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originally posted in:Secular Sevens
4/30/2013 2:57:53 PM
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What hurts the economy more? Spending wildly out of control until we go bankrupt or cutting government so that we can have long run growth?
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  • At some point, you must ignore your personal intuition and give weight to the data. Government spending isn't pouring gold down a black hole never to be seen again. If you don't want to see the data editorialized in youtube or colbert, than read the story in the BBC. Or read a detailed analysis here: [url]http://www.nextnewdeal.net/rortybomb/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems[/url] [quote]So what do Herndon-Ash-Pollin conclude? They find "the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0.1 percent as [Reinhart-Rogoff claim]." [UPDATE: To clarify, they find 2.2 percent if they include all the years, weigh by number of years, and avoid the Excel error.] Going further into the data, they are unable to find a breakpoint where growth falls quickly and significantly.[/quote] The data shows growth, despite your intuition.

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  • Regardless, debt has to be paid back at some point.

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  • Of course it does. We are talking about suicide prevention here, not wholesale robbery.

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  • Yet most of the time I see this debated the pro-debt people act as though our modus operandi should be "spend spend spend FOREVER!!!"

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  • Listen, this whole theory is completely flawed. The only reason the data holds any weight is because we are applying keynseian economics in a keynesian system. Whenever we apply classical economics it doesnt work as intended because we have a keynesian system. You can't play Monopoly with the rules of Candyland. Needless to say, the data isn't valuable in my opinion. Compare government spending and growth to this: To say more government spending leads to high GDP is like adding play doh to a sheet of cookies, you might end up with more cookies, but not all of them are real.

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  • Can you show how this theory is completely flawed? Can you prove the data isn't valuable?

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  • This is interesting.

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