Can we please stop including government spending as part of GDP? At best it’s double counting the money that was already in the economy but taken and spent inefficiently from those who actually created the wealth. It’s equivalent to saying your household has more money when you give your kids an allowance.
You beat me to it. GDP as currently measured is meaningless because if government spending ramps up, GDP "grows" and we know that "growth" comes at a much higher costs than the private sector growth.
Agreed. Before the election whenever a Team Blue acquaintance would brag about how Democratic counties have higher GDP I'd remind them that those are all government jobs, federally financed fake incomes that have no real commodity value. They don't get it.
You are correct, Patrick, to the extent that the federal government produces nothing. But to the extent that some service of value is produced, that part must be included in GDP for accounting accuracy.
If I understand you, which perhaps I do not, you are arguing that accountants do not know their business. I am a financial economist, not an accountant, but so far as I know, the mathematical statement of C+I+G+(X-M) is a correct accounting identity, to the extent that we measure each variable well.
David, remember, the GDP equation is not a law of nature, it was created by Keynes in the 20's to measure something that hadn't been effectively measured prior. the fact that we have been using it for a long time doesn't make it "correct" in any sense, just familiar. if we remove G, we are measuring something different, but related. however, perhaps absent G, we have a better idea of what the private economy is doing and that may be far more useful information for policymakers to address whatever issues may exist.
We might want to measure lots of things, but to the extent we wish to measure aggregate spending in the economy, the equation is a logical, mathematical identity.
It’s just that the value itself is not a true representation of value. Just because X is spent on it doesn’t mean that’s the value of it. RedBaron touched on this. There’s a perverse incentive for the government to inflate this value by overspending in order to claim that the economy is growing. That money had to be taken out via taxes or raised via debt first. So, while there may be something that’s an asset afterwards, the value is suspect.
DOGE isn't going to even put a dent in federal spending. Why? Here are the top 5 categories for spending:
- Social Security 21%
- National Defense 15%
- Health 14% (Doesn't say but this is probably Medicaid)
- Net Interest 13%
- Medicare 13%
The above 5 categories account for 76% of the budget now. DOGE isn't going to have a chance reducing these. Social Security is only going to go up, because more are retiring than working and those working are not making more money than those retiring, which means it will be dipping deeper into the budget. Medicare/Medicaid will do the same. The GOP are always willing to raise the DoD budget, so good luck trimming the budget. How about no more money sent to any foreign country? The problem is Donnie and Congress will continue to flush billions of our dollars to Israel, regardless of how many civilians they kill. When there is a disaster in some country, let the Red Cross, Salvation Army, and other charities respond. They can do more with $1 than the federal government can do with $10.
As for oil drilling, the price has to be high and stay high for some wells to be uncapped, more or less for any drilling to start; otherwise it is uneconomical. If we really want low oil prices to help a economic recovery, simply remove all tariffs from Iran and Venezuela, but this, unfortunately, will never happen.
"...almost everything that grows the economy shrinks Congress' power."
But not strictly, "Congress", right? I assume you're using Congress here as a cipher for "government." Surely the various regulatory agencies stand to lose even more power than Congress if the needed changes are made.
Not to be overly negative but to put things in perspective (hopefully).
Growth...oil, gas and coal = long term investments and ramp-up. Improved infrastructure also required. All of this takes several years. Oil and gas supply and demand is affected by world wide forces, not just domestic.
Invest $500 billion in A/i and likely 5-10 times that by 2030. Is A/I going to upgrade the infrastructure? Maintain the infrastructure? Manufacture more things to sell? A/i itself is going to need massive new infrastructure support.
Trump wants to suddenly lower interest rates, lower taxes, incite growth and lower inflation. Good luck with that. What is needed is improved productivity to start with and then a free market where the Fed stays on the sidelines. No more economic engineering. No more central planning.
We have had at least 1-2 generations of school kids dumbed down by socialist policies. Simple math, writing, reading, reasoning, etc are a challenge for many. That won't be fixed overnight.
Much of what is termed economic growth comes from government spending. If DOGE cuts gov't spending, that is some growth that goes out the window. It needs to happen but could be a negative for a while.
Are we a nation that needs to buy more "things"? Do we need more services? For us (my wife and I) we don't need anymore of either although we could afford to spend more every month and we are by no means much above lower income levels.
Smashing the deficit or at least whittling it down every year means at least two decades of "determined" financial and fiscal discipline from the entire government. Not happening as wars, rising medical expenses, recessions (or downturns), defense spending, needed infrastructure repairs and build-outs (including the grid), green energy silliness, fake pandemics (already planned by gates and WHO), and a host of other things that can interfere with any well devised plans.
For sure, you make some good points and perhaps time is running short. But it's government that got us into this mess and I do not expect government is the answer to fixing it. There is still too much corruption in industry in the US. Short term greed outweighs any long term plans. This is true in big tech and big pharma for starters.
