Negligable GDP Return on National Debt?

March 2, 2013 by tjefferson2076

Gary North Posted a great article at Tea Party Economist:

This graph shows the declining “bang” in America’s Gross Domestic Product for each new dollar of debt. It’s a pea-shooter today. Bernanke can inflate all he wants. The economy remains stagnant.

DebtGDP

Thomas Jefferson’s analysis:

Here is how to interpret the chart:  From 1947 to 1952, the US enjoyed a net increase of 4.61 in Real GDP for every dollar of debt.  This was a pretty good return on investment by the US public.  However, this decreased to 0.63 during the years 1953 to 1994 and decreased to 0.24 between 1985 and 2000.  Since 2001, every dollar of debt essentially has no net increase in GDP (0.08).  Therefore, the entire net increase in GDP is due to the increase in national debt.  Every dollar in debt results in no real increase in growth.  This means that the entire growth of GDP since 2001 is all an illusion, or just another way of saying that the increase in GDP is only due to printing money by the Federal Reserve.  The ultimate evil to the working man.  Wake up America!

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