Everyone talks about GDP = C + I + G + Net Exports. They scream that if G (government spending) goes down that GDP will drop. But I say, if G were lower, there’d be a lot more investment, and a lot more productive investment than money spent by the government.
We also know that over the past few years, additional credit has yielded less that a dollar of GDP for each dollar borrowed. It’s time to stop running G on tomorrow’s money (and to lower it’s share of today’s income, too).
DING DING DING.
WAY too much of our GDP ‘gain’ over the past couple of decades comes from government spending of borrowed money, not real increases in wealth or production.
Obeyme didn’t start it, but he - to borrow his favorite car wreck metaphor - aimed it toward a cliff, put a brick on the accelerator and jumped out.
There’s a hundred alphabet soup agencies that could go out of business tonight and the only visible sign outside of DC would be that traffic on I-270 and 495 would clear up and the Tysons Nieman Marcus would close.