[ElJefe]

(09-18-2013 10:41 PM)CactusCat589 Wrote:  

Even if you the government at its word and say that GDP growth is at 2.5%, and believe the CPI accurately calculates inflation, which stands at 1.5%, then the economy only grew at 1.0%. If real inflation is even slightly higher than what the mutilated CPI states, then the economy has been contracting even with the epic trillions of dollars being spent by the federal government.

I agree with most of your article, but I believe economic growth is always nominated in real terms - GDP growth in nominal terms is circa 3.5%.

Basically, economic growth for the last 10-15 years has been, to a large extent, due to credit expansion, and now the chickens are coming home to roost. There is no way getting around paying debt except insolvency. Or cancellation, but that just leads to taking on more debt. Americans have been living beyond their means for a while. This is possible from, as you say, low interest rates combined with profligate spending, enabled by culture of rampant hedonism and instant gratification over long-term thinking.

Meantime, Obama is doing his damnedest to raise marginal costs for firms, households and expand the labor supply will minorities who will keep his Democrat occupation government in power indefinitely. It's insanity. And the Wall St. Journal is no better with a fat piece by Michael Barone today on the perks of immigration - utter foolishness and blatant ignorance from the conservatives (in name only).

The policy prescription is clear, but I have yet to see any man who will propose what needs doing:

Tariffs on trade-dumping nations
Deport illegals
Limit legal immigration
End QE and allow interest rates to rise
Tax reform to simplify the 80,000 page tax code, raise revenue, promote growth and end need for massive corporate legal departments and tax attorneys
Entitlement reform, means testing medicare, medicaid and social security
Rationalization of Federal government agencies (there are +1,200 today, the fewer the better)

which will lead to a:

Balance budget and begin a federal, state and municipal debt repayment plan so that we have at least some leeway when we need financial reserves to stop China if the time comes