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Focusing on spending

As Alex Tabarrok comments, David Beckworth manages to sum up a lot of recent economic history into this one figure.

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What's interesting about this graph is that Beckworth places nominal spending at the center of the story, rather than GDP growth or, as the Federal Reserve would have it, inflation.

By Ezra Klein  |  November 5, 2009; 2:35 PM ET
Categories:  Charts and Graphs  
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Comments

For, like, the trillionth time, the crash was an inevitable consequence of Reaganomics and trickle-down. Of right-wing fiscal policies.

All the money went to Wall Street for investment. That is the problem driving everything. "Growth" does not come from Wall Street alone. All parts of the system contribute to it.

When we sent too many resources to Wall Street, this meant normal people ran out of money to buy things. And government ran out of money to do things. So, Wall Street lent them this money. And still had money left over. So they invested it in even crazier things. And as Wall Street's surplus built, the system got crazier and crazier.

And then it collapsed.

We as liberals have been so focused on the manifest injustice of flooding Wall Street with cash while starving the public sector and working class that we have failed to notice it's economic suicide.

Posted by: theorajones1 | November 5, 2009 3:13 PM | Report abuse

This chart doesn't mean a thing. "Great Nominal Spending Spree" = Inflation in the 70s

Posted by: Quant | November 5, 2009 3:23 PM | Report abuse

It is interesting to see this kind of graph. Even adjusting into real terms would not basically alter the big picture in the graph, which is of a profound change in the growth of consumer demand.

There's a lot to this story, and even the bigger story is only a part of an even bigger story.

But that's part of a book, so I'll leave it there for now.

Posted by: HalHorvath | November 5, 2009 5:39 PM | Report abuse

I'm not an economist but I don't get what's so profound about this graph. It mainly reflects inflation. Is someone suggesting we print a bunch more money? What's the take-home here?

Posted by: bmull | November 5, 2009 6:17 PM | Report abuse

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