Is good for the Fake Americans, but no one else in the USA.
According to official US government economic data, the US economy has been
growing for 10.5 years since June of 2009. The reason that the US government
can produce this false conclusion is that costs that are subtractions from GDP
are not included in the measure. Instead, many costs are counted not as
subtractions from growth but as additions to growth. For example, the penalty
interest on a person’s credit card balance that results when a person falls
behind his payments is counted as an increase in “financial services” and as an
increase in Gross Domestic Product. The economic world is stood on its head.
It is aggregate demand that drives the economy. Payments made on a rise in interest rates on credit card balances from 19% to a 29% penalty rate reduce consumers’ ability to contribute to aggregate demand by purchasing goods and the services of doctors, lawyers, plumbers, electricians, and carpenters. Contrary to logic, the fee is magically counted in the “financial services” category as a contributor to GDP growth. The extortion of a fee that reduces aggregate demand lowers GDP, but builds paper wealth in the financial services sector.
GDP growth is also artificially inflated by counting as GDP abstract concepts that do not produce income streams. For example, for homeowners the US Department of Commerce estimates the rental values of owner-occupied housing, that is, the amount owners would be paying if they rented instead of owned their homes, and counts this imputed rent as GDP.
These and other absurdities have caused economist Michael Hudson to conclude correctly that the “financial reality of how the U.S. economy works is no longer captured in GDP statistics.”
It is aggregate demand that drives the economy. Payments made on a rise in interest rates on credit card balances from 19% to a 29% penalty rate reduce consumers’ ability to contribute to aggregate demand by purchasing goods and the services of doctors, lawyers, plumbers, electricians, and carpenters. Contrary to logic, the fee is magically counted in the “financial services” category as a contributor to GDP growth. The extortion of a fee that reduces aggregate demand lowers GDP, but builds paper wealth in the financial services sector.
GDP growth is also artificially inflated by counting as GDP abstract concepts that do not produce income streams. For example, for homeowners the US Department of Commerce estimates the rental values of owner-occupied housing, that is, the amount owners would be paying if they rented instead of owned their homes, and counts this imputed rent as GDP.
These and other absurdities have caused economist Michael Hudson to conclude correctly that the “financial reality of how the U.S. economy works is no longer captured in GDP statistics.”
You
may recall that I pointed out this sort of thing repeatedly back in 2008 and
2009. We have been living in the Great Depression 2.0 ever since, even though
the massive financialization of the economy has managed to disguise that being
exposed in the statistics.
This is why I no longer pay any attention to the statistics or comment upon them. CPI is fictitious, GDP is fictitious, and Z.1. has been rendered useless. It would be about as meaningful as commenting on the fictional economics of the post-imperial Star Wars universe.
The reason that the fake growth has to continue indefinitely is because once the paper gains are correctly written off and accounted for as losses, the whole structure begins to collapse.
This is why I no longer pay any attention to the statistics or comment upon them. CPI is fictitious, GDP is fictitious, and Z.1. has been rendered useless. It would be about as meaningful as commenting on the fictional economics of the post-imperial Star Wars universe.
The reason that the fake growth has to continue indefinitely is because once the paper gains are correctly written off and accounted for as losses, the whole structure begins to collapse.