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China is Suffering from the Same Curse as the U.S.: Too Much Debt, Too Little Growth

Sep.22, 2017

by Bob Adelmann

When Zig Ziglar was trying to motivate salesmen, he would often tell them that “there aren’t very many problems that can’t be solved by sufficient production.” This, unfortunately, has been picked up by statist economists who have assumed that any production, at any cost, will solve any problem. Put another way, “We can grow our way out from under the massive debt we have. And we can grow the economy by stimulating it with borrowed funds.”  

Zig would be appalled: The growth he was referring to was organic, from increased production from increasingly skilled salesmen’s efforts coupled with real capital generated through savings in the private market. But Keynesians think that’s way too much trouble: let’s just borrow the money and spend it, and that will generate more than enough growth to pay it back.

Once embarked on that path – skipping the creation part and going immediately to the borrowing part – one finds himself dealing with another law: the law of diminishing returns. “Disrupter Investigator,” writing at Seeking Alpha, spelled it out more than five years ago:

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