Something both unwanted and unexpected has tormented western economies in the 21st century. Gross domestic product (GDP) has moderated onward while government debt has spiked upward. Orthodox economists continue to be flummoxed by what has transpired.
Here is the United States, since the turn of the new millennium (starting January 1, 2001) real GDP has increased from roughly $10.5 trillion to $18.6 trillion, or 77 percent. Over this same time government debt has spiked nearly 250 percent from about $5.7 trillion to $19.9 trillion. Obviously, some sort of reckoning’s in order to bring the books back into balance.
Throughout this extended episode of economic and financial discontinuity, the government’s solution to jumpstarting the economy has been to borrow money and spend it. Thus far, these efforts have succeeded in digging a massive hole that the economy will somehow have to climb out of. We’re doubtful such a feat will ever be attained.
In short, additions of government debt over this time have been at a diminishing return. Continue reading







