Deficit Spending Main Driver Of American Economy

Wake up America! It is only massive and unsustainable deficit spending that continues driving our economy forward. This is why the President's fixation on the stock market and not the real economy represented by Main Street does a great disservice to Americans. While Trump may have been correct in pinpointing many of America's economic ills his prescriptions for a cure leave much to be desired. How we react to money and the economy is often rooted in our past experience and Trump has never shown himself to be shy to taking on debt to propel himself forward. This is why when the stock market started to wobble months ago President Trump increasingly ratcheted up his attacks on Fed Chairman Jerome Powell for"ruining the party." 

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The budget deficit is set to widen significantly in the next few years and in 2020, is expected to top $1 trillion even with healthy economic growth, according to new projections from the nonpartisan Congressional Budget Office. This means the national debt of around $22 trillion will soar to more than $33 trillion in 2028. A trillion dollar deficit translates into America spending $3,333 more than it takes in for every man, woman, and child in the country. This is "each year" and does not include State and local deficits or a slew of "off book" promises and spending that are also being made. This money "percolates" several times through every part of the economy as food stamp recipients buy groceries and government agencies pay their workers and buy new equipment.  

The bottom-line is that we are in the midst of a "false economy" and it is only by the grace of this massive deficit spending that we are not languishing at the bottom of a deep economic pit. When a country gorges at the trough of deficit spending it can easily manipulate a big temporary boost in its GDP.  In the past I have written about how a country can kick their gross domestic product higher and build a false economy based on infrastructure or war, both these methods of producing economic growth are the result of deficit spending. Ever since the 2008 financial crisis deficit spending has been on a torrid pace that has created the longest bull market in history but no matter what, the economic cycle will end as we are forced to face the massive debt we have created and a slew of bad investments brought upon us because money has been so cheap.

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Gary Anderson 8 months ago Contributor's comment

The only domination I see is American protectionism of inferior and expensive IPhones. Fear of China and tariff wars will lower world prosperity.