Debt and GDP

[Casual Observer 597]

Take a look at the article in the link below. The author is discussing excess credit in the economy and relating GDP growth to debt levels. The shocking thing about this analysis is the GDP growth chart. It goes up a little and down a little here and there, but the chart shows GDP growth in the US as being essentially flat since 1980.

 

http://market-ticker.org/akcs-www?post=206934

[Voltaire 4,604]

This site is not blocked by the Chinese government, it's blocked by Karl Denninger personally who doesn't want people in China to read it. It's the first and only site I've ever come across with a message like this.

 

Oh well, the internet is a big place, fock him.

[Casual Observer 597]

This site is not blocked by the Chinese government, it's blocked by Karl Denninger personally who doesn't want people in China to read it. It's the first and only site I've ever come across with a message like this.

 

Oh well, the internet is a big place, fock him.

 

Wow. In any event, to summarize, the US racks up a ton in debt and it doesn't do anything to actually grow GDP and GDP growth has been flat since 1980.

 

Good luck to Denninger in keeping that secret away from the Chinese.

[MTSkiBum 1,605]

http://www.usgovernmentdebt.us/us_gdp_history

 

 

I am not sure i buy your link, there has been good gdp growth since the 80's.

[Casual Observer 597]

http://www.usgovernmentdebt.us/us_gdp_history

 

 

I am not sure i buy your link, there has been good gdp growth since the 80's.

 

This chart shows GDP onward and upward at a rapid pace, with no bumps in the road until '08. Can't be.

 

 

Note that the Denninger chart is showing growth from Q to Q, not total GDP.

[MTSkiBum 1,605]

This chart shows GDP onward and upward at a rapid pace, with no bumps in the road until '08. Can't be.

 

 

Note that the Denninger chart is showing growth from Q to Q, not total GDP.

 

 

So the denninger chart is worthless is what you are saying, or do you expect growth in the growth of gdp every quarter?

 

 

Because that is what his chart shows.

[Casual Observer 597]

So the denninger chart is worthless is what you are saying, or do you expect growth in the growth of gdp every quarter?

 

 

Because that is what his chart shows.

 

No, the Denninger chart shows growth in GDP from quarter to quarter (or lack thereof). Not sure how you think that's worthless. It speaks for itself.

 

If I expected growth in the growth of GDP I would expect to see something like the chart you posted, which until '08, is approaching a vertical climb as time goes on.

[BLS 313]

So the denninger chart is worthless is what you are saying, or do you expect growth in the growth of gdp every quarter?

 

 

Because that is what his chart shows.

 

 

His chart is Q2Q, not aggregate. What it shows is that while there are minor blips up or down on GDP depending on the quarter, it's overall pretty consistent. Not that there isn't any growth, only that the changes from quarter to quarter are very slight.

 

 

The problem to observe from his chart is how much DEBT is growing at an exponential rate over a Q2Q basis.

 

It's fricken frightening.....and once you 'see' it, you'll realize just how bad things are going to get.

 

I know, I know.....chicken little.

 

Math is a cold b1tch.

[Voltaire 4,604]

I can't see the link, but I can say that the debt to GDP ratio is the key to everything about understanding this. As of February, it was 101% and it had hit 100% just three weeks before that. This is how fast it's growing. http://reason.com/blog/2012/02/24/monetary-apocalypsageddon-update-us-debt

 

We never paid off our WWII debt but between the economy blowing up and inflation eroding away at it, it's significance gets smaller all the time. That should be our guide now. Just don't grow it and let inflation make it less relevant.

 

If our government would stop accumulating debt, then inflation would eat away at it's cost. Even if we run a deficit, if it's small and GDP/inflation outgrow it, it's an improvement.

 

Ou debt eats away at everything, it's massive, it takes 18% of the budget just to pay interest. Then combined with our entitlement programs (and the military costs are huge too), there's just too much being spent and crowds out everything else.

[Greedo 13]

I can't see the link, but I can say that the debt to GDP ratio is the key to everything about understanding this. As of February, it was 101% and it had hit 100% just three weeks before that. This is how fast it's growing. http://reason.com/blog/2012/02/24/monetary-apocalypsageddon-update-us-debt

 

We never paid off our WWII debt but between the economy blowing up and inflation eroding away at it, it's significance gets smaller all the time. That should be our guide now. Just don't grow it and let inflation make it less relevant.

