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GDP Revised Down to 1.3%

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  • Description

    Tres Knippa of Kenai Capital discusses how the debt-GDP ratio impacts investing strategy.

  • Duration 2:17
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This transcript is automatically generated

The company from Chicago is -- can that the with and I capital management crisis right.

I'm reading that GDP number this morning a meal one point 3% growth right I think that is flat out terrible about you.

How how could I not agree with that listen can we face the economic fact.

That -- you get a debt to GDP level on the government level once you get debt to GDP.

Up above a certain amount it becomes a significant headwind to economy it has in.

Every single instance an economic history and I think that our significant government debt.

Is providing a big part of that headwind to -- second from an investor's point out -- that's our look.

How does that look.

I'm I know that our debt is now -- than our economy the debt to GDP ratio look at gets bigger than the economy.

But how does that -- the economy all limit its growth right what's the connection between the two.

Okay here's how you expand GDP unit you expand GD -- GDP by an increase in population and an increase in productivity so all those assets that are being used to lend money to the government.

Those are assets that could be invested to expand productivity.

You don't increase productivity by raising taxes you don't increase productivity by changing deductions schedules and things like that you increase productivity.

-- capital investment.

And that is simply not happening that is dead money.

The money that is linked to our government it's dead money and it's not out there investing in productive assets could easily with guns -- -- always go into recession.

I I it's hard it'd be hard to argue not.

What I find odd is I was having this discussion last night isn't it odd that we see two diametrically opposed views of of economic growth in Washington right now.

Bernanke is trying to -- create the wealth effect you get stocks to go up everybody feels more wealthy because asset prices are going up they feel more wealthy than they go consume and that helps the economy come around.

By the same token if you look to the got if you if you look to the democratic side -- -- not the route that Bernanke's a Republican or Democrat.

But if -- look the other side Dickensian theory of now we have to expand government.

And then that will get it that will get the -- and -- economy turning I find that odd that both of those are being played.

Played together at the exact same time right now while -- off -- -- netbook thank you very much indeed see again soon.

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