Spending IS the problem

by pdxblake

Spending by the government is the problem, we are told by the Very Serious People.  And for once I agree, but not entirely.  The VSP say the US government is spending too much, but relative to prior recessions (not even taking into account the depth of the recession) we are spending far less.  The best way to see it is to see this chart from Fed Vice Chairwoman Janet Yellen (ht Business Insider).  And you wonder why there hasn’t been any faster economic growth in the US where the bursting of a housing and financial bubble decreased significantly private sector spending and there has been much less offsetting spending by the Federal Government (and severe austerity from state and local governments)