The Diminishing Marginal Productivity Of Debt In The U.S. Economy

Posted By on July 8, 2010

 Diminishing Margin Of Debt

The problem is actually pretty simple. We have more debt than productive growth can support. Debt has been losing its marginal productivity for years now and it no longer increases GDP. Rather, we abruptly reached debt saturation and now growth in debt reduces GDP. We have such levels of mal-investment and excess balance sheet gearing that increased debt now directly subtracts from productive money. Stimulus spending no longer will add sustained job growth.

Gordon T Long

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