Thursday, June 2, 2011

ZeroHedge GDP and Shenanighans

Do like the ZeroHedge, even with the extra "juice" they sometimes slant articles with.  

TD wrote:

Can We Please Stop Pretending the GDP Is "Growing"?
The Federal Government borrowed and spent $5.1 trillion to get $700 billion in total GDP "growth" from 2008-2011. In constant dollars, there was no growth at all.

The Federal government borrowed and spent $5.1 trillion over the past four years to generate a cumulative $700 billion increase in the nation's GDP. That means we've borrowed and spent $7.28 for every $1 of nominal "growth" in GDP.

In constant dollars, GDP is flat: we got no growth at all for our $5.1 trillion: zip, zero, nada. In constant dollars, the GDP in 2011 might return to the 2007 level, if the economy continues "growing" at the same pace reached in the first three months of 2011. If not, then the GDP will actually be lower than pre-recession levels.

My response.

It is actually worse than just a "bad investment".
Because Gov spending is directly added into GDP, if they borrowed 7T and got 7T more in GDP, then that would be a "bad investment" with a yield of zero. 

They are just pissing money away, our money, in poorly allocated form that produces nearly nothing in the way of organic growth.   Sure there is some "shot in the arm effect",  but it ought to be much higher is money were properly spent/invested in things that really matter in the short, medium, and long term.

No comments:

Post a Comment

Insightful and Useful Comment!