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There is theory that debt drives GDP. The more debt, the more money in circulation, more GDP. So cutting debt, cuts GDP. Also. Not sure GDP is completely nor

• fluidcruft 2mo ago
  I'm no expert about anything related to this but the obvious fact that the size of the debt as proportion of GDP has consistently increased since Reagan first implemented this scheme suggests it's pretty obvious these GDP gains do not offset increased debt (and that this is causative).
  • FrustratedMonky 2mo ago
    Not offset. Other way around. Debt comes from spending, that spending is on stuff, which drives GDP. So whole concept that we could reduce debt by increasing GDP and tax it, is not how the money actually flows. This is why in economic downturns, often the best solution is more debt, by more spending. And trying to fix economy by 'austerity' makes things worse. Of course, also I don't know solution, or what the 'right size' debt should be. Just that it isn't black/white.
    • fluidcruft 2mo ago
      It makes sense that spending stimulates GDP in the short term. The consequences of debt are delayed. The argument that people tried to make in the past was that spending can stimulate growth so much that growth ultimately overshadows debt. That was controversial 50 years ago but at this point it doesn't seem like it's working out as expected since debt has been doing nothing except steadily increase relative to GDP. Sometimes it's valid to accept that failed experiments are failures.