It's the Economy, Stupid!

[Leonhard]

Stop parroting the same nonsense.

Demi, I've treated you with respect, I except you to treat me likewise. I'm not parotting anyone. I could accuse you of the same thing, because several sound bytes from people here are lifted almost one to one off conservative news sites and talking points.

I just looked up the statistical information, that is all.

The claim is made that the economy flatlined, so I post the GDP and Stock Index. The claim is then moved to it being unemployment that was flatlined, so I post the employment number. The claim is then made that its not really the unemployment number, but its the labor participation rate. So I post that, and there's an interesting discussion with Mountain Man on that point.

Now you're making an argument, and frankly I don't see what sense it makes.

Do you admit that if government borrowing for spending was 1 trillion higher in 2010, the GDP would be about 1 trillion higher?

Yes, that is trivially true. GDP is spending.

But that is not what you said, you then made a calculation where you subtracted debt from gdp and divided by the past years gdp, to produce a negative percentage. All that means is that there was a deficit, and the gdp to debt ratio increased.

It's been doing that ever since Reagan started doing that. It has only gone down since then under Clinton. Trump is no different.

[Leonhard]

All unemployment measurements -- U3, U5, U6 -- were on a downward trajectory starting in 2010. In fact, there is very little distinction, as the decline has been steady between both admins. So the argument about Obama vs. Trump in regard to employment is pretty retarded. BLS is going to continue to use the U3 number because it looks less bearish to an economic recovery. The real argument should be the quality of jobs, and this argument is as relevant under Trump as it was under Obama.

You beat me to it.

Both U3, U5 and U6 (with these latter two including discouraged workers) all show a downward trend. The claim that unemployment was stagnant under Obama just doesn't jive with the evidence.

[demi-conservative]

I just looked up the statistical information, that is all.

You were parroting nonsense like you shouldn't take debt into account because it's not amortised quickly, or that debt is fine if debt-to-GDP remains the same. It's all the same mainstream nonsense, just like U3 is mainstream nonsense.

But that is not what you said, you then made a calculation where you subtracted debt from gdp and divided by the past years gdp, to produce a negative percentage. All that means is that there was a deficit, and the gdp to debt ratio increased.

You've admitted that GDP is income, and that debt fuels GDP. So to get an accurate view of the economy, you have to first add change in GDP to change in debt.

An income account is not useful, what you want is a balance sheet. And yes, the balance sheet indicates that things have been going downhill for a few decades.

[demi-conservative]

Except you used a horrible argument against them, where you expected a loan to be paid back within a single year.

This is completely false. Taking note of the debt incurred to make a balance sheet does not expect the loan to be repaid within a single year. Why do you keep making this unjustified claim? I am not making this assumption, but for some reason you think I am.

And stock index being inflated does not depend on debt so much as QE. It's useless for a different reason.

[demi-conservative]

Let try to make things simple. Things aren't getting better if GDP improves because of debt, you're just borrowing against future income. Which is why a balance sheet is important, just looking at income statement is useless.

Just increasing spending does not make the economy better, which is why GDP is useless at measuring economic health. It was never intended to do so, but the mainstream paradigm is to misuse it.

[demi-conservative]

All unemployment measurements -- U3, U5, U6 -- were on a downward trajectory starting in 2010. In fact, there is very little distinction, as the decline has been steady between both admins. So the argument about Obama vs. Trump in regard to employment is pretty retarded. BLS is going to continue to use the U3 number because it looks less bearish to an economic recovery. The real argument should be the quality of jobs, and this argument is as relevant under Trump as it was under Obama.

Completely agree. At some point in Obama's administration the depression got to its worst point, and then things started improving from there.

Lies, damned lies, and statistics. Arguing who has more political credit for recovery using useless/BS government statistics is retarded.

The real argument should be the quality of jobs, and this argument is as relevant under Trump as it was under Obama.

Yes

[Leonhard]

It's all the same mainstream nonsense

It's fine if you believe that, but something being or not being mainstream isn't what determines whether its true. You need to grow out of 4chan demi, being counter-cultural isn't the same as being correct. It's counter-cultural to believe that the Earth is flat, or to larp along with QAnon, but it is still bonkers.

