[quote=pri_dk]Not all debt is “bad,” and using debt to finance the right investments can actually lead to a better long-term outcome than not using debt.[/quote]

Right, but if you borrow against a depreciating asset, that is a “bad” investment unless the investment grows faster than interest plus the asset reduction. Borrowing against a house in a growing bubble in order to buy consumer goods that don’t return any thing on their investment is bad debt, decidedly increases GDP in the short term and sets up for a matching reduction in GDP later.

Nobody really gives a crap about the absolute value of GDP, which is why you never see anyone report it and why pretty much everyone but you knew davelj meant growth. Theoretically, GDP growth has to keep up with population growth to keep the quality of life constant.