The cardio diet of deficit reduction – a modern tale

By Edward Harrison of Credit Writedowns

Everybody in the west knows the fabled effectiveness of weight-loss dietary programs designed around intense cardiovascular regimes which burn huge amounts of calories. The people who work hard, doing as much cardio as possible lose weight. Those that pump iron may get muscular, but they aren’t working as hard and they don’t lose weight, they gain it. The moral of the story? When it comes to losing weight, cardio works, weights don’t.

Yet life is more complex than that. In the real world, cardio workouts alone aren’t the failsafe way to weight loss. If you work too hard, you burn too many calories and your body eats your muscle which slows your metabolism down and makes you gain weight.

Brian’s tale

Let’s look at Brian. He’s a world class athlete. But he has been living high on the hog for quite a while. That wasn’t a problem until recently. Now, he is a bit bloated and fat and wants to go on a diet to lose weight to stay on his coach Hermann’s team. Three of Brian’s teammates, George, Jose Luis and Jose, are also in jeopardy of being cut from the team and need to lose weight. What should Brian do?

Well, Brian consults his sister Angela. She’s also on the team. While she has had a minor weight problem for the last ten years, she’s definitely in better shape than Brian right now. She tells Brian that she has dieted in the past and that the sure fire way to losing weight is working hard and burning a lot of calories in an intensive cardio program. Burning off calories has always worked for her.

Brian’s trainer, Dominque (DSK for short) tells him Angela is right and prescribes a tough cardio regimen for our friend. Brian follows the program assiduously. But rather than losing weight, he gains weight. What happened?

Does Jose Luis learn from Brian?

Jose Luis sees Brian’s experience and is petrified. His fitness coach DSK gave him the same advice. Now he’s not so sure this is the right thing to do. Looking around for answers, he asks his strength coach Rob P for advice. Rob P says "you’re working too hard and burning too many calories. Your body is eating into your muscle, which is slowing your metabolism down. And you aren’t strength training." Jose Luis is perplexed. "Wow I didn’t realize that you could burn too many calories. Rob P answers, "Let me explain how the body works. Your body needs a certain number of calories throughout the day in order to function, and more importantly for you, to maintain muscle."

Jose Luis cuts in with, “I don’t care about my muscle. What does that have to do with my losing weight?”

"Jose Luis, your muscle is going to be what regulates your metabolism. The more muscle you have, the more calories you will burn throughout the day. This is known as your base metabolic rate. If you burn too many calories by over-training, your body starts eating your muscles as well as your fat, slowing your metabolism. The result is you lose strength, you end up gaining weight and you become weaker."

"Now I get it. But I’m not sure if I can do that. If people see me doing strength training and not cutting back when everyone thinks eating a lot less is the only way to lose weight, I’m going to be off the team in a hurry?"

"Good point. I don’t know what to say.  Maybe you’re on the wrong team. Maybe you need to go solo, Jose Luis."


Barry takes notes

Barry is not on Angela, Jose Luis and Brian’s team. He’s solo. So he doesn’t have the same constraints where eating less is the only way to lose weight. He has  a lot more options than George, Jose and company. If he chooses, he could try strength training too. If he does just enough cardio and just enough strength training, he might be able to lose the weight without cutting into his muscle too much. He would be stronger and his metabolism would be faster. When he went up against Team Euro, he would win hands down.

But Barry is advised by Larry and Tim who studied physical fitness at the same school DSK did. And their recommendation to Barry is that he follow a similar high intensity cardio but muscle-losing program that failed for Brian and that Jose Luis is bent on trying tempered with a bit of strength training.  Unfortunately, the cardio is too much and in all likelihood, Barry’s metabolism will slow. He will gain weight but also lose muscle.  Who cares, though? It’s not like Angela and Jose Luis are gaining muscle.  It only matters to Barry’s family who depend on how well he does to earn a living. And right now, it looks like they are looking pretty depressed.

Deficits, Spending and Taxes

Think of this as a tale of government spending and deficits. The longer-term goal is to reduce deficits as one would reduce weight. There are two ways to go about this. One is to cut as much spending as possible, the equivalent of a highly focused cardio regimen and its calorie burning intensity. The second is for the government to create jobs to increase GDP and the tax base while strengthening the competitiveness of the economy as one might pump iron to gain strength and muscle, increasing the metabolic rate. Clearly, if one over-trains by pumping iron and eating too much, one gains weight just as wasteful spending misallocates resources and increases the deficit. But, there are risks to cardio over-training which causes muscles to atrophy, slowing the metabolism and increasing weight where the economic analogue comes in the form of depression, the dead-weight economic loss of healthy companies’ insolvency, tax loss from high long-term unemployment, and ultimately higher deficits.

