What is the True US GDP Growth?
From January 2007 until today, US government debt increased by $4.1 trillion dollars. During that time, real GDP increased by about $200 billion. This means that “true GDP growth” over the period was about -30%. This sounds very extreme which is why I started with the analogy. It doesn’t feel like GDP shrunk by 30%, because we’re maintaining our consumption levels with new debt. How is the Money Being Spent? My argument is entirely dependent on the assumption that $1 of government spending produces less than $1 of real productivity. It’s worth looking at the actual spending to see if this is true. In developing countries, there is frequently an opportunity to invest productively in the infrastructure of the country. For example, China has spent a lot of money on roads, railways, and energy infrastructure that will support future growth. Of the roughly $600 billion in stimulus, about 65% was spent on infrastructure, and 20% was spent specifically on long-term development projects like n
