Friday, February 6, 2009

Obama can win - here's how!

You hear it everywhere.The stimulus won't work.It's just spending or pork.It's taxpayer funded Government temp jobs.It's deficit spending.You need wealth creating private sector jobs.All true.But here's a way Obama can still claim a victory.

The GDP is the total value of all goods and services of our economy.Approx. $13 trillion today.When you have a recession,then the GDP is actually shrinking.To reverse it,you must expand the value of either goods or services or both.The stimulus will create taxpayer funded Government jobs which will increase the Federal debt.However,the Federal debt is not factored into the GDP.It's a separate calculation known as the debt as a percentage of GDP.Theoretically,you could expand the GDP by spending this way.Those Government workers will spend their incomes increasing the value of goods and services thereby increasing the GDP.In this manner,you can reverse a recession and claim the spending stimulus was successful.

The difference is you have increased the Federal debt to finance the stimulus.If you increased the GDP thru normal free market capital growth,you wouldn't have the debt increase.Yet,the debt is fictional to most Americans.We pay no principal,only interest.It's a huge $10.6 trillion number that people can't imagine.So increasing this number doesn't seem to matter to people because they can't understand it's implications.The goal must be stated to people that we need GDP growth without debt growth.

However,the loophole is created to allow Obama to say the stimulus reversed the recession and he can claim victory!Watch for it.You heard it here first!More to come...

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