{"id":19661,"date":"2016-04-07T15:28:48","date_gmt":"2016-04-07T20:28:48","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19661"},"modified":"2016-04-07T15:29:11","modified_gmt":"2016-04-07T20:29:11","slug":"can-we-grow-out-of-our-problems-if-were-not-actually-growing","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19661","title":{"rendered":"Can We Grow Out Of Our Problems If We\u2019re Not Actually Growing?"},"content":{"rendered":"
\n

Can We Grow Out Of Our Problems If We\u2019re Not Actually Growing?<\/a><\/h3>\n<\/div>\n
\n

The rationale for today\u2019s easy money policies is pretty straightforward: Falling interest rates and rising government deficits will counteract the drag of excessive debts taken on in previous stimulus programs and asset bubbles, enabling the developed world to create wealth faster than it takes on new debt. The result: a steady decline in debt\/GDP to levels that allow the current system to survive without wrenching changes.<\/p>\n

That\u2019s a seductive, free-lunchy kind of idea \u2014 if it actually worked. But as the following chart of historical US GDP growth illustrates, as we\u2019ve taken on more and more debt, each successive stimulus program has generated less and less growth. Compare the past few years to the rip-roaring recoveries of the 1960s through 1990s and it\u2019s clear that whatever mechanism once converted easy money into greater wealth is no longer operating.<\/p>\n

\"GDP<\/a><\/p>\n

And note that the 2% recent growth on the above chart doesn\u2019t include the revision of Q4 2015 growth to only 1.4%, and the\u00a0Atlanta Fed\u2019s GDPNow<\/a>\u00a0projection of 0.4% growth for 2016\u2019s first quarter.<\/p>\n

\"GDPNow<\/a><\/p>\n

It\u2019s the same story pretty much everywhere else. Japan, for instance:<\/p>\n

\"Japan<\/a><\/p>\n

Now the question becomes, how does the US and the rest of the world \u201cgrow out of its debt\u201d if it can\u2019t grow at all? Won\u2019t the steady accretion of debt at every level of every society go parabolic in a zero-growth world? The answer is that mathematically speaking, this appears to be unavoidable.<\/p>\n

So what will we do? More of the same of course:<\/p>\n

OECD Calls for Urgent Increase in Government Spending<\/a><\/strong><\/p>\n

(Wall Street Journal) \u2013 Governments in the U.S., Europe and elsewhere should take urgent and collective steps to raise their investment spending and deliver a fresh boost to flagging economic growth, the Organization for Economic Growth and Development said Thursday.<\/p><\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Can We Grow Out Of Our Problems If We\u2019re Not Actually Growing? The rationale for today\u2019s easy money policies is pretty straightforward: Falling interest rates and rising government deficits will counteract the drag of excessive debts taken on in previous stimulus programs and asset bubbles, enabling the developed world to create wealth faster than it […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,213,240,353,12584,391,431,7544,534,2164,827],"class_list":["post-19661","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-dollar-collapse","tag-economic-growth","tag-gdp","tag-government-spending","tag-growth","tag-interest-rates","tag-john-rubino","tag-monetary-policy","tag-oecd","tag-united-states"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19661"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19661\/revisions"}],"predecessor-version":[{"id":19663,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19661\/revisions\/19663"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}