02-26-2017, 11:02 AM
(02-26-2017, 09:17 AM)Warren Dew Wrote:(02-26-2017, 09:02 AM)Mikebert Wrote: Here is a chart of Federal deficit since 1950. Democratic and Republican administrations (lagged one year) are colored in blue and red, respectively. The reason for the lag is that incoming president inherits an economy and budget from his predecessor.
Let's be honest. The reason you use that lag is cherry picking to blame Republicans, for example for Obama's billion dollar "stimulus" program.
It also blames Carter for stagflation and recession that Reagan inherited. Over a near-70 year period the shoe falls on both sides. Besides all the data is there, simply ignore the colors if you prefer. The story is unchanged. Just where do I talk about Republicans and Democrats anyways? If blame is to be assigned by the chart it would go to the Saudis and the Fed.
And here is the rest of the story, the effect on investors.
Period Deficit/GDP Wage Growth Inflation Investment Return
1950-1974 0.7 2.1 3.0 -0.1
1975-1981 2.7 -0.4 9.1 -5.3
1982-1993 4.1 -0.5 3.9 5.3
1994-2001 0.1 1.1 2.6 4.9
2002-2016 4.2 -0.2 2.0 2.2
Investment return is the real after-tax return on a hypothetical 50-50 stocks/bonds portfolio that turns over once per year.