 

If our government would stop accumulating debt, then inflation would eat away at it's cost. Even if we run a deficit, if it's small and GDP/inflation outgrow it, it's an improvement.

 

Ou debt eats away at everything, it's massive, it takes 18% of the budget just to pay interest. Then combined with our entitlement programs (and the military costs are huge too), there's just too much being spent and crowds out everything else.

 

This sounds like BLS and RLLD's justifiable argument for future inflation that the fed would be is happy to see, as it would deflate the real debt.

 

Trouble is, our average American consumer hasn't deleveraged enough yet (we're getting there), and the housing market is still in the doldrums. No robust recovery will occur until these 2 things work through.

[Voltaire 4,604]

This sounds like BLS and RLLD's justifiable argument for future inflation that the fed would be is happy to see, as it would deflate the real debt.

 

Trouble is, our average American consumer hasn't deleveraged enough yet (we're getting there), and the housing market is still in the doldrums. No robust recovery will occur until these 2 things work through.

 

BLS and RLLD claimed that hyperinflation was coming because they are/were under the mistaken impression that Reserve Banks were printing money to fight inflation. That's illegal under their charter and none of the money printed was used for that purpose. The Reserve banks are required by law to keep those amounts on reserve (and they do). Which is why their hyperinflation claim was laughable.

 

Historically, a 2% inflation rate has in my lifetime always been the Fed target. If that has changed recently, I am not aware of it.

 

As for your two things, I don't know how much those are holding back growth. It's a chicken/egg thing. Cause/effect/both?

[BLS 313]

BLS and RLLD claimed that hyperinflation was coming because they are/were under the mistaken impression that Reserve Banks were printing money to fight inflation. That's illegal under their charter and none of the money printed was used for that purpose. The Reserve banks are required by law to keep those amounts on reserve (and they do). Which is why their hyperinflation claim was laughable.

 

Historically, a 2% inflation rate has in my lifetime always been the Fed target. If that has changed recently, I am not aware of it.

 

As for your two things, I don't know how much those are holding back growth. It's a chicken/egg thing. Cause/effect/both?

 

 

OK Volty. Gloves off buddy.

You're wrong. Dead wrong.

 

I never said they were trying to fight 'inflation'. They propped up the markets to stave off DEflation. Maybe you had a typo.

 

However, they most certainly monetize the debt of the country via Bond purchases. They did it again today.

http://www.zerohedge.com/news/treasury-sell-10-year-bonds-record-low-yield-two-hours-after-fed-buys-10-year-bonds

 

Inflation erodes savings, and savings drives economic growth. Those on fixed incomes and the poorest bear the largest brunt of it. But that's another argument for another time.

 

However, you cannot sit here and say that through QE and Operation Twist that the Fed isn't using money (which it creates) to buy debt. Maybe you're not saying that, but it sure as hell seems like it.

 

Not only are they buying debt, but they bought up a huge chunk of bad assets that banks can't absorb.

 

When you have the Federal Government running 1.4T dollar deficits year over year, and the Fed purchases a large portion of that deficit via Treasuries, that's INFLATION.

 

It's money created by the Fed to 'ease the yield curve' of Treasuries, so other countries can't demand higher returns on it. If that's not a 'oh my f'ing god, we don't have any other choice' move, I don't know what is.

 

Hyperinflation has not hit us yet, and maybe it never will, but if Debt continues to grow at what is shaping up to look like an exponential rate, and we can't cut spending, you'll only have 1 choice. Inflate the currency.

[MTSkiBum 1,605]

Hyperinflation has not hit us yet, and maybe it never will, but if Debt continues to grow at what is shaping up to look like an exponential rate, and we can't cut spending, you'll only have 1 choice. Inflate the currency.

 

Sorry I parsed your post BLS, but the 2 things you have absolutely correct is that we will see hyperinflation in the next decade to help erode the debt and that ron paul is the best man for the job.

 

 

 

 

 

American debt is in american dollars, and since we can print our way out of debt. Inflation is coming.

[Voltaire 4,604]

OK Volty. Gloves off buddy.

You're wrong. Dead wrong.

 

I never said they were trying to fight 'inflation'. They propped up the markets to stave off DEflation. Maybe you had a typo.

