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Debt and the Recession

 
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PostPosted: Sat Mar 19, 2016 7:08 am    Post subject: Debt and the Recession Reply with quote

PeakTrader:

Getting rid of tax cuts, adding new taxes and fees, and more regulations dont help.

Anyway, there isnt much money to spend anymore:

https://research.stlouisfed.org/fred2/series/GFDEGDQ188S

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Yet, high government debt coincided with low per capita real GDP growth:

https://research.stlouisfed.org/fred2/series/JPNRGDPC

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Paul, Im not a fiscal conservative when debt to GDP is low or moderate. However, Im a fiscal conservative when its high. As the saying goes, a day late and a dollar short.

Bank for International Settlements study 2011:

At moderate levels, debt improves welfare and enhances growth. But high levels can be damaging. When does debt go from good to bad?Our results support the view that, beyond a certain level, debt is a drag on growth. For government debt, the threshold is around 85% of GDP.

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A fool will believe anything in their simple world. Its the result of numerous rigorous studies.

http://www.nber.org/digest/apr10/w15639.html

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We had the worst recession in over a half century and the worst recovery since ?.

The fiscal stimulus to start this recovery seemed to be a sideshow to more important things.

We need to do more than just shovel money at problems.

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Business cycles became much smoother, causing faster growth, after we went off the gold standard, adopted Keynesian economics, created automatic stabilizers, and utilized more microeconomics.

Also, the economy became more diversified, America dominated the global economy (while Europe and Japan rebuilt after WWII), and attracted the worlds best (including in the Information Revolution, where the U.S. leads the rest of the world combined).

There were huge economic improvements in the 20th century, although America surpassed Britain as the most powerful economy over a hundred years ago. Nonetheless, the economy can improve substantially.

Recessions in the Industrial Revolution 1871-1914

Period Percent Decline of Business Activity

1873-79 33.6%
1882-85 32.8%
1887-88 14.6%
1890-91 22.1%
1893-94 37.3%
1895-97 25.2%
1899-00 15.5%
1902-04 16.2%
1907-08 29.2%
1910-12 14.7%
1913-14 25.9%

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