US Federal Government Spends $8.70 for Every $1 Gain in GDP

US Federal Government Spends $8.70 for Every $1 Gain in GDP

Charles Hugh Smith writes on his excellent Of Two Minds website that from 2008-2011, the US Federal government paid roughly $8.70 for every $1 gain in GDP.

The Federal government borrowed and spent $6.1 trillion over the past four years to generate a cumulative $700 billion increase in the nation’s GDP. That means we’ve borrowed and spent $8.70 for every $1 of nominal “growth” in GDP.

In constant dollars, GDP is flat: we got no growth at all for our $6.1 trillion: zip, zero, nada. In constant dollars, the GDP in 2011 might return to the 2007 level, if the economy continues “growing” at the same pace reached in the first three months of 2011. If not, then the GDP will actually be lower than pre-recession levels.

If you borrowed $8 to get $1 in your pocket, would that strike you as a good deal?How long do you reckon you could borrow $7 to get $1 of “growth” in your finances?

Full article: Can We Please Stop Pretending the GDP Is “Growing”?

Sweet economics we’re running here in the good ol’ formerly laissez faire U S of A!