Thursday, May 6, 2010

Wow! GDP is on the rise!

The Mogambo Guru notes that, according to a recent Bureau of Economic Analysis report, “Real gross domestic product – the output of goods and services produced by labor and property located in the United States – increased at an annual rate of 3.2 percent in the first quarter of 2010, (that is, from the fourth quarter to the first quarter)."

The Guru notes
that merely computing 3.2% of our $14 trillion GDP, we get the $448 billion dollar figure of the quarterly “growth” in GDP, which comes out to roughly $2 trillion per year, which is – surprise! – roughly approximately nearly exactly precisely how much money the federal budget-deficit spending is now pumping into the economy.

In short, it looks like the entire growth in GDP is due solely to – dollar for dollar! – the deficit-spending by the federal government! Hahaha! “Growth!” Hahahaha!

And this is before another large item is included in the calculation of GDP, which is exports, which are a subtraction from GDP, which means that since we had a $532 billion annual trade deficit (a negative number) in the last 12 months, subtracting a negative number from GDP magically results in an annual addition to GDP of $532 billion – or $133 billion quarterly – just like that! Hahahaha! “Growth!” Hahaha!

You’d never know it from the Bureau, which admitted that “The increase in real GDP in the first quarter” was influenced by “exports”, although it did not say that the trade deficit increased, but, instead, said only that “Imports, which are a subtraction in the calculation of GDP, increased”, although it did not mention, for the benefit of us math-impaired guys out here, that their calculation of GDP was thus increased by a math trick.
Smoke and mirrors can only last so long. Buy commodities, particularly gold and silver.

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