Everything plotted on a quarter by quarter basis. I have gdp growth both compounded annually and as a change over the period. And the federal interest payment.
So we have plotted the change in GDP over the quarter and the effective interest charge, computed quarterly, as I have defined above. DC is a money loser. So, let the debate begin, why am I wrong? Yglesias claims the opposite, what are his numbers? First he uses nominal growth, except DC does not really buy dollars and hold them. If we use compounding, then we see some profit prior to 1980.
Second Yglesias uses the yearly interest rate, but we roll over a quarter of our debt each year. Third, if we measure the profit of government, we must include ongoing interest payments on infrastructure already built, but not paid for. This then includes the lost (or gain) taken from real effects.
What is the interpretation? From 1965 government profitably borrowed maybe if we include compounding . From 1980 government took losses on its borrowing. What changed? That is the great debate, something happened to multipliers, likely the accumulation of debt to cover the losses incurred by having California, a huge wart, on the butt of America.
Very clearly we see what happened. In 1980 an ignorant communist blew the nations credit with an insane policy of growing government for no reason except Republicans are natural communists. It was not until Bubba Clinton that we finally threw the bums out and for a period restored normalcy to the budget process.
Right now, government may be profitable! But mostly because we are sequestering, getting rid of deadwood government programs. We are in a debt spiral, past debt is hampering the effectiveness of new debt. This is Steve Keen's effect.
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