Zombienomics, or Nikki Haley’s Day of Debt Reckoning

Real economics: the JMK aggregate demand graph (https://econlife.com/2017/05/priming-the-pump/)

Debt Zombie Haleynomics: Britain’s Buffett vs the Austrian Austerian

FDR’s 1937 tap on the fiscal brakes triggered a 55% stock market drop, 14% to 19% rise in unemployment. Then $5bn for public works & the war proved this cartoon wrong (https://econlife.com/2017/05/priming-the-pump/)

Let’s unpack Haley’s bundle of economic and historical illiteracy one step at a time. We’ll examine the post WWII history of US national debt, the controlled experiments in US economic and financial market history, tax policy and zombie debt fantasies and the numbers on which states and regions generate the biggest share of the national debt.

The Long History of Zombie Ideas on Debt: It’s the Denominator, Stupid

British Tory then American conservative alarmists like Haley have been braying about the phantom debt trap for 2 1/2 centuries, starting with conservatives’ founding troll, counter French revolutionary Edmund Burke, who said he’d rather be ruled by the Turk than the debt Britain was running up. Britain’s rapid post-Napoleonic growth and Alexander Hamilton’s copy of “Dutch Finance” — the US treasury bond market — proved Burke spectacularly wrong on both sides of the Atlantic. Britain’s debt/GDP ratio in 1815 was 225% and Britain kept issuing century term Consols (bonds) with 3–4% coupons. Result? Debt/GDP ratio dropped all through the high growth 19th century…