I follow Armstrong Economics run by Martin Armstrong who has an excellent background in finance and economics and from a world wide perspective. His thoughts are what I consider the closest thing to reality absent all the politics and sacrosanct establishment nonsense.
When Gov/State spending is included by Gov/State data deciders as GDP, the entire calculation of GROWTH is massively distorted IMO... and few regular ppl even realize that this is what has been going on for ages. When did this start? Or has it always been part of calc but in more recent decades Gov spending has been a larger & larger "contributor" to GDP?
President Trump has the authority to direct the Treasury Dept to issue a new type of currency which would be non-debt bearing fiat money. These 'Trump Bucks' would be equivalent to one Federal Reserve Note and would be used to pay the principle due on all maturing bonds and that bond would be retired. This is non-inflationary since it's a one for one replacement and both are backed by the same thing 'The full faith and credit of the US Gov't.'
A historical precedence would be President Lincoln issuing 'Greenbacks' in 1862 to finance the Union war effort.
The 3 month and 10 Year and 2 Year and 10 Year have both been uninverted for a few months, so it looks like the BIG one is about to hit. Have your cash ready to deploy.
For consideration- a change from single-factor economy (labor) to a two-factor economy (labor and capital). A transition to every person/household owning capital with income from that capital ownership displacing their income from labor, e.g., employee owned stock program (ESOP), as capital is the larger input to the production of wealth. A huge undertaking but necessary to diffuse the wealth generated from new technology. A good reference is Louis Kelso's "A Capitalist Manefesto".
If we could grow the economy 3% per year, if we could pay off the debt 3% per year, how long would it take to pay it off? Don't forget, interest is added to the debt every year. Don't forget we have another variable (unpredictable)-- the FED. While the FED exists, I believe the debt will never get paid.
Can we please stop including government spending as part of GDP? At best it’s double counting the money that was already in the economy but taken and spent inefficiently from those who actually created the wealth. It’s equivalent to saying your household has more money when you give your kids an allowance.
You beat me to it. GDP as currently measured is meaningless because if government spending ramps up, GDP "grows" and we know that "growth" comes at a much higher costs than the private sector growth.
Agreed. Before the election whenever a Team Blue acquaintance would brag about how Democratic counties have higher GDP I'd remind them that those are all government jobs, federally financed fake incomes that have no real commodity value. They don't get it.
You are correct, Patrick, to the extent that the federal government produces nothing. But to the extent that some service of value is produced, that part must be included in GDP for accounting accuracy.
That’s true, but it’s not an accurate value for inclusion.
If I understand you, which perhaps I do not, you are arguing that accountants do not know their business. I am a financial economist, not an accountant, but so far as I know, the mathematical statement of C+I+G+(X-M) is a correct accounting identity, to the extent that we measure each variable well.
David, remember, the GDP equation is not a law of nature, it was created by Keynes in the 20's to measure something that hadn't been effectively measured prior. the fact that we have been using it for a long time doesn't make it "correct" in any sense, just familiar. if we remove G, we are measuring something different, but related. however, perhaps absent G, we have a better idea of what the private economy is doing and that may be far more useful information for policymakers to address whatever issues may exist.
We might want to measure lots of things, but to the extent we wish to measure aggregate spending in the economy, the equation is a logical, mathematical identity.
It’s just that the value itself is not a true representation of value. Just because X is spent on it doesn’t mean that’s the value of it. RedBaron touched on this. There’s a perverse incentive for the government to inflate this value by overspending in order to claim that the economy is growing. That money had to be taken out via taxes or raised via debt first. So, while there may be something that’s an asset afterwards, the value is suspect.
Who are the 22% of people who don't want lower taxes? Seriously, I'd like to know.
Probably the ones not paying any, or the ones getting more tax deductions than they pay in taxes.
Probably the ones who believe lower taxes will just balloon the National Debt.
DOGE isn't going to even put a dent in federal spending. Why? Here are the top 5 categories for spending:
- Social Security 21%
- National Defense 15%
- Health 14% (Doesn't say but this is probably Medicaid)
- Net Interest 13%
- Medicare 13%
The above 5 categories account for 76% of the budget now. DOGE isn't going to have a chance reducing these. Social Security is only going to go up, because more are retiring than working and those working are not making more money than those retiring, which means it will be dipping deeper into the budget. Medicare/Medicaid will do the same. The GOP are always willing to raise the DoD budget, so good luck trimming the budget. How about no more money sent to any foreign country? The problem is Donnie and Congress will continue to flush billions of our dollars to Israel, regardless of how many civilians they kill. When there is a disaster in some country, let the Red Cross, Salvation Army, and other charities respond. They can do more with $1 than the federal government can do with $10.
As for oil drilling, the price has to be high and stay high for some wells to be uncapped, more or less for any drilling to start; otherwise it is uneconomical. If we really want low oil prices to help a economic recovery, simply remove all tariffs from Iran and Venezuela, but this, unfortunately, will never happen.
