The Untold Story Of How Clinton's Budget Destroyed The American Economy

[Dovahkiin]

It makes sense.
The Untold Story Of How Clinton's Budget Destroyed The American Economy

If the government is in surplus, it means that the government is taking in more cash than it's spending, which is the opposite of stimulus.

It's also well known that the US trade deficit exploded during the late 90s, which means that 'X-M' was also a huge drag on GDP during his years.

So the trade deficit was subtracting from GDP, and the government was sucking up more money from the private sector than it was pushing out.

There was only one "sector" of the economy left to compensate: Private consumption. And private consumption compensated for the drags from government and trade in two ways.
First, the household savings rate collapsed during the Clinton years.

Business Insider, Bloomberg



And even more ominously, household debt began to surge.

The private sector cannot survive in negative territory. It cannot go on, year after year, spending more than its income. It is not like the US government. It cannot support rising indebtedness in perpetuity. It is not a currency issuer. Eventually, something will give. And when it does, the private sector will retrench, the economy will contract, and the government's budget will move back into deficit."

 

[The Great Goose]

Yeah but our conservative party was in here in Australia and the same shit was done. These people all listen to the economists. Common concensus sux.

 

[Tehon]

So private saving is contingent on government spending? I don't buy it.
How come there is no mention of the rising cost of living, stagnating wages, job offshoring and deregulation of the credit card industry in relation to increased private debt and a declining savings rate? Where is the tidy formula for those factors?