Debt Does Not Exist

...Debt does not exist, except as a measure of credit in use.

Debt is an accounting of the use of credit. If you borrow a dollar, you put credit to use. If you borrow a dollar and spend it, the credit remains in use until you repay what you borrowed. Debt is just a measure of money borrowed. The only way to reduce debt is to reduce credit-in-use.

Well, This Is Depressing

In his 1995 book To Renew America, Newt Gingrich wrote:

The power of economic growth was driven home to me by a study that suggested that a 1 percent increase in our economic growth rate would shrink the federal deficit by $640 billion over the next seven years, would increase federal tax revenues by $716 billion without a tax increase, and that each and every adult citizen would earn $9,600 more than they would in the current growth projection.

In this world of merely 1 percent higher growth, the Social Security Trust Fund never runs out of money....

Part Four of Three

You have to go where the numbers take you, that's what I think. But after I finished the first three posts of my "On the Growth of Government" series, I realized that I could have achieved the same result by making just one adjustment to Federal spending. Instead of three.

I adjusted for inflation, population, and living standards. But in the living standards adjustment, I had to disallow inflation and population because those adjustment were already made. So I ended up using "real GDP per capita."

If I didn't adjust for inflation separately, I could use "nominal GDP per capita." And if I didn't adjust for population separately, I could drop the "per capita." So now I want to look at Federal spending growth again, adjusted only for the growth of "nominal GDP."

The accuracy will be much better, I think, using this approach. Using only one tweak.

I really don't see how this "unified" graph -- annual change in Federal spending growth, less annual change in Nominal GDP -- can look like my final graph from Part 3. Because I've heard too many horror stories of "Federal spending relative to GDP." Those stories always tell the tale of excessive Federal spending.

Okay. So now it's even more important to do the new graph.

Supply Side Economics?

Scouring a set of drawings for some key information, I ran across this note at work:

Jake? Jake??

Awww...

On the Growth of Government (Part 1 of 3)

If you run a business you'll probably compare this year's sales to last year's, to see how much your business has grown. If sales are up 6%, you could say your business has grown 6%.

I want to look at government spending by that standard: year-over-year change.

On the Growth of Government (Part 2 of 3)

If you run a business you may compare this year's sales to last year's, to see how much your business has grown. If sales are up 6%, you could say your business has grown 6%. But if prices went up 4%, then really your business grew only 2%. To get a better gauge of how much your business grew, you have to adjust for inflation.

I want to look at government spending by that standard: adjusted for inflation.

On the Growth of Government (Part 3 of 3)

So your business got 6% bigger, but 4% was inflation and only 2% was growth. You're not doing as well as you hoped. So then, how are you doing? How does your business growth compare to your competition? How does it compare with the economy, overall? ...And can we ask similar questions of government spending?

Jacob Claus

My grandson at 12 weeks...