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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (113394)	5/11/2012 9:00:40 AM
From: RetiredNow	Read Replies (1) \| Respond to of 149317

That's only half true. The large stimulus absolutely helped. However, the other half of the equation was that our competition over in Europe and Asia...indeed the world over...was completely flattened by war and bombs. Here in the US, we remained largely untouched. So all of our competition was eliminated and we became the world's manufacturer and supplier, just as China is becoming today. So today is different. Stimulus certainly helps a bit, but we've reached the period in our economic history where stimulus that comes from debt and money printing is reaching seriously diminishing returns. It used to be that for ever dollar we borrowed, we'd get more than a dollar return in the economy. Now for every dollar we borrow or print, we get less than a dollar back. Economists usually peg the tipping point for this at somewhere between 70-90% debt to GDP. We're at 100%, if you don't count the $50-60 trillion in Entitlement obligations. If you do count those, since they are actually the largest cause of our deficits and under GAAP accounting we should count them, then we're at 400-600% debt to GDP. Stimulus at these levels, whether from deficits of $1.5T or from QE to the tune of $3T over the last 4 years, just aren't as helpful as they used to be. Instead, it's long past the point at which the Fed should have started to let their positions start to unwind, rates moved upwards, and deficits reduced. We're in very serious trouble.