StrongTowns: Market Correction Time
strongtowns.org
StrongTowns: Market Correction Time
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Re: StrongTowns: Market Correction Time
#2> The chart shows cumulative growth in GDP since 2010 compared to the cumulative amount of deficit spending by the federal government. Without that deficit spending, GDP over the past decade is negative.
> ...
> ... The Modern Monetary Theorists out there might find this to be a great argument for deficit spending, but it’s really a pretty simple trick to grow the economy by $1 trillion today by borrowing $1 trillion from tomorrow.
The author makes some good points.
The discussion would be strengthened if the graph obviously showed what he says it does. This should be a simple matter of using GDP growth minus deficit spending as one of the bar sequences.
Re: StrongTowns: Market Correction Time
#3> The chart shows cumulative growth in GDP since 2010 compared to the cumulative amount of deficit spending by the federal government. Without that deficit spending, GDP over the past decade is negative. > ... > ... The Modern Monetary Theorists out there might find this to be a great argument for deficit spending, but it’s really a pretty simple trick to grow the economy by $1 trillion today by borrowing $1 trillion…
There is a paper from Norway's geology administration that says what's happening is that fossil fuel productivity is in steep decline since about 2005. Which means the amount spent on fossil fuel (oil and gas) extraction is growing faster than the world economy. Basically an economist looking at gross figures thinks everything is fine. But a mayor of a city looking at his budgets feels like things are getting worse.
Re: StrongTowns: Market Correction Time
#4This argument fails to account for the insane amounts of wealth that djia Nasdaq are gaining from global growth. I would like to see these numbers compared with global gdp vs the total government spending of all nations.
I also question how the switch from products to services has influenced the numbers. I don't know how gdp is calculated but it seems non trivial to value goods to services in a why that truely communicates the expansion/value of the economy.
Further more, markets look to the future. Let's say an asteroid passes by with all the energy and materials we would ever need and we could harvest then for free, would the market grow by all the value of the minerals in that asteroid?
Re: StrongTowns: Market Correction Time
#5Is it just me or is there a very basic math error here? The chart compares the sum of deficits (aka the increase in cumulative debt) over several years to the increase in GDP. But GDP is an annual measure. You can’t say that the debt is directly paying for the increased GDP as depicted here, because in fact the quantity measured by GDP resets each year. If one dollar spent by the government once can create one dollar of GDP not only this year, but also keep creating another dollar of GDP for each year in perpetuity, that would actually be a pretty good investment! The basic macro answer would be that a dollar of government spending gives you a dollar of GDP this year only (perhaps with some constant multiplier), so this would be a great result for proponents of government spending.
We ought to compare annual debt to annual production, or cumulative debt to cumulative production.
Re: StrongTowns: Market Correction Time
#6This really screams of someone who wants a crash because they were on the sidelines during this bull market. Many if not most of the companies are international in nature and gdp is just a single data point for judging them. Many if not most companies have little to do with strip malls and our built environment. What on earth does Google or Microsoft have to do with car centric development? People use google all around the world.