high grade gold intercepts - edjudins, page-49

" You can't really get rich by borrowing and spending. "

I think that Bill has never heard about the fallacy of composition.

http://www.nizkor.org/features/fallacies/composition.html

Yes it is true that at an individual level one cannot really get rich by borrowing and spending, but it looks different when one looks at the whole.

First, when one borrows somebody else must lend so there is no net loss as what the borrower looses in terms of future income the lender wins.

Second, expenditure of one person is the income of another.
Therefore when everybody stops spending at the same time we all will be ending on the dole, but not for long because without taxes the dole cheques soon would have to stop.

I have already mentioned here the paradox of drift, but I think that I should mention it again.

http://en.wikipedia.org/wiki/Paradox_of_thrift

"What we noticed is that despite the most fertile ground for growth in the history of the human race, GDP growth rates have declined for the last 50 years. Our bet is that it is because the marginal utility of energy inputs is in decline"

I think that here Bill is not only cherry picking as, for instance, the rates of growth for China for the last 30 have been staggering, but also confusing long term economic growth with short term economic disequilibrium.

Public spending is though as a short term measure to bring back the economy to equilibrium at full employment and as such is known as pump priming and in its essence it is designed to replace a fall in private spending due to a severe economic shock with a proportional increase in public spending. This contrasts with long term economic growth a phenomenon that has to do with capital formation and the incorporation of new technological advancements.

When one has 10 million people that had jobs in a particular year without jobs the next that becomes a short term problem requiring a short term solution and as such it has nothing to do with long term economic growth and the law of diminishing returns.

http://www.investopedia.com/terms/p/pump-priming.asp#axzz28xN0PKIY

Excessive debt does cause problems and that is undeniable as, for instance, it severely constraints the debtor's ability to spend without stimulating the creditor to spend proportionally more; or making future generations pay for the excesses of current ones. However this is a completely different kind of story.