16 thoughts on “Chart of the Day – U.S. Economy Contracts

  1. Cutting defense spending caused the economy to contract. Perhaps another war – Mali? Iran? North Korea? – is what we need. Break more windows!

  2. Anyone see the jobs numbers? 192,000 private sector jobs and a net decrease of 13,000 for the public sector. (Isn’t that the type of numbers you guys should be celebrating, instead of lame straw man arguments about Democratic rhetoric?)

    It is also worth noting that this occurred in spite of economically confused, Republican congressmen actively trying to destroy the US economy via the debt ceiling.

    1. Are you going to deny that the American economy is anemic right now and has been for some time despite (or likely due to) government action? Of course, the government isn’t the only cause of good or bad economic news – but there is a lot to support the thesis that the government isn’t helping.

      1. You did write that not raising the debt ceiling would destroy the economy. I assumed you therefore think not raising the debt ceiling (authorizing more borrowing) is bad for the economy.

        And yes, I do indeed think that authorizing more borrowing, rather than cutting spending and balancing the budget, would cause government to go further into debt. But perhaps I am wrong about that.

        I think it is time for the government to reign in spending (stop buying more cars that it can’t afford), and leave more money in the private sector.

  3. Shaun, You suggest that the government failing to go further in debt is bad for the economy. I assume that is another of the “lame straw man arguments” you want us to ignore in our comments.

    1. When did I say that? And I gather you mean extending the debt ceiling is pushing the government into debt, yes? You’d be wrong. Congress approves spending and raising the debt ceiling is a way to pay for that spending. Now we can argue morals of government spending all day long, but voting to spend and then refusing to pay for it is clearly illegal. Let me put it to you this way, what the Republicans did was the equivalent of me walking into a car dealership and buying a car and then telling the dealer to go to hell when he asks for payment. It really has nothing at all to do with reigning in spending. It’s just a pointless maneuver. So please do understand what you are talking about before you retort.

      1. Congress should just not vote for anymore spending, or vote for decreased spending. Instead, it has chosen to vote for spending and then threaten to default instead, by playing games with the debt ceiling. It’s stupid, wreckless, and doesn’t achieve any real objective other than financial market chaos.

      2. Shaun, I’m pretty sure that Democrats helped the Republicans in all that. In any case, trying to decide which profligate party is more irresponsible is a waste of time in my view. We have bills that we cannot pay. There is no getting around that. We should not have made the promises we made, yes; but we cannot change that now. Soon and very soon, reality will force upon us very difficult choices, and those choices become more difficult with each and every passing day. We may as well start dealing with them like adults now.

  4. Not authorizing new debt to be issued to pay for spending already approved and mandated is a default, plain and simple, and would be perceived by the market as such. This is not a philosophical disagreement. This is a technical disagreement, wherein I describe how the debt ceiling actually works and you confuse it with something else.

    One can argue that increasing government spending is wrong and that’s fine. But arguing that raising the debt ceiling is the proper way to do it is akin to shafting your own citizens to appease foreign creditors. Plain and simple. It would make the situation worse because it would kill the economy and therefore revenues. This is not a long standing, ongoing, scholarly issue. This is accepted economic fact by almost all schools of thought.

    I cannot believe I have to actually sit here and explain how unbelievably stupid and innacurate that viewpoint is.

  5. Shaun, I am sure I do not appreciate your burden of having to deal with intellects so inferior to your own. I fully understand what default is, and I understand moreover that it would not only be perceived as such but would in fact be such. My claim, which you have yet to see, is that default is inevitable and unavoidable. If Congress stopped voting for spending or voted for decreased spending, as you suggest, it would constitute default on future payments of former promises of funding for entitlements like Medicare, Medicaid, and Social Security. Thus it is default either way. If I am right, our only choices are (a) to do it now, when the effects will be bad; or (b) to do it later, when the effects will be worse.

    We are long since past the practical usefulness of any conversation about whether “increasing government spending is wrong.” That is why I did not bring it up, and why I am puzzled that you keep doing so.

  6. America is bankrupt. We are in the final throes of the destruction of the American dollar. The real inflation rate is closer to 10% as is the real unemployment rate closer to 20% (see John Williams Shadow Stats .com.). Next on the horizon is inflation. Maybe not hyperinflation but inflation nevertheless. The American productive middle class is being squeezed between inflation and high taxes. Only Mr. Obama’s voting constituency of government employees has been able to keep ahead of the curve. In the end,it doesn’t matter whether a Republican or a Democrat is in the White House. The real economic president of the United States is Ben Barnake the chairman of the Federal Reserve counterfeit paper money racket. When you have a monetary system that is based on paper debt bonds backing paper money and or computer credits buying real goods and services in the market then you have a recipe for economic disaster. Real goods and services require brainpower,labor,capita,raw materials and hard work to produce. When a nation and it’s Political Class uses money that is created by a printing press and or computer entries all is needed is the printing press and computers plus the legal tender laws,a tax system to collect the interest on the debt money plus a monopoly on the use of violence to enforce those laws and tax collecting. It is the biggest con and swindle ever. It is a con that will destroy America.

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