Why The Stimulus Won't Work: The Marginal Productivity of Debt
This chart should give you pause about stimulating the US economy with more debt. What it says is that for every Dollar of new debt (private or public) we have had diminishing returns. According to Antal Fekete, if you take this chart further back, we used to get $3 of GDP for every $1 of debt. Sometime in the late '60s, the line crossed below $1, meaning every new Dollar of debt returned less than that in GDP. Antal thinks we actual went negative in 2006, but regardless of whether his data is the same as this chart, we are approaching that point.
This chart should give you pause about stimulating the US economy with more debt. What it says is that for every Dollar of new debt (private or public) we have had diminishing returns. According to Antal Fekete, if you take this chart further back, we used to get $3 of GDP for every $1 of debt. Sometime in the late '60s, the line crossed below $1, meaning every new Dollar of debt returned less than that in GDP. Antal thinks we actual went negative in 2006, but regardless of whether his data is the same as this chart, we are approaching that point.
This is truly a point of no return....
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