It looks like we’re in for a lot of cardio across the entire developed world and not enough strength training.  My prediction is serious weight gain and serious muscle loss. I now believe GDII is coming and I will have a lot more to say about this in an upcoming post.


Why Cardio Alone Doesn’t Cut Fat – EliteFTS

The dreadful potential of frugality – Edward Chancellor, FT

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This entry was posted in Economic fundamentals, Guest Post, Macroeconomic policy, The destruction of the middle class on by .

About Edward Harrison

I am a banking and finance specialist at the economic consultancy Global Macro Advisors. Previously, I worked at Deutsche Bank, Bain, the Corporate Executive Board and Yahoo. I have a BA in Economics from Dartmouth College and an MBA in Finance from Columbia University. As to ideology, I would call myself a libertarian realist - believer in the primacy of markets over a statist approach. However, I am no ideologue who believes that markets can solve all problems. Having lived in a lot of different places, I tend to take a global approach to economics and politics. I started my career as a diplomat in the foreign service and speak German, Dutch, Swedish, Spanish and French as well as English and can read a number of other European languages. I enjoy a good debate on these issues and I hope you enjoy my blogs. Please do sign up for the Email and RSS feeds on my blog pages. Cheers. Edward


  1. Tertium Squid

    Wait, what?

    I think it’s incumbent on the purveyor of an allegory to demonstrate that the symbolism fits rather than ask the reader to assume that it does.

    And anyway, unlimited deficit spending would seem more like your cardio workout than the austerity program does, which seems more like belt-tightening-starvation-dieting.

  2. Diego Méndez

    Excellent post. I really enjoyed it (well, the joy starts weaning away when you read that frightening acronym: GDII…). Anyway, thank you very much for it.

  3. But What Do I Know?

    So how is this supposed to help me lose weight?

    /just kidding, good piece

  4. Peripheral Visionary

    Not a bad analogy, and I like the fact that it highlights that rebuilding the economy will be a critical facet, not just “cutting the fat”. I also like the fact that it emphasizes that weight training should be a part of any exercise regimen, which it should. :)

  5. joe l

    Government spending is like a box of chocolates. It sure feels good going down, but in the end it will rot your teeth and spoil your appetite.

    1. Haigh

      Exactly! Government spending to create jobs rots the economy’s ability to create prosperity for all.

    2. KFritz

      1)Chocolate is a lousy analogy for government spending. The body can live without chocolate. The body politic can’t survive without government spending. Government spending is more like protein–it’s necessary, but too much is damaging.
      2)A moderate amount, ie the right amount, of chocolate is good for most human bodies, except diabetics, who have to have sugar substitutes w/ it.
      3)But without exercise and muscle building, chocolate is destructive. The author certainly advocates a balanced regimen of exercise and muscle building.

      Analogy collapses. FAIL.

      1. Burt

        Chocolate? you would be so lucky. It has relatively high nutritional value, fat, little protein, lots of carbohydrate and sugar.

        Current economy is pure sugar high + methamphetamine. There is almost no nutritional value in it.

        Consider this: total world GDP is about $60T, US is $15T. The amount of injection and bail out so far is $2-3T. That’s 5% of entire global economy. and this is assuming equal distribution of liability, instead of only in top 20 or so largest global institution and a dozen western countries.

        to put it in simple word, western economy is running 30-50% on meth injection. Once that high is gone, we gonna crash BIG TIME.

  6. NOTaREALmerican

    I trust the Larry, Tim, and all the gang have a new miracle weight loss plan.

    But, wait, there’s more. If you act now, they’ll include the magic disappearing dollar.

    Operators are standing by.

  7. Kevin de Bruxelles

    What’s missing from the typical American take on this issue is the key factor of government spending as a percentage of GDP. In America it is roughly 35% of GDP. In Europe it varies from around 45-65%. There is a percentage at which increasing the government percentage of GDP actually decreases net wealth. Year-in, year-out, depending on your perspective, European governments flirt with and often pass this limit. This results in high GINI scores. But GINI scores are not the final determinate of a just society as was so well illustrated in Communists societies; total wealth has to come into play as well. As governments begin to cross this threshold by spending even a higher percentage, GDP will actually start to shrink.

