{"id":23276,"date":"2017-03-19T13:19:04","date_gmt":"2017-03-19T18:19:04","guid":{"rendered":"http:\/\/olduvai.ca\/?p=23276"},"modified":"2017-03-19T13:19:04","modified_gmt":"2017-03-19T18:19:04","slug":"the-long-run-economics-of-debt-based-stimulus","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=23276","title":{"rendered":"The Long Run Economics of Debt Based Stimulus"},"content":{"rendered":"
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The Long Run Economics of Debt Based Stimulus\u00a0<\/a><\/h3>\n<\/div>\n
Onward vs. Upward<\/strong><\/div>\n
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Something both unwanted and unexpected has tormented western economies in the 21st century.\u00a0 Gross domestic product (GDP) has moderated onward while government debt has spiked upward.\u00a0 Orthodox economists continue to be flummoxed by what has transpired.<\/p>\n

\"\"What happened to the miracle? The Keynesian wet dream of an unfettered fiat debt money system has been realized, and debt has been duly expanded at every opportunity.\u00a0 Although the fat lady has so far only cleared her throat (if quite audibly, in 2008) and hasn\u2019t really sung yet, it is already clear that calling this system careening toward a catastrophic failure.<\/p>\n

Here is the United States, since the turn of the new millennium (starting January 1, 2001)\u00a0real GDP<\/a>\u00a0has increased from roughly $10.5 trillion to $18.6 trillion, or 77 percent.\u00a0 Over this same time government debt has spiked nearly 250 percent from about $5.7 trillion to $19.9 trillion.\u00a0 Obviously, some sort of reckoning\u2019s in order to bring the books back into balance.<\/p>\n

Throughout this extended episode of economic and financial discontinuity, the government\u2019s solution to jump-starting the economy has been to borrow money and spend it.\u00a0 Thus far, these efforts have succeeded in digging a massive hole that the economy will somehow have to climb out of.\u00a0 We\u2019re doubtful such a feat will ever be attained.<\/p>\n

In short, additions of government debt over this time have been at a diminishing return.\u00a0 Specifically, at the start of the new millennium the debt to GDP ratio was about 54 percent.\u00a0 Today, it\u2019s well over 100 percent.<\/p>\n

\"\"<\/a>US GDP and US federal debt, indexed (1984 = 100). Mises noted back in the late 1940s already that \u201cit is obvious that sooner or later all these debts will be liquidated in some way or other, but certainly not by payment of interest and principal according to the terms of the contract.<\/em>\u201d<\/p>\n

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

The Long Run Economics of Debt Based Stimulus\u00a0 Onward vs. Upward Something both unwanted and unexpected has tormented western economies in the 21st century.\u00a0 Gross domestic product (GDP) has moderated onward while government debt has spiked upward.\u00a0 Orthodox economists continue to be flummoxed by what has transpired. What happened to the miracle? The Keynesian wet […]<\/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":[5728,195,353,467,11763,1234],"class_list":["post-23276","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-debt","tag-gdp","tag-keynesian-economics","tag-mn-gordon","tag-stimulus"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23276","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=23276"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23276\/revisions"}],"predecessor-version":[{"id":23277,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23276\/revisions\/23277"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}