Ho hum; trillion dollar deficit

us fed debt

The US debt story with a bit of historical perspective. Here we find an example of Change You Can Believe In, care of the blessedly departed Barack Obama over the period 2009-2017. Consequences include slower growth, limited if not actually negligible increases in the real wage, additional upwards pressure on the price level and some additional increases in rates of interest. But really, where’s the constituency to do anything else? How many non-Keynesians are there, never mind anti-Keynesians?

Remember this? Remember how it ends?

What’s changed and how you gonna change it? Still, there are  regulations going and public spending is being better targeted. Large numbers are being peeled from the welfare rolls. Not good, but if the deficit is rising and you’re a Keynesian, what’s the problem? And if you’re not, what are you going to say to convince them otherwise? You will certainly never convince the people spending the money.

Of course, there is then this from Drudge yesterday:


But then there’s this from today:


Really, you only wish people knew how things worked, as in some business comes up with an idea, borrows some money to buy in some capital and labour, and then produces goods and services that are sold on the market for a profit.

There is endless entrepreneurial drive in the US. With a President who is an entrepreneur, who knows what’s possible? But there are also those economists at the Fed and the Treasury. As the old joke had it, the final group in the military parades in front of the Kremlin were the Soviet Union’s economists because “you have no idea how much damage these people can do.” Same again here.

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20 Responses to Ho hum; trillion dollar deficit

  1. BoyfromTottenham

    Only 100% of GDP? Sheesh. For a minute there
    I thought you writing about Australia’s debt. Silly me.

  2. BorisG

    With a President who is an entrepreneur,

    Australia has a PM who is an entrepreneur. Does this help?

  3. Malcolm

    Proves how pathetic Trump is. Debt should be falling in nominal, real and as a percent of GDP. Of course it increased during the GFC. But what is Trump doing? He is worsening the national debt situation. That is a sacking offence.

  4. Malcolm

    When Obama had policies that increased government debt Kates rightly criticised him. Now Trump has policies to increase government debt and Kates praises him. Talk about inconsistent. Kates should be ignored for the nutter he is.

  5. Bruce of Newcastle

    Obama doubled the Federal debt and there was no attempt by he or the Democrats to rein it in.

    So if it’s going to be spent anyway at least the Right can spend it on useful stuff like tax cuts, infrastructure, renewed equipment for the armed forces and security walls. That way when the Democrats next have the chequebook they can’t spend what isn’t there.

  6. Defender of the faith

    Kates is always hard to decipher. In this case it reads as though he’s now given up on trump. That is: he’s making the excuse. What’s a guy to do?
    Most of us knew at the start that trump would do nothing. No swamp drained. No budget fix. Nada. Now it seems the drinkers of his bath water are waking up.

  7. Rebel with cause

    There’s no point in paying down debt unless both sides of politics commit to it and the majority of voters see it as something worthwhile. That situation doesn’t exist in America or Australia.

  8. Pyrmonter

    Trump not leading you into the Promised Land, Dr Kates. Well, knock me down with a feather …

  9. Neil

    It should be stated that the large drop in debt around 1995 was due to Clinton. It was projected to fall to zero until Bush was elected. It does seem the Republicans have some similarities to our own ALP. It will be interesting to see what happens to debt under Trump

  10. RobK

    I note the pink shaded projection is of lesser slope to the section of curve immediately preceeding it. Given that Trump has applied a recipe for stimulating the economy in the long term that is very different to the QE method which has the steep slope as a legacy, i think critisism of a graph’s projection is premature and unsound. The historical section of the graph is fair. The projection is just that; a guess.

  11. RobK

    I worded my previous comment poorly. I meant criticism of the policy in place over the period of the projection is premature as it is based on a guess. Modelling is not fact.

  12. JohnA

    BorisG #2637354, posted on February 15, 2018, at 3:10 am

    With a President who is an entrepreneur,

    Australia has a PM who is an entrepreneur. Does this help?

    Definition: entrepreneur
    noun, plural entrepreneurs
    1. a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.
    2. an employer of productive labor; contractor.

    verb (used with object)
    3. to deal with or initiate as an entrepreneur.
    verb (used without object)
    4. to act as an entrepreneur.

    Origin of entrepreneur
    1875-1880; < French: literally, one who undertakes (some task), equivalent to entrepren(dre) to undertake (< Latin inter- inter- + prendere to take, variant of prehendere) + -eur -eur. See enterprise

    This definition seems to imply purposeful and productive action so, no, I don’t think it helps.

  13. Not good, but if the deficit is rising and you’re a Keynesian, what’s the problem?

    Trump inherited a boom – I know it didn’t benefit everyone, but it’s a boom. He is now pump priming, which is procyclical and could lead to some of the problems that Dubbya ran into.

  14. Malcolm Thomas

    So Steve blames Obama when things that emenated from Obama’s time in office when they’re”bad”, bit credits Trump for things that emenated from Obama’s Presidency when they’re “good”.
    You are so hopelessly biased, Steve.

  15. Dr Fred Lenin

    That malcolm is a dagg,typical socialist , ‘. drag the country into impossible debt and when you are thrown out on yor ass,moan that the non socialist government isn’t doing enough to reduce the debt you created .

  16. Tim Neilson

    at least the Right can spend it on useful stuff like tax cuts

    Bruce, I know that you’re just paraphrasing, but it needs to be made clear that tax cuts aren’t “spending”. Yes, tax cuts may increase the debt (depending on what point on the Laffer curve the country is at), but if we fall into the habit of calling tax cuts “spending” we’re just playing Goose Swansteen’s game of how to claim to be making “spending reductions”.

  17. Habib

    Australia has a PM who is a entrepreneur crony capitalist. Does this help? FIFY, and of course no.

  18. Habib

    & government never, I repeat never, spends on tax cuts. They steal less. Please don’t repeat that leftist lie.

  19. Irreversible

    Kates! The white flag on Trump! Hilarious.

  20. What is it about Steve Kates that brings out the same old pack of personal abusers?
    He’s like catnip to some.

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