Ritchie and fiscal history

James g says:
September 5 2015 at 6:14 pm
The US massively reduced government spending after WW2 and ran a large surplus for a few years.

Richard Murphy says:
September 5 2015 at 6:31 pm
We spent a great deal and reduced debt

That’s the advantage of spending a lot – it produces surpluses

UK Total government spending:

1945 £7 billion
1946 £6.5 billion
1947 £5.3 billion
1948 £4.7 billion
1949 £4.6 billion
1950 £4.8 billion

Figures are not inflation adjusted.

GDP went from £10 billion to £13.3 billion over the same years, so the fall as a percentage of GP was even higher than the nominal one.

Net public debt went from £21.4 billion to £25.8 billion.

So, we didn’t spend a lot and we didn’t reduce debt.

Is there no beginning to this man’s knowledge?

8 thoughts on “Ritchie and fiscal history”

  1. RM:

    “That’s the advantage of spending a lot – it produces surpluses”

    Awe inspiring, from a chartered accountant!

    “So, we didn’t spend a lot and we didn’t reduce debt.”

    Actually, I would suggest ~ 70% of GDP in 1945 is “a lot”, but you are right it certainly didn’t reduce debt!

  2. So that you don’t have to, and as I’m feeling a bit nerdy today, here’s the equivalent numbers for the USA:
    USA Federal government spending:
    1945 $92.7 billion
    1946 $55.2 billion
    1947 $34.5 billion
    1948 $29.8 billion
    1949 $38.8 billion
    1950 $42.6 billion

    Figures are not inflation adjusted.

    GDP went from $226.4 billion to $279.0 billion over the same years.

    ‘Gross federal debt’ went from $260.1 billion to $256.9 billion.

    Source – copying the data against each year from the tables at https://www.whitehouse.gov/omb/budget/Historicals/

    What’s terrifying about those tables is where the USA is now, and the projections for the next 5 years or so. They have given up the pretence of even having an intention to balance the federal budget.

  3. I think the more notable comment from Ritchie on that page was this:

    Why hasn’t it been done?

    Because, to be blunt, an elite do not want it

    QE has suited then very well, making them very much richer at cost to everyone else

    I mean, really, he’s not even trying to hide what he’s about anymore.

  4. Bloke in Costa Rica

    “That’s the advantage of spending a lot – it produces surpluses”

    I’ll try that on the bank. “Yes, I know it looks like I’m overdrawn, but in reality my spending has created a surplus.”

  5. “That’s the advantage of spending a lot – it produces surpluses”.

    I think RM is making some heroic assumptions about fiscal multipliers. After a severe crisis he may be right that spending more kickstarts growth and therefore could eventually result in a surplus. This is pretty much what the IMF’s Blanchard & Leigh said in that controversial piece of research about fiscal multipliers back in 2013. But it’s much less clear that spending a lot in normal times does anything other than create a larger deficit.

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