Jun

11

Meat goes into the sausage factory….

Meat comes out of the sausage factory.

So, by the conventional measure of GDP (which counts government spending as a positive, the only negative being imports) counts government spending twice. That positive has already been accounted for (and perhaps it should be a negative, as it must be made up by taxation, past, present or future).

The government could borrow 5 trillion, spend 5 trillion, and GDP would increase by 5 trillion.

If we look at my version of GDP, we haven't had positive growth in years in the US.


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  1. Edward Lam on June 12, 2012 3:54 am

    which is why I think GDI (gross domestic income) has been a better indicator of real economic activity than GDP for the whole of this crisis period.

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