Comments on: GDP and Loan Growth http://admin.returnofthegreatdepression.com/2010/03/gdp-and-loan-growth/ The Return Of The Great Depression Thu, 25 Mar 2010 02:04:12 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: DrTorch http://admin.returnofthegreatdepression.com/2010/03/gdp-and-loan-growth/comment-page-1/#comment-13201 DrTorch Mon, 01 Mar 2010 18:13:07 +0000 http://admin.returnofthegreatdepression.com/?p=11421#comment-13201 A couple of questions/comments. "Keynesian theory teaches that aggressive deficit spending will create economic growth. Austrian theory teaches that contracting debt leads to economic contraction." Those don't seem mutually exclusive to me. In fact in some instances, they are very similar. If these are going to be contrasted, can you provide better explanations? To me Keynesian seems much more of a phenomonological description. Anyway, it's a model that can't be fully tested now b/c gov't doesn't do what it's supposed to during the "boom periods". Both of these facts lead me to conlcude that it's a very simplistic approach, with minimal value beyond the 11th grade. Other questions, assuming debt deflation is correct, what are the consequences (and any recommended actions) for the individual? 1. Are hard stores of Au and Ag going to devalue? Should these be sold now? 2. Is cash on hand going to have more buying power in future? Or will the dollar and/or other monetary systems crumble? 3. Is cash in the bank ok...presuming it will have more buying power in future? Or will one unspoken consequence be that gov't confiscates accounts? 4. I take it my house will continue to fall in value, and it will simply be a race to avoid being "underwater" on my mortage. That's probably ok as long as I can maintain my current salary (in actual dollars) but I'm in trouble if deflation causes a large salary reduction or layoffs (obviously bad regardless)? 5. Similar to #4, if a person rents, don't buy now? A couple of questions/comments. “Keynesian theory teaches that aggressive deficit spending will create economic growth. Austrian theory teaches that contracting debt leads to economic contraction.” Those don’t seem mutually exclusive to me. In fact in some instances, they are very similar. If these are going to be contrasted, can you provide better explanations?

To me Keynesian seems much more of a phenomonological description. Anyway, it’s a model that can’t be fully tested now b/c gov’t doesn’t do what it’s supposed to during the “boom periods”. Both of these facts lead me to conlcude that it’s a very simplistic approach, with minimal value beyond the 11th grade.

Other questions, assuming debt deflation is correct, what are the consequences (and any recommended actions) for the individual?
1. Are hard stores of Au and Ag going to devalue? Should these be sold now?
2. Is cash on hand going to have more buying power in future? Or will the dollar and/or other monetary systems crumble?
3. Is cash in the bank ok…presuming it will have more buying power in future? Or will one unspoken consequence be that gov’t confiscates accounts?
4. I take it my house will continue to fall in value, and it will simply be a race to avoid being “underwater” on my mortage. That’s probably ok as long as I can maintain my current salary (in actual dollars) but I’m in trouble if deflation causes a large salary reduction or layoffs (obviously bad regardless)?
5. Similar to #4, if a person rents, don’t buy now?

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