On page 536 of Volume 1 of the CFAI curriculum under the heading “Is U.S. Borrowing for Consumption?,” the author concludes that “Our international borrowing is financing private and public investment, not consumption.” I’m not buying it. I think the U.S. has been borrowing primarily to finance consumption. What are your thoughts?
based on the numbers yes, US private investment and public investment is far greater than US current ac deficit, … so US is indeed not borrowing for consumption, instead its borrowing for financing the investment component of GDP.
It just seems counterintuitive to me. I have a feeling that over the past decade or so American’s lived far above their means (e.g., buying houses, cars, and vacations they could not afford) and that most of the expenditures would not fall under the classification of “investment.” I could be wrong, but it just doesn’t seem to make sense.
dont hate america pls.
wow. maybe that’s why our country is in such bad shape. even trying to breach the topic of Americans’ overconsumption is seen as “hating America.” it’s no wonder why our politicans don’t have the guts to do what is hard and necessary to bring us out of this mess (i.e., encourage production rather than consumption)
you’re on the homeland security watchlist now buddy
you bet your ASS we are/were borrowing to fund consumption, thats why consumption makes up about 70% of our GDP (in China its just 35%!). We are going to get FUCKED in the long run, our unfunded portion of SS and Medicare in perpetuity is 106 trillion dollars and the fed is conjuring money out of thin air like their Harry Potter!!!