productivity.gif">
"The chart above shows the "Productivity change in the nonfarm
business sector, 1947-2010" (Source: BLS).... Instead of the
"Great Stagnation," maybe we're in the "Great Accelerating
Productivity Surge"?"">
Has any of this spending done anything useful since the fall of the berlin wall? Have standards of living decreased. Does it take two incomes to own a house in a good school district where one was once enough? All this govt spending and look what happens to our standard of living? We have crowded out entire sectors of the economy with a larger govt sector.
Given the growth of GDP, and particularly productivity, one would think the working man's lot would have improved over the past 30 years, but it has not. Why? Because he has to OWN those things to receive the benefits of those things. As for two incomes, that started with the surge of consumerism, families want more stuff and it takes two to get it. Is that all of the reason? No--see my point above about ownership.
Crowding out... a real possibility, it does occur. How to discover likely environments? Interest rates are one way:
<img src="http://www.ritholtz.com/blog/wp-content/uploads/2010/08/1790-Present.gif">
Big competition for money back in the 80s, but we knew that. Lately? Nothing out of the ordinary.
Essentially the baby boomers spending has been robbing from every generation to support their habit of never paying the piper.
They inflated out of their parents savings bonds.
They had the govt spend their asses off for the last 30 years.
They have saddled our children with some estimates of 900,000 dollars each of debt.
And now when it is time to tighten the belt... they say no no no spend more. Really screw our kids with massive debt and massive inflation.
As if our kids are not going to have it tough enough after these greedy bastards ship all our tech and jobs over sees so they could buy cheap shit at wall mart.
Balance the budget... have a recession.. build from a real base instead a from a base of fanancial tricks.
disclosure... I am a baby boomer.
They inflated, yes, but as the history indicates, at an easy to take rate, ie. a targeted rate. The alternative? Playing with deflation, or at least everyone just sitting on capital.
Spending has been rising, yes, and one could (and many do) argue that our entitlements have grown too large, though clearly that's mainly a cultural "norm" argument, until the mathematics, which we're discussing, indicate differently. Belt tightening? It works for
a family budget, because ordinarily cutting spending doesn't mean the wage earners of that family have their pay cut
as a further result of those spending cuts. For the government budget, during a demand-constrained recession (to put it another way), cutting spending basically does nothing more than reduce sales which immediately cuts income, hence, the death spiral. Maybe those sales need to be reduced, we'll look to interest rates for signs of excessive competition from government.
Greedy bastards shipping jobs overseas? Those are responsible corporate decisions based on the mandate to return to investors. I don't entirely like those rules, I'd like to change those rules, but they are the rules today.
Edit: sorry about the wide chart, I hate side-scrolling.
