No growth in GDP-amount borrowed under Bush adminstration

[○∙◄☻¥tπ[╪AV┼cVê└]

See that orange line? All of the GDP growth in the Bush adminstration has come from borrowed money. Sooner or later that money has to be paid back.

[Swing low, sweet chariot. Comin' for to carry me home.]

Can you define the "Net Borrowing" line?  I noticed it was negative even during the boom of the late 90's, so what is it?

[○∙◄☻¥tπ[╪AV┼cVê└]

Can you define the "Net Borrowing" line?  I noticed it was negative even during the boom of the late 90's, so what is it?

I believe it's the amount borrowed from other countries minus the amount loaned to other countries.

As the other graphs here (http://www.dailykos.com/storyonly/2005/12/4/101241/258) show, we are a borrow and spend nation. We're living on borrowed time.

[MODU]

What the heck is "Billions of Chained 2000$?"

[Blue Rectangle]

It took me a while to figure out what "Net Borrowing" is, but I think I got it.  It is the difference between U.S. assets owned overseas and Foreign assets owned in the U.S.  This difference rises from trade:

I = U.S. Imports
E = U.S. Exports
A = U.S. Assets gained in foreign countries
F = Foreign Assets gained in the U.S.

The assets are exchanged for goods traded in equal amounts:

E - I - (F - A) = 0

This equation can be seen the BEA's tables regarding International Transactions.  The amounts are summed and any difference from zero is labeled "statistical discrepancy".

E - I is net U.S. Exports (NX)
F - A is Net Borrowing (NB)

Rearrange terms and you get:

NX = NB

Now, how does this pertain to GDP?  The GDP measures production in a country.  This production is calculated by adding up what we spend in this country, minus what we spend outside the country.  Another variable is:

C = Consumption of domestically produced goods and services

Obviously, this value "C" is what we call GDP.  We can't measure C directly, so let's make a new variable called "C*":

C* = Domestic consumption of goods and services

Note that C* includes imports and excludes exports, because it only measures spending in the U.S., regardless of where the goods were produced.  In other words:

C* + E - I = GDP
C* + NX = GDP

From the above equation that relates NX with NB:

C* + NB = GDP

Now, in jferns' graph, NB is shown to be a negative number.  This is because NX is negative (we have a trade deficit).  The fallacy in the graph comes from this error: the numbers for the quantity dubbed "GDP Growth Less Borrowing" is calculated by adding the negative NB quantity.  In other words:

GDP* = "GDP Growth Less Borrowing"
GDP* = GDP + NB  (add NB to GDP for some reason)
GDP* = GDP + NX  (NX = NB)
GDP* = C* + NX + NX (GDP = C* + NX)
GDP* = C* + 2NX

In other words the "corrected" GDP value shown by the yellow line double counts the trade deficit!  This has no meaning in economics and therefore the DailyKos article's dire warnings are extrapolated from a fallacy.

[Richard]

Jfern, I need more information.  Could you link me up to a few more links that shows how Bush's borrowing is damaging the United States?  I know that GDP growth is affected by personal spending AND government spending, and I also know that government spending (G) in that equation has shot through the roof; logically, therefore the GDP growth is due to, ... borrowing.

I'm being serious here; more links would be appreciated.

[○∙◄☻¥tπ[╪AV┼cVê└]

Jfern, I need more information.  Could you link me up to a few more links that shows how Bush's borrowing is damaging the United States?  I know that GDP growth is affected by personal spending AND government spending, and I also know that government spending (G) in that equation has shot through the roof; logically, therefore the GDP growth is due to, ... borrowing.

I'm being serious here; more links would be appreciated.

What sort of links? It's probably raising interest rates, which could lead to some terrible positive feedback. It's not just the government, personal debt is also way up.

[Richard]

Any links with material to read that you think is worthwhile reading.