I’m surprised that this is my first economic blog post, considering that a large portion of the stuff I read every day is financially related, but something on www.ritholtz.com (via John Mauldin) caught my eye:

I am reminded of former Vice President Dick Cheney’s comment that “deficits don’t matter.” He is right, if the deficit never grows past the rate of the growth of the country (nominal GDP). It might not be wise to approach that limit, but it would not necessarily be a disaster. And, to be charitable to Cheney, I’m sure it never occurred to him that the US could run a deficit close to 10% of GDP. Such a notion would have been preposterous to him. Unthinkable. The US government would pull back from anything even close to that. And that remained true – until it happened and we didn’t pull back.

This guy is a “renowned financial expert, a New York Times best-selling author, and a pioneering online commentator” (according to his website) and he is unwilling or unable to admit that our debt has been growing faster than GDP for the past 30 years. Don’t believe me? Check out a table of the History of the United States public debt and cross reference the growth of the federal debt vs the growth of GDP – the numbers don’t lie.

The Reagan era was the start of the debt-fueled “boom” – in the vast majority of years, the debt was growing faster than GDP. And something that many people don’t realize is that deficit-spending gets added into the GDP calculation. That’s basically how we’ve been “growing” over these past 30 years.

Let’s run the numbers up to 2007 (before the crisis) from that table above  just to be clear – in 1980, the inflation-adjusted debt was $1.808T, and the GDP was $5.422T. In 2007, the inflation-adjusted debt was $7.419T and the GDP was $11.329T. GDP increased 208% over that time period but debt increased 410% – *FAIL* (note: this doesn’t include the past 6 years where things get REALLY ugly because of the crash)

I don’t mean to pick on Mr Mauldin – I actually receive his weekly newsletter and it was there that I first started to open my eyes about our problem. Krugman and others on the left fail to mention or acknowledge it either. All they talk about is “growing our way out of it” when it’s plainly clear that’s bullshit.

I will leave you with this – 2012 had a GDP of 15.094T and a growth rate of about 2.2%, which means an increase of $332B. Except that our deficit was $1.1T.. oops. We spent $1.00 to get back $.33 but hey, I guess we’ll make it up on volume!