Many of us have argued this topic before but this article does a great job at explaining the historical results of the fiscal policies that we have been, and currently are, employing.
So those that are banging the drums for even more stimulus, why would it work now when it hasn't worked in 30 years?
Paul Krugman, Jackass
I'm tired of this crap, frankly, but people keep spamming me with it, so here we go.
Bull.
And this isn't a difference of opinion. We're all entitled to our opinions.
We're not entitled to make up our own set of facts.
Here are the facts relating to "more borrowing" to "stimulate the economy" and thus "grow GDP."
FACT: Over the last 30 years Krugman's prescription has never worked.
NOT ONCE.
The facts are that on a historical basis borrowing always produces less GDP growth than debt growth. That is, it is a net negative as you must both pay back the debt some day and pay the interest, which means that in order for it to "work" GDP must expand by more than the debt does, so the interest can be covered along with the principal.
But NEVER did GDP exceed new debt, even for one quarter, at any time during the 1980-2007 time period and the only time you saw that happen during the collapse of 07-08 was when debt defaults pushed outstanding down faster than GDP declined -- a temporary condition as you can see we have resumed our sin.
Read this again:
Not once has "stimulus" actually produced an increase in GDP that exceeds the new debt taken on to prove it.
NOT ONCE.
This is not my opinion or someone else's opinion. It is mathematical fact as documented by both the Federal Reserve and the government's GDP numbers.
Krugman has the same access to these numbers as everyone else. He can thus trivially verify that this is true, if he bothers to look. My sources are listed in the chart.
This cannot, therefore, be an innocent error.
Krugman's policy prescription is wrong. It is wrong on the facts, it is wrong on the mathematics and it is empirically, with more than 30 years of history, wrong in terms of realized results.
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