TALE OF TWO ECONOMIC STYLES
Will 2013 be a better year? A number of economic commentators have been saying the worst is behind us. I think they are wrong, and here is why. In most major countries, including the United States, government is growing faster than the private sector.
As Mitchell's Golden Rule explains, when the private sector grows faster than government, prosperity increases, and when government grows faster than the private sector, misery increases.
As can be seen in the accompanying table, in most of the major nations, debt-to-GDP ratios are increasing, because the deficits as a percentage of gross domestic product (GDP) are greater than economic growth -- meaning these countries are getting deeper in the hole each year. The US is one of them.