The constant caterwauling you here these days for ramping up fiscal spending is a catch-all term that really means we're out of ideas, so it's time to go to the government well again. In Keynesian parlance it's a well known as aggregate demand.
The only sure thing one can say about AD is it's guaranteed to proscribe any possibility of fixing anything or ever paying down your debt. A while back after MSM and other Keynesian acolytes exhausted their list of usual suspects and the economy was still sucking wind after five years of crazy monetary policy, they blamed consumers. Consumers were being too naughty. How dare they cut back on spending and start saving a few bucks. How dare they put funding their upcoming retirements in this economic slowdown ahead of government interests.
We are the government. And we know fiscal spending aka aggregate demand works. JMK told us so.
Well, here's another viewpoint.
Count us incredulous. There is absolutely no evidence to back this argument up. Between 1992 and 2000, the eight years of Bill Clinton's presidency, consumer spending averaged just 65.1% of GDP, but real GDP grew 3.8% annually.
In the past five years, consumer spending has averaged 68.3% of GDP, the highest five-year period in history. Yet real GDP grew only 2% per year. In other words, aggregate consumer demand has risen sharply, but the economy is growing more slowly.
And if you think government spending is a solution to this problem, think again. Between 1992 and 2000, federal government spending averaged 19.2% of GDP. In the past five years, government spending has averaged 21.5% of GDP.
Read more:
.advisorperspectives.com/commentaries/2016/10/03/cut-spending-to-grow-economy
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