[quote=pri_dk][quote=davelj]Contrary to your assertion, I don’t think there’s any confusion on the topic here.[/quote]
You missed the discussion.
I understand your claims about debt – and they are certainly valid – but that’s not the confusion I was referencing.
There was genuine confusion. Specifically, there were claims that the US economy had become “zero sum” in recent years.[/quote]
Let’s get the math straight first. The US economy – and all economies – are n-sum games, at the end of the day, with n = real GDP growth. I would argue that the US economy is not a zero sum game, but it’s certainly not much more than a 1.5%-sum game over the next couple of decades. (And, in fact, it was a negative sum game during the recession.)
[quote=pri_dk][quote=davelj][…] borrow against their houses and… wait for it… “spend”. […] “consumption” (aka, “consumer spending”) accounted for about 2/3 of GDP. This is neither controversial nor debatable.[/quote]
Now you are being a bit misleading. You seem to be suggesting that 2/3 of the GDP is driven by people borrowing and spending. There certainly was more borrowing during the bubble, but it didn’t account for 2/3 of economic activity (as measured by GDP.) Not even close.[/quote]
Actually, no, you’re trying to MAKE it look as though my statement was misleading by leaving out the words “led folks to” in place of “…” Here’s what I said (verbatim): “They’re merely (correctly) suggesting that booming house prices led folks to borrow against their houses and… wait for it… ‘spend’. Which they did. And it’s documented. And last time I checked, ‘consumption’ (aka, “consumer spending”) accounted for about 2/3 of GDP.”
I’m betting you’re the only person on this blog that read my statement and thought I was suggesting that every dollar of consumption during the boom was the result of home equity borrowing. The fact is that the wealth effect and it’s positive impact (at the time) on GDP during the boom are well-established. There’s a great deal of research on the topic out there, virtually none of it taking the opposite view.
[quote=pri_dk]
But the main point is that claims that our entire economy is some sort of capitalist shell game and that there is no actual value being created are simply nonsense.[/quote]
I never claimed this. There is actual value being created. But, arguably, the value created has been greatly exaggerated over the past 30 years (as a result of debt driving a lot of unsustainable consumption).
