Worst Socialist Ever part MMMCDLXIII*

I just notice that in the second quarter of 2015 US real gross private domestic investment surpassed US real government consumption expenditures & gross investment for the first time since the data have been collected (1947).

The long era of US socialism as lead by Eisenhower, Nixon, Reagan and the Bushs has ended under raging capitalist Barack Obama (and the insane Republican posse in congress and the 50 little Hoovers).


I think this is relevant to the debate about secular stagnation. It isn’t so clear to me that the US economy needs bubbles to achieve full employment with positive interest rates. I think it might be enough to end the extraordinary austerity.

update 1: Latin numbering corrected in title thanks to Warren in comments.

update 2: more importantly JW Mason argues convincingly that I should have looked at nominal private investment and nominal government consumption plus investment. That measures how much the two cost us. He argues that comparing real this and real that is a mistake as the difference depends on the base year. This is very important because the investment deflator has been falling like a rock (mostly computers and such getting cheaper). Now real vs real comparisons with different price indices (which grow at different rates) are very common — there is a huge literature on PPP corrected GDP and its growth in different countries.

Here is the nominal graph nominalsocialist

As JW Mason noted, it looks very different — the strikign feature is how coincidentally similar the two flows happen to be.

On the other hand and in my defence, I note the striking pattern during the Obama presidency


The almost complete absence of growth of nominal government consumption plus investment is extraordinary (and has been noted again and again).

To be clear, I was being facetious, Obama isn’t a socialist and he isn’t the worst moderate progressive ever — he’s just president and has to deal with Congress over the Federal budget (with avoiding default a principal goal) and has little influence over state and local budgets.

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