Putting It All Into Perspective.............

Ernie Lane ernielane at VERIZON.NET
Sun Feb 8 15:38:23 MST 2009


John A. Quayle wrote:
> 
> 
> If you had gone into business on the day Jesus was born, and your 
> business lost a million dollars a day, day in and day out, 365 days a 
> year, it would take you until */October, 2737/* to lose a trillion dollars.
> 
> The U.S. Congress has done seven times this damage to their constituents 
> in a little over eighteen years!

I know it's popular to cite Keynes for the need for the government to 
spend money and all that.

I read an article the other day that said that deficit spending is OK, 
if not called for, as long as the deficit is below 4% of GDP.  Now, I 
don't know what the "limit" is, but Obama is moving us in the direction 
of annual deficits of more than 10% of GDP.  I think that deficits are 
fine, as long as they are of reasonable size.

And one thing you don't hear much about is that these huge deficits are 
going to put us in the area of a total government debt of more than 100% 
of GDP, and I don't think that's survivable.  At least when the annual 
deficits are small, the economy can grow faster than those deficits, so 
the total debt never overtakes GDP.  A declining economy, as we are in 
now, can absorb reasonable deficits for a year or two, and eventually 
make that surplus (deficit over economic growth) up.  But Obama's 
deficits, so much so fast, will hobble the economy forever.



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