And yes, the balance sheet indicates that things have been going downhill for a few decades.

If you believe a growing gdp to debt ratio is evidence of an economy going downhill, then yes, the economy has been going downhill since Reagan took office.

I believe a country can increase its debt to gdp quite a bit as long as it can turn the boat. The problem for the US, which might become a problem eventually, is that if they keep increasing this ratio then its going to be a problem.

Taking note of the debt incurred to make a balance sheet does not expect the loan to be repaid within a single year. Why do you keep making this unjustified claim?

Because otherwise your calculation makes no sense. The money isn't going into nothingness. Your calculation would make sense if the US government took that pile of money and basically set fire to it. But its money going into stimulating the economy, and as long as the economy rises, the loan gets paid back and there's a surplus. So in the end you'd need to include a factor on the expected return and multiply gdp with that for it to even begin to make sense.

Otherwise your calculation, if taken at face value, says "There is zero value generated by this spending, and the loan should be paid back within a year"

[demi-conservative]

Yes, that is trivially true. GDP is spending.

We can make things really simple.

If GDP is spending, why does increase in spending necessarily mean that things are improving?

Does a company increasing spending necessarily mean that it's doing well?

No, therefore balance sheet. Therefore debt has to be taken into account.

[seanD]

It's fine if you believe that, but something being or not being mainstream isn't what determines whether its true. You need to grow out of 4chan demi, being counter-cultural isn't the same as being correct. It's counter-cultural to believe that the Earth is flat, or to larp along with QAnon, but it is still bonkers.



If you believe a growing gdp to debt ratio is evidence of an economy going downhill, then yes, the economy has been going downhill since Reagan took office.

I believe a country can increase its debt to gdp quite a bit as long as it can turn the boat. The problem for the US, which might become a problem eventually, is that if they keep increasing this ratio then its going to be a problem.



Because otherwise your calculation makes no sense. The money isn't going into nothingness. Your calculation would make sense if the US government took that pile of money and basically set fire to it. But its money going into stimulating the economy, and as long as the economy rises, the loan gets paid back and there's a surplus. So in the end you'd need to include a factor on the expected return and multiply gdp with that for it to even begin to make sense.

Otherwise your calculation, if taken at face value, says "There is zero value generated by this spending, and the loan should be paid back within a year"

In regards to the economy, disbelieving mainstream's views about the economy is not at all bonkers. It was the mainstream telling everyone there was no recession in sight in 2017 and scoffing at the economic contrarians. In fact, it was the federal reserve head (as mainstream as it gets) telling everyone there was no housing crisis as late as 2008. Mainstream is designed to keep a bullish outlook on things, naturally to keep panic at bay and the economy and markets going.

[demi-conservative]

It's counter-cultural to believe that the Earth is flat

Now you're just blatantly smearing.

If you believe a growing gdp to debt ratio is evidence of an economy going downhill, then yes, the economy has been going downhill since Reagan took office.

Yes.

Because otherwise your calculation makes no sense. The money isn't going into nothingness. Your calculation would make sense if the US government took that pile of money and basically set fire to it. But its money going into stimulating the economy,

The more accurate analogy is that the company is doing poorly, and is increasingly taking on more and more loans to stay afloat. The money isn't 'burnt', it is used to keep going, but things are getting worse.

and as long as the economy rises, the loan gets paid back and there's a surplus.

Which is not happening.

So in the end you'd need to include a factor on the expected return and multiply gdp with that for it to even begin to make sense.

You are right about expected return in principle. As I said, to get an accurate picture of the economy you need to begin by taking debt into account. It is nowhere near the end. It's a first step, and you need to take into account inflation, per capita, depreciation, and so on to get further. The whole point is that just looking at GDP is simply not enough, you're not taking even the first step.

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In practice we see debt escalating and there is no movement towards a surplus. Change in debt > increase in GDP. No movement towards repaying the growing debt.

In practice most of government loans do not go to promote capital and other useful things, so the expected return is negative.