 

However, they most certainly monetize the debt of the country via Bond purchases. They did it again today.

http://www.zerohedge.com/news/treasury-sell-10-year-bonds-record-low-yield-two-hours-after-fed-buys-10-year-bonds

 

Inflation erodes savings, and savings drives economic growth. Those on fixed incomes and the poorest bear the largest brunt of it. But that's another argument for another time.

 

However, you cannot sit here and say that through QE and Operation Twist that the Fed isn't using money (which it creates) to buy debt. Maybe you're not saying that, but it sure as hell seems like it.

 

Not only are they buying debt, but they bought up a huge chunk of bad assets that banks can't absorb.

 

When you have the Federal Government running 1.4T dollar deficits year over year, and the Fed purchases a large portion of that deficit via Treasuries, that's INFLATION.

 

It's money created by the Fed to 'ease the yield curve' of Treasuries, so other countries can't demand higher returns on it. If that's not a 'oh my f'ing god, we don't have any other choice' move, I don't know what is.

 

Hyperinflation has not hit us yet, and maybe it never will, but if Debt continues to grow at what is shaping up to look like an exponential rate, and we can't cut spending, you'll only have 1 choice. Inflate the currency.

 

Good grief, you know what, there is a typo. No wonder you're p*ssed. I'm sorry.

 

I'd meant they didn't/can't print money to pay off debt. Which isn't the same thing. So I guess that means my fight is with MTSkiBum. I hate to point that out to him since 100% of my sympathy is with his generation and 0% of it is with the retiree generation. I want the millennials to bend grandpa over and stuff IOUs up his ass. I'm a bandwagon of one commited to focking over the retirees who voted for the politicians who's borrowing and spending got us into this mess.

 

And you're right about a couple of things: the worry at the time was a deflationary spiral. All people were talking about was deflation back then but out of the blue Ray posts something about hyperinflation and it was like ... what planet are you from?

 

Also, Yes, the Fed buys debt.

 

It's illegal for the Fed to print money to pay off debt. Which is why hyperinflation won't come. In the highly unlikely event that the Fed's Charter is revisited at all, it would be done by folks intending to eliminate the Fed, not by folks that want to allow it to print money to pay off debts. There's people with an axe to grind against the Fed, but there's nobody out there wants to print our way out of debt.

[BLS 313]

Good grief, you know what, there is a typo. No wonder you're p*ssed. I'm sorry.

 

I'd meant they didn't/can't print money to pay off debt. Which isn't the same thing. So I guess that means my fight is with MTSkiBum. I hate to point that out to him since 100% of my sympathy is with his generation and 0% of it is with the retiree generation. I want the millennials to bend grandpa over and stuff IOUs up his ass. I'm a bandwagon of one commited to focking over the retirees who voted for the politicians who's borrowing and spending got us into this mess.

 

And you're right about a couple of things: the worry at the time was a deflationary spiral. All people were talking about was deflation back then but out of the blue Ray posts something about hyperinflation and it was like ... what planet are you from?

 

Also, Yes, the Fed buys debt.

 

It's illegal for the Fed to print money to pay off debt. Which is why hyperinflation won't come. In the highly unlikely event that the Fed's Charter is revisited at all, it would be done by folks intending to eliminate the Fed, not by folks that want to allow it to print money to pay off debts. There's people with an axe to grind against the Fed, but there's nobody out there wants to print our way out of debt.

 

well, I'm glad we had ths little chat, because we both are coming to understand each others' points.

 

I've never advocated that the US Fed would print money to pay off CURRENT debt. That would be Weimar-eque and obviously destroy our economy. But with future entitlements weighing down like a ton of bricks, unless we impose some form of austerity on ourselves now, we'll have few options later.

 

My fear is that the Fed will continue to be a major player in financing NEW debt for the US government, and that will have significant inflationary ramifications

 

.

[Voltaire 4,604]

well, I'm glad we had ths little chat, because we both are coming to understand each others' points.

 

I've never advocated that the US Fed would print money to pay off CURRENT debt. That would be Weimar-eque and obviously destroy our economy. But with future entitlements weighing down like a ton of bricks, unless we impose some form of austerity on ourselves now, we'll have few options later.

 

My fear is that the Fed will continue to be a major player in financing NEW debt for the US government, and that will have significant inflationary ramifications

 

.