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Politics : View from the Center and Left

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To: Steve Lokness who wrote (125528)	11/25/2009 11:28:35 AM
From: RetiredNow	Read Replies (1) of 542459

Good point. Here's what drives me nuts. In 2007, the US had a $14 trillion economy, as measured by GDP. So now, everyone is trying to figure out how to quickly grow us back to a $14 trillion economy. Krugman is in this camp, which is why we saw articles from him about how our gov't needed to employ Keynsian economics to draw up these huge stimulus bills to quickly bump up GDP to 2007 levels. But wait a second. This is a big mistake. The only reason why we were a $14 trillion economy in the first place is because we had a negative savings rate and our Bush, Paulson, and Bernanke were borrowing trillions from other countries. So in effect, all of us were borrowing from our future to pay for the excesses leading up to and including 2007. So in my view, I believe that the long term sustainable baseline economy is more like $12 trillion. That's the level at which we would not need to borrow to sustain growth. So Americans and our gov't needs to measure our economy and the growth we try to squeeze out of it, not based on where we were in the past, but on what we can get with sustainable, organic growth, not growth from deficit spending. JMHO.

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