Posted on 04/20/2016 1:57:02 PM PDT by Lorianne
While economists, politicians, and analysts point to current data points and primarily coincident indicators to create a “bullish spin” for the investing public, the underlying deterioration in economic prosperity is a much more important long-term concern. The question that we should be asking is “why is this happening?”
From 1950-1980 nominal GDP grew at an annualized rate of 7.55%. This was accomplished with a total credit market debt to GDP ratio of less 150%. The CRITICAL factor to note is that economic growth was trending higher during this span going from roughly 5% to a peak of nearly 15%. There were a couple of reasons for this. First, lower levels of debt allowed for personal savings to remain robust which fueled productive investment in the economy. Secondly, the economy was focused primarily on production and manufacturing which has a high multiplier effect on the economy. This feat of growth also occurred in the face of steadily rising interest rates which peaked with economic expansion in 1980.
(Excerpt) Read more at davidstockmanscontracorner.com ...
Bet FDR wishes he had Facebook and Twitter.
Stockman points out very accurately that the problem is the deterioration of manufacturing. The premise of a “consumer based economy” was a self-evident lie from the beginning. Nothing can be consumed that has not first been produced.
The most necessary and immediate action is to eliminate all of the Federal regulations that are assaulting our manufacturing sector, returning the responsibility to the States. Eliminate the EPA, SEC, OSHA and all other agencies that are deliberately destroying our manufacturing base.
Until manufacturing is restored, the future will remain bleak.
bump
Or better yet, Federal agencies willing to dummy up numbers to make the economy look GREAT!
Take government spending out of the equation and the economy tanked a long long time ago.
"Nominal GDP" means unadjusted for inflation.
As such, it's meaningless.
I don't care how pretty the charts are; without inflation, they're sawdust.
Of course, it could be a bad calculator No matter what you do the value of money is in somebody else's hands rather than your own.
But Mr. Lance Roberts (article author) seems to get the point across that we need to get back to a growing economy based on agriculture or manufacturing rather than sustaining debt to move forward.
Appears to be a version of Wave Theory.
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