Growth at what cost?

Real Gross Domestic Product (GDPC1), Total Public Debt (GFDEBTN), quarterly, January 1990 to December, 2012.

The chart above shows two series: Real Gross Domestic Product (GDPC1, black line) and Total Public Debt (GFDEBTN, red area curve). Both are measured quarterly in billions and millions of dollars respectively. Three different recessions, illustrated with vertical grey bars are covered: the Early 1990s recession (July 1990 to Mar 1991), the Early 2000s recession (March 2001 to Nov 2001) and the Great Recession (Dec 2007 to June 2009).

Clearly total debt has been relentlessly increasing across the entire period in question. With the recovery from each recession debt increased as did GDP but each cycle clearly showed diminishing returns compared to the previous. Across all three recessions US GDP only increased by 71%, while total debt soared by 364%.

Does stimulus really work?

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