    In the US, on the other hand, government spending is nowhere near these limits. This allows a very wealthy elite to maintain their status at the expense of the masses.

    So when a crisis comes along the US government has plenty of room to hit the throttle since they are nowhere near any redlines. European governments on the other hand have been running tacked-out for years and so during the crisis they must pull back a little.

    So let’s do a slightly different allegory. And I recognize it is imperfect but I think it illustrates the point despite its flaws. Let’s say there is a company called EU LLP that each and every year pays top salaries (high government spending) to its employees (citizens). And during the good times these salaries keep going up until the point where the long term viability of the company is at risk. But suddenly economic winter is upon them and as Christmas rolls around an austerity program is announced and “salaries” are reduced from say 55% down to 53%. The local tabloid, owned by an angry wealthy competitor, compares the company to the Grinch, and insists that if these relatively reasonable salary cuts are not revoked, the EU workers will just become beggars on their neighbour’s doorsteps.

    At the same time the competitor company, US LLP, while paying some of its executive huge salaries, has been paying the overwhelming majority of their workers minimum wage. But when winter comes around, and the hard times hit, it is true that US LLP is able to come up with a “stimulus” of a tiny raise and a bonus at Christmas time of a frozen turkey and a sack of old potatoes. In other words they are bumping up their salaries from say 35% up to 37%. And that same local tabloid breathlessly celebrates this act of humanitarianism and the far-sighted wisdom of US LLP’s enduring altruism. At the same time it denounces those Grinches over at EU LLP for not giving their employees a similar Christmas bonus.

    Which company would you rather work for? I know I would prefer to be with the one that usually pays 55% but I would be damn flexible in working together with management when they need to bring costs down a bit. Especially as this will allow them to pick up sales and eventually restart the good times again. Over at US LLP I would be but a poor peasant no matter what time of year it was.

    So at the end of the day, once all the propaganda has been stripped away, the clear fact is that European governments have been and continue to spend way higher amounts as a percentage of GDP than America could ever dream of. In other words they have been and continue to provide way more “stimulus” than the US does. The fact that they must cut spending when the crisis hits just shows that there are practical limits to the optimal percentage of government spending for any given economy. By transferring workers back to the private sector, European governments are trying to stimulate the economy in a way Americans cannot conceive of. Long story short is that you must take into account relative government spending as a percentage of GDP to get an accurate picture.

    1. Jib

      35%? Maybe before the govt started running deficits at 10% of GDP but lets go with that.

      I keep asking the Tea Party people in my family, do you really understand what you are asking for? We have never cut govt spending, we cut and raise taxes and govt spending can decline as a % of GDP but we never cut nominal spending. They seen to think a 10% cut in spending is very reasonable. 10% reduction in 35% of the economy. Seems to me that equals a 3.5% drop in GDP.

      Oh, thats right, the magical free enterprise fairy will make it up. Some how removing 3.5% of GDP ins spending will equal higher GDP.

      I know we cant run deficits the way we are but if we cut, we make it wore. The technical term for this is ‘we are screwed’. We are carrying way too much debt, mainly corporate (total corporate debt is much higher than total govt debt) and consumer debt (somewhat higher than govt debt) and now rising govt debt. We need to clear debt to get the economy working. You clear corporate and consumer debt through bankruptcies and real estate foreclosures. The govt should be running deficits to help reduce some of the considerable pain that will come from doing this.

      But bankruptcies and foreclosures would wipe out the banks and that must not happen. So the govt runs massive deficits to prop up the banking system and at best, any debt that is cleared is replaced by new govt debt and nothing changes.

      Banks always have all the power. FDR only got done what he did because the banking system was a already a smoking ruin when he come into office. Until the banking system is in ruins, there will be no true reform. The GDII will do that nicely.

      I for one welcome our new economic savior – GDII!

      1. Cranky master

        free enterprise fairy”

        Relax man, the chinese will bail us out and issue new credit card.


