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Federal Spending and Economic Freedom

Why Less is More

The less the government spends, the more the government itself shrinks relative to the economy –  and the greater the economic freedom for stock investors.

More economic freedom means much more economic surplus and capital created, as resources are allocated much more efficiently.

I have hypothesized that the stock market rally has been caused by investors anticipating more economic freedom….take a look at the amazing shrinking government.

federal spending

Federal spending in calendar year 2013 was only slightly above its post-War average of 19.1% of GDP, by my calculations. Federal revenues were only slightly below their post-War average of 17.2% of GDP. Nobody on earth expected this to happen back in mid-2009. This achievement was brought about largely by a combination of a) no growth in spending and b) the recovery, which boosted the tax base.

To learn more about the role of federal spending on the stock market — and other stock investing tips — sign up for my email list. I’m always available to help you at david@www.valuealigned.com or 732-800-2375.