[quote=davelj]
Yes, debt has been growing at a much faster rate than GDP, so we know that it has had a positive impact on GDP (in the past). Now we’re at the point where debt is so large that it has a negative impact on GDP (too much to service). We have too much debt – there’s no question about that. But… you’re dramatically overstating your case when you suggest that there hasn’t been ANY economic growth ex-debt over the last 30 years; this is empirically incorrect. In fact, there’s been a bit of research done on this subject and most of it concludes that about 50-100 bps of annual GDP growth over the last 30 years has been the result of incremental debt.[/quote]
Fair enough. If you take on a trillion dollars of debt to produce 300 billion of annual production it theoretically does end up producing a positive return at some point. It’s just difficult to see it when you keep increasing debt every year in excessive of the incremental productivity increases. I suppose in our system we should measure yearly servicing cost versus the GDP growth. I.e. 1.2 trillion @ 4% is right around 70 billion in servicing costs for 30 years. We get about 280 billion in what we assume is permanent growth from that debt.
Certainly in a world with a growing population and growing energy usage there is growth. It’s just that we chose to measure it something that has a variable meaning. A dollar today in terms of productive output is different than a dollar 2 years ago.