Govt spending down

It’s definitely too early to celebrate the end of the recession.

But the weak growth in the June quarter is a relief and we can be very pleased that government spending is down.

The dead weight of government spending which grew so much from 1999 was one of the factors which put New Zealand into recession early and until it’s addressed it will hold back the recovery.

A .4% decline isn’t much, but it’s a welcome change in direction.

The Visible Hand points out that real gross national disposable income – RGNDI – is a better indicator of our economic health than GDP.

2 Responses to Govt spending down

  1. I have just posted on the matter too.
    To me, what really matters is GDP per capita.
    Thus we need to look at total population, which may well be impacted by immigration.


  2. murrayg1 says:

    Please don’t propagandise. GDP is a nonsense appraisal, and Government spending did not cause the recession, or even contribute to it one tiddly bit. Nor for that matter did ‘the sub-prime’.
    Those things are symptoms, not causes. You need to see a bigger playing-field – the finite one.
    The world simply wanted to be wealthier en masse, than the supply of resources could underpin.
    The overshoot was in the form of overvaluation of existing things (like real estate and finance-company shares) and was just pages of numbers on paper.
    Put it this way. Your house was worth 100,000, then got valued at $200,000. You go along to the bank, spring a mortgage on the ‘new’ $100,000, and ‘invest’ it in something. What, exactly, did you invest? Diddly-squat in reality terms.
    The world simply overshot it’s commodity/resource underpinning, and did it on tha back of fractional-reserve banking – all smoke and mirrors.
    Believe in that, believe in anything. Government expenditure, from double to quits, makes no difference whatever to that reality.
    Bollard talks of the ‘lost’ dollars stretching to the sun and halfway back. He too thinks of them as real. Actually, they never existed, except as numbers on a bit of paper representing desires.


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