"...almost everything that grows the economy shrinks Congress' power."
But not strictly, "Congress", right? I assume you're using Congress here as a cipher for "government." Surely the various regulatory agencies stand to lose even more power than Congress if the needed changes are made.
Have I misunderstood you?
We are heading into a recession, maybe Trump can turn it around and keep pumping the bubble.
Let us grow North America Strong, not just the USA!!!
Not to be overly negative but to put things in perspective (hopefully).
Growth...oil, gas and coal = long term investments and ramp-up. Improved infrastructure also required. All of this takes several years. Oil and gas supply and demand is affected by world wide forces, not just domestic.
Invest $500 billion in A/i and likely 5-10 times that by 2030. Is A/I going to upgrade the infrastructure? Maintain the infrastructure? Manufacture more things to sell? A/i itself is going to need massive new infrastructure support.
Trump wants to suddenly lower interest rates, lower taxes, incite growth and lower inflation. Good luck with that. What is needed is improved productivity to start with and then a free market where the Fed stays on the sidelines. No more economic engineering. No more central planning.
We have had at least 1-2 generations of school kids dumbed down by socialist policies. Simple math, writing, reading, reasoning, etc are a challenge for many. That won't be fixed overnight.
Much of what is termed economic growth comes from government spending. If DOGE cuts gov't spending, that is some growth that goes out the window. It needs to happen but could be a negative for a while.
Are we a nation that needs to buy more "things"? Do we need more services? For us (my wife and I) we don't need anymore of either although we could afford to spend more every month and we are by no means much above lower income levels.
Smashing the deficit or at least whittling it down every year means at least two decades of "determined" financial and fiscal discipline from the entire government. Not happening as wars, rising medical expenses, recessions (or downturns), defense spending, needed infrastructure repairs and build-outs (including the grid), green energy silliness, fake pandemics (already planned by gates and WHO), and a host of other things that can interfere with any well devised plans.
For sure, you make some good points and perhaps time is running short. But it's government that got us into this mess and I do not expect government is the answer to fixing it. There is still too much corruption in industry in the US. Short term greed outweighs any long term plans. This is true in big tech and big pharma for starters.
I follow Armstrong Economics run by Martin Armstrong who has an excellent background in finance and economics and from a world wide perspective. His thoughts are what I consider the closest thing to reality absent all the politics and sacrosanct establishment nonsense.
When Gov/State spending is included by Gov/State data deciders as GDP, the entire calculation of GROWTH is massively distorted IMO... and few regular ppl even realize that this is what has been going on for ages. When did this start? Or has it always been part of calc but in more recent decades Gov spending has been a larger & larger "contributor" to GDP?
Dreaming stuff. Offer .50/dollar or nothing.
The art of the deal. A way of retrieving stolen intellectual property.
Or offer Melie a consulting position!
Or repudiate the debt and out of the ashes, preplanned, the cb/fed model is gone, a blood letting proposition.
Go back to the constitution for treasury monetary system backed something tangible. If Congress spends in deficit mode the popular vote must consent.
Inflation is gone. The market sets usery !
Money supply is constant with end and flows by natural cycles, purging fools.
We can all dream, though. The cabals of money will have none of any reform away from debt based fiat, their power over us slaves. Simple stuff.
President Trump has the authority to direct the Treasury Dept to issue a new type of currency which would be non-debt bearing fiat money. These 'Trump Bucks' would be equivalent to one Federal Reserve Note and would be used to pay the principle due on all maturing bonds and that bond would be retired. This is non-inflationary since it's a one for one replacement and both are backed by the same thing 'The full faith and credit of the US Gov't.'
A historical precedence would be President Lincoln issuing 'Greenbacks' in 1862 to finance the Union war effort.
The Wall Street crash of 1929 happened suddenly, didn’t it. So the next one is going to happen in the next couple of weeks.
There will be attempts to fix first, so be wary. The Great Depression didn’t really stat until 1933, when tariffs really got gong.
The 3 month and 10 Year and 2 Year and 10 Year have both been uninverted for a few months, so it looks like the BIG one is about to hit. Have your cash ready to deploy.
For consideration- a change from single-factor economy (labor) to a two-factor economy (labor and capital). A transition to every person/household owning capital with income from that capital ownership displacing their income from labor, e.g., employee owned stock program (ESOP), as capital is the larger input to the production of wealth. A huge undertaking but necessary to diffuse the wealth generated from new technology. A good reference is Louis Kelso's "A Capitalist Manefesto".
If we could grow the economy 3% per year, if we could pay off the debt 3% per year, how long would it take to pay it off? Don't forget, interest is added to the debt every year. Don't forget we have another variable (unpredictable)-- the FED. While the FED exists, I believe the debt will never get paid.
Every lie that comes from politicians begins with "All we have to do..."
Changing that to "All we have to stop doing..." just starts another fiction.
A fellow economist, I agree, Peter. If not now, when?