Guest Post: Why We Cannot Print/Borrow/Spend Our Way to Prosperity

Submitted by Charles Hugh-Smith of OfTwoMinds blog, Ballooning government deficit spending and debt has a negative effect on private GDP, money supply, money velocity and wages.   I have often explained why the Keynesian belief that the government can print/ borrow and spend enough money to trigger self-sustaining prosperity is a nonsensical, magical-thinking Cargo Cult. The Federal Reserve's Cargo Cult Magic: Housing Will Lift the Economy (Again) (September 11, 2012) The Dangerous Blindspots of Clueless Keynesians (January 2, 2013) Misunderstanding Austerity, Stimulus and Demand (January 17, 2013)   The following charts show why printing/borrowing and spending our way to self-sustaining prosperity has failed, and why it will continue to fail, with eventually catastrophic results: the returns on this unprecedented borrow-spend policy are diminishing to near-z...