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  1. Humor aside, lets examine the idea of a cut in defense spending causing the drop in GDP versus a cut in giving money to social programs. Like a bridge to nowhere, social spending does not support or lift the economy BECAUSE nothing is made to create wealth as defense spending does to some extent versus just handing out money to buy food or pay the rent.

    All spending is not equal. Building a road or bike trail that doesn’t increase commercial activity is of lessor economic value than building a road that in some way supports commercial activity (via increased access to consumers or cost savings on fuel). Surely a (defense contractor) bomb making factory gives greater economic value to the economy than simply handing out money to the unemployed. This is why the stimulus failed, they wasted most of the money on feel good agenda items rather than on actual capital and durable goods.

    Now had the $5 trillion been allowed to be spent on the private economy, then you would have seen a bonafide economic recovery. The Fed screwed up by purchasing government bonds which merely supported wasteful feel good spending, what they should have done was purchase strictly private issue bonds to actually invest in something. The proper thing to do would have been to allow GM, Chrysler and the big banks to fail, then the Fed buy up the bonds of the survivors to keep interest rates low for a limited period of time.

    The Fed needs to stop supporting wasteful government spending through the purchase of Treasuries which would force up those interest rates to discipline the government spendthrifts. Then turn around to buy up corporate bonds to support a limited (with a phased out) manner to spark a building boom.

    Comment by dscott — January 31, 2013 @ 9:08 am

  2. [...] Economic Excusemakers Go Into Overdrive January 31, 2013 BizzyBlog No comments Obama’s Economic Excusemakers Go Into Overdrive, [...]

    Pingback by Obama’s Economic Excusemakers Go Into OverdrivePERSUASION IN INK | PERSUASION IN INK — January 31, 2013 @ 1:01 pm

  3. For greater context for the readers:

    Federal outlays by quarter for 2012:

    1st: $966.188 billion

    2nd: $884.957 billion

    3rd: $809.969 billion

    4th: $907.912 billion

    Not only did Federal outlays increase in the 4th qtr, the 3rd qtr where GDP supposedly increased at an annual rate of 3.1%

    So what are we to make of -0.1% annual rate decline in the 4th qtr? Apparently, government spending doesn’t drive the economy after all. I guess we will see when the 1st qtr results are presented.

    Comment by dscott — January 31, 2013 @ 6:12 pm

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