        But this is not as stupid as the one who keep insisting, we are going to have “lost decade just like japan”. Instead of defaulting like greece, argentina, etc. The big intellectuals idiots actually believe we are in same big export surplus, big budget surplus as in Japan when they started the lost decade. a)We don’t have big government surplus to start with. japan had one. b) japan has gigantic trade surplus to sustain their currency balance. We have gigantic trade deficit, there is a reason we lost control of dollar pricing and it can’t be brought down! China, japan, Europe now are in control of dollar price. America cannot use cheap export price to exit recession. Particularly not when everybody is pricing their export in dollar and has the ability to control dollar price.

        Can we print out money and burn the chinese with the inflation? (to which the chinese will ask: how fast can you print money? We accumulate a quarter of a trillion dollar a year and climbing at 25% increase a year. If we achieve taiwan/south korea growth during their similar phase, we will go as high as 30-40% forex increase a year. To put it in other world, china optimum capacity maybe around $400B/year.)

        US annual foreign direct investment is about $320B/year.

        DO THE MATH. We are no japan, we are argentina!

  8. Francois T

    Excellent post!
    The analogy is pretty close and hits all the important points.

  9. dearieme

    “I now believe GDII is coming”: he’s taken his time – I decided that in 2006.

  10. SP

    Sorry, but your analogy doesn’t truly hold up, too narrow a focus. These countries aren’t just athletes who simply got a bit fat and need to get competitive. Since every time they got a bit fat, they never did cardio or strength training, they took the shortcut of adrenaline and drugs to keep competitive _while fat_!

    And now they got so fat, they have developed diabetes, heart disease, and their bodies are so imbalanced, they’ve had heart attacks. Yeah, they can do some cardio soon or weights… but that won’t fix the rot in their arteries or damage to their hormones. It’s way beyond fat and muscle now. That will take years to fix. How? What does the doctor tell you you need to do after you have a heart attack?

    “You need a lifestyle change.” You can’t keep doing what you were doing before. It’ll kill you in the end.

    Now that analogy fits a lot better with your prediction of GDII coming up, no?

  11. SP

    So where does Greece fit into your analogy anyway? That’s important as that’s what’s triggered the latest “crisis”. Sounds to me that you’d say they’ve been doing lots of “strength training”, but the thought that they having run big deficits “to boost growth and GDP” and thus becoming “muscular” is pretty laughable.

    Maybe you can do this strength training only up to a point, after which you get no more return. Maybe all your athletes are already at or near that point, so maybe their actions aren’t so stupid after all.

  12. E.B. White

    Here is an example Strunk & White treatment, which increases impact by saying the same thing in less than half the words.

    Brian’s tale

    “Brian is a world-class athlete gone soft. Coach Hermann will cut him, along with bloated teammates George, José and José Luís, unless they lose weight fast. What to do?

    “He consults his sister and teammate, Angela, who is hardly svelte but manages her weight to stay on the team. She insists intense cardio training always works for her.

    “Brian’s trainer Dominique (DSK), concurs. But when Brian follows her tough cardio regimen, he actually gains weight. Why?”

  13. Paul Vigna

    It’s worse than that. These aren’t athletes, these are diabetics who need to radically alter their lifestyles. Unfortunately for some of them, it’s too late.

  14. dave

    Better analogy. Stimulus is like a nicotine patch. In theory it can help get you off smoking. You can also end up abusing them just as badly as cigarettes and never get of your nicotine addiction. If Obama’s smoking habits are any indication this government is not capable of easing off its various addictions. It has to go cold turkey, a process that will lead to a painful purging period but ultimately get them off the stuff.

  15. michel

    I don’t get it, at all. Not a bit of it. Do you seriously think that in the present situation, increasing total outstanding debt is going to make things better?

    It seems more plausible that it will lead to ever more silly spending on ever more unproductive purposes, more economic investment distortions, a higher proportion of national income then going on interest payments, followed by eventual defaults.

    Racking ones brains about why anyone would advocate this, the only plausible explanation is that the costs of the defaults may fall on different sections of society than the cuts in spending now. So basically this must be a class based agenda. Borrow more now, increase government spending now, default in a bit, because that will benefit relatively speaking the people I care about, and hit the ones I do not.

    Is that it? Because in its own terms, as a general economic prescription, it makes no sense whatever.

    1. Joe Firestone

      Well, Michel, You can look at it in another way. Government spending adds to savings in the non-Government sector to the penny, when it’s not matched by taxation. So, I think what we’re saying is that increasing total non-Government savings that can be used for consumption or investment will help the situation. It will increase aggregate demand and create opportunities for the private sector to wake up and do business. Now, what’s so silly about that?

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