Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Changes in federal debt seem to foretell changes in per capita GDP.

The following chart depicts the entire period, from the time the U.S. became Monetarily Sovereign until the most recent data:
Federal Debt vs Per Capita GDP  #1

To get a closer look, I’ve divided the above chart into segments. Here’s 1972 – 1975:
Federal debt and real GDP per capita changes both peak in 1973.
Federal debt and real GDP per capita changes both trough in 1974
Federal Debt vs per capita GDP 1972-1975 Monetary Sovereignty

1975-1978:
Federal debt and real GDP per capita both peak in 1976
Federal Debt vs per capita GDP 1975-1980 Monetary Sovereignty

1980 – 1993:
Federal debt and real GDP per capita both peak in 1981.
Debt troughs in 1981; GDP troughs the next year, in 1982.
Debt peaks in 1983. GDP peaks the next year, in 1984.
Debt troughs in 1989; GDP troughs the next year, in 1990.
Federal debt vs per capita GDP 1980-1993 Monetary Sovereignty

2000-2006:
Federal debt troughs in 2000; real GDP per capita changes trough the next year, in 2001.
Federal debt and real GDP per capita changes both peak in 2004
Federal debt vs. per capita GDP 2000-2006 Monetary Sovereignty

2007 – 2010:
Debt troughs in 2007; GDP per capita troughs in 2009
Debt peaks in 2009 then drops precipitously; GDP per capita rises in 2010.
2005-2010 Federal debt vs. per capita GDP Monetary Sovereignty

GDP per capita data is not yet available for 2011, but total GDP direction may give us a hint, as it peaks in 2010:
Federal debt vs. per capita GDP 2005-2010 Monetary Sovereignty

In summary, changes in federal debt correspond with, or closely precede the same changes in per capita GDP. What does that tell you about the “super” committee’s efforts to reduce federal deficit spending?

(See a related post at “Oh, you want to cure unemployment?“)

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY