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Financial Crisis

 
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PostPosted: Mon Oct 05, 2015 6:06 pm    Post subject: Financial Crisis Reply with quote

PeakTrader:

It was too many people buying houses they couldn’t really afford and too many people using their houses as ATMs.

It accelerated in the 2000s, before the economy peaked, while median income growth was too low.

When the economy began to decline, more and more households couldn’t make monthly payments, which accelerated the decline.

Then, to make matters worse, we engineered an L-shaped recovery, after the severe recession, that continues today.

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Paul Mathis:

What about conjectures regarding the supposedly harmful effects of the federal debt?

By 2015 the national debt was 18 times higher than when Pres. Reagan took office in 1981 and 419 times higher than in 1940 when Pres. Franklin Roosevelt was re-elected to his third term. It was more than 800 times greater than in 1933 when we abandoned the gold standard.

The consequences : real GDP has increased nearly 14 times over since 1940 and industrial production has increased more than 25 times over since 1933. Private sector jobs have more than quadrupled since 1940 as has total employment at a record high above 142 million.

When will debt phobia become implausible among economists?

We had our highest debt-to-GDP ratio after WWII, then increased the debt 82% and federal spending 725% over the next quarter century from 1948, producing our greatest prosperity: a 168% increase in real GDP.

When did tight fiscal policy produce better results?

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PeakTrader:

You should look at the economic performance of high government debt countries – Japan, Greece, Portugal, etc..

And, what about U.S. economic performance?

U.S. federal debt:

https://research.stlouisfed.org/fred2/series/GFDEGDQ188S

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