That's how we can easily tell that there's no actual growth, it's all debt-fueled fake growth. We can see all this qualitatively, without having to put a number on 'return on investment', because it's clearly negative.

[Leonhard]

If GDP is spending, why does increase in spending necessarily mean that things are improving?

Actually, that's usually the sign of something healthy going on, especially if the valuation of the market is improving at the same time. The market isn't magical value out of nothing. Thing have value because they fulfill needs. If the US market grows an industry that provides a good, then the valuation of that industry increases.

The US economy undoubtedly has recovered quite a bit since the last boom.

I know you think you've got a simple knock-down argument against the idea that the US economy is rather robust at the moment. I agree with your concern about debt to gdp ratio, but I think you're overblowing the problem, and your argument that any deficit equals a tanking economy is bunk. I will agree it can become a problem if the ratio keeps increasing forever. Then at some point the interest on the loan becomes unfeasible for a country to pay, and then the US economy would sink.

[demi-conservative]

Actually, that's usually the sign of something healthy going on, especially if the valuation of the market is improving at the same time.

No, just as often it's taking on more debt to stay afloat.

I know you think you've got a simple knock-down argument against the idea that the US economy is rather robust at the moment. I agree with your concern about debt to gdp ratio.

False. I did not mention debt to gdp ratio even once, that's not my part of the argument.

your argument that any deficit equals a tanking economy is bunk

Completely false. My argument is that growth in GDP that is fuelled by debt does not mean things are getting better, because of simple balance sheet considerations.

At this point I'm going to assume that you're just intentionally misunderstanding. In no way did I argue that "any deficit equals a tanking economy". That's complete BS. I'm not going to respond further unless there's any constructive post from you.

[Leonhard]

Now you're just blatantly smearing.

No, just stating an example.

You are right about expected return in principle. As I said, to get an accurate picture of the economy you need to begin by taking debt into account. It is nowhere near the end. It's a first step, and you need to take into account inflation, per capita, depreciation, and so on to get further.

I agree with this. But then the question is then in what way is the economy flatlining then. I am simply asking conservatives here to explain a talking point that I've heard repeated at nauseum amongst conservatives. It seems like a healthy exercise.

That's how we can easily tell that there's no actual growth, it's all debt-fueled fake growth. We can see all this qualitatively, without having to put a number on 'return on investment', because it's clearly negative.

Actually you do have to put a number on it. I'm sorry Demi but your argument doesn't work. The debt to gdp ratio is increasing. Yes, but its not pure debt money being blown into nothingness with zero return. The value of the US market is in fact increasing. If all the money was being funelled into a furnace, with zero value generated, then the amount needed to be borrowed would be significantly bigger in order to keep up the appearance of the GDP.

I share your concern on the debt to gdp, and I find it puzzling that conservatives in the US have decided not to care about this issue anymore. And for Gingrich to utter the phrase "Deficit doesn't matter" and for Forbes and other outlets to jump on the same bandwagon.

Still the US can keep doing this for several decades more, though at some point they will get near to risking defaulting on the debt, which would crush the US economy.

[demi-conservative]

Actually, that's usually the sign of something healthy going on, especially if the valuation of the market is improving at the same time.

As often it's just borrowing to stay afloat.

I agree with your concern about debt to gdp ratio

False, that has never appeared in my argument.

and your argument that any deficit equals a tanking economy is bunk

Completely false, and you're just deliberately misunderstanding now. I have never said that.

[demi-conservative]

The value of the US market is in fact increasing.

Primarily because debt taken on is increasing.

If all the money was being funelled into a furnace, with zero value generated

A strawman.

I share your concern on the debt to gdp, and I find it puzzling that conservatives in the US have decided not to care about this issue anymore. And for Gingrich to utter the phrase "Deficit doesn't matter" and for Forbes and other outlets to jump on the same bandwagon.

Do you admit that if there was a balanced budget tomorrow, GDP would crash because of a drop in government spending? QED.

At this point you know that GDP is useless measure, but you're just strawmanning my position as equally useless as an excuse not to budge. If there's nothing constructive, I'm not going to respond further.