Steadfast FinancesFake Prosperity: U.S. National Debt Growth vs. GDP Growth - Steadfast Finances

Fake Prosperity: U.S. National Debt Growth vs. GDP Growth

Filed in Infographics & Chartology , Politics 4 comments

If you’re a member of Gen X and Gen Y, this is probably the scariest chart you will see in 2011, and possibly, right up to the time you’re old and gray.

As you can clearly see, the crony capitalism, fake prosperity, recycled Keynesianism memes et al., have been a great benefit to the U.S. economy… right up until we reach the tipping point and it’s time to pay it back.

Let’s hope those folks who started this race to economic ruin in the 1980s (for the sake of winning elections) will get voted out of office see the light and do the right thing: force those who ran up the national debt pay it back (e.g. higher taxes, eliminate tax deductions for all income levels, cut spending, etc.) versus making their children pay for it years from now.

Image Source & Credit
Karl Denninger
The Market Ticker

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Posted by CJ   @   3 August 2011 4 comments
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Aug 3, 2011
12:43 pm

While I enjoy reading your blog posts….they rarely get me looking forward to my financial future as a 27 year old. In my book, that puts you slightly above reading the comments on financial/political articles on yahoo…yahoo comment writers seem to be the most depressing, uneducated people on earth. At least your stuff is intelligent, and insightful while being depressing! With political leaders looking out for self-interest only, and taxes inevitably on the rise, what’s your opinion on where to put money now? The stock market seems to be littered with panicked investors who jump ship at the possibility of unsavory news…I’ve been doing the lending club thing for awhile now, but like you, don’t like the new rules they have imposed with question asking. I feel much less like a banker and more like an asset ready to lose money.

Aug 3, 2011
1:46 pm
#2 Matt SF :

Thanks Micah. I’m only bearish because I’m looking at actual data, not the pie-in-the-sky hopium that’s being sold to us to boost confidence (e.g. Green Shoots), or at least, to help unwind all this leverage in a semi-orderly fashion.

TARP, QE, et al., was meant to prop up the house of cards and prevent an overnight collapse so an orderly wind down could be executed. Anyone who says it was supposed to “help the economy” or “put us back on track” is about as clueless as McCain during the 2008 election when he said “the fundamentals of our economy are sound”. So when you hear the talking points from the GOP/Republicans this upcoming election about a few trillion was spent and what did it get us, it’s just that — an uneducated talking point to score points.

Please don’t take what I’m about to say as financial advice b/c I don’t have the credentials to give it as to my own personal funds…

I sold half my index funds several weeks ago b/c I just don’t trust the market. Some technical indicators helped me out, but I really wanted to get out before QE ended. (That’s the reason why all those IPOs rushed to market – to cash out before the game was up.)

Personally, I’ve been looking to rotate back into real estate now that prices are down, rates are low, etc. People still need a place to live, and when a big percentage of the population can’t or won’t buy a home, rental demand is sure to rise over the next few years.

Aug 4, 2011
5:48 pm

I love seeing these graphs because they communicate the message so much better than words. After looking at this, it would be rather difficult for any politician to believe that spending is anywhere near ‘under control’. Even after the most recent legislation was signed, spending will continue to far outpace GDP growth.

Aug 4, 2011
6:24 pm
#4 Matt SF :

Same here MH.

I’m not sure spending can be lowered even if we wanted it to be, and we raised taxes, b/c of the age demographics problem we have.

Boomers were a boom to our consumer driven economy when they were younger, but considering how costly medical care is these days, it’s going to be a strain on the national budget for 1-2 decades minimum.

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