From a macro economic point of view it doesn't matter
If your stealth bomber uses $100 parts made in the USA or $10 parts from china with the difference going in the CEOs bonus - doesn't make any difference when the taxpayer is billed $1000
That was sort of my original point, much of the US high value engineering (defense/transport/infrastructure) is for the US government. Which means that the more the taxpayer spends on overpriced defense contracts and cost overruns the better US industrial output looks
Making defense, at least how it's defined in this report, merely 2% of the total output. I'm not sure how much of that 2% is going to the U.S. government as these defense contractors also produce quite a bit for other countries.
That probably doesn't cover the total of it, but I just can't find any substantiation that the government is buying up a significant amount of the manufacturing output. Does someone have a source to help me better understand this?
I agree, paid for by the Fed buying U.S. Treasuries or by banks buying U.S. Treasuries. It is bound to fail sometime. What could save us is China failing first, property bubble, major projects, the 24/7 work, bad loans, floated by the Chinese as well but is backed by their Treasury bond holdings and the fact that no one knows how much money they print.
If your stealth bomber uses $100 parts made in the USA or $10 parts from china with the difference going in the CEOs bonus - doesn't make any difference when the taxpayer is billed $1000