Question

Discussion in 'Economy' started by JBeukema, Oct 9, 2010.

  1. JBeukema
    Offline

    JBeukema BANNED

    Joined:
    Apr 23, 2009
    Messages:
    25,613
    Thanks Received:
    1,703
    Trophy Points:
    0
    Location:
    everywhere and nowhere
    Ratings:
    +1,705
    Deficit spending on bombs increases both GDP (by making stuff) and the deficit (by going into the red to do so), right?

    So wouldn't any significant degree of federal deficit spending that results in anything being made (eg: bombs for the Long War) (directly by the government or indirectly via contracted manufacturers) render Deficit as a Percentage of GDP a rather unreliable and fickle measure?
     
  2. Toro
    Offline

    Toro Diamond Member

    Joined:
    Sep 29, 2005
    Messages:
    50,786
    Thanks Received:
    11,059
    Trophy Points:
    2,030
    Location:
    The Big Bend via Riderville
    Ratings:
    +25,119
    No
     
  3. JBeukema
    Offline

    JBeukema BANNED

    Joined:
    Apr 23, 2009
    Messages:
    25,613
    Thanks Received:
    1,703
    Trophy Points:
    0
    Location:
    everywhere and nowhere
    Ratings:
    +1,705
    Can you clarify, Toro?

    If they're spending in the red, is that not deficit spending by definition?

    If they're buying things that need to be made, doesn't that increase production- and therefore GDP necessarily?

    Shouldn't this be able to skew the measurement in either way, depending on whether they buying 'no-bid; deals that pay more than the goods are worth or buying in bulk and paying less than what would otherwise be market value of the goods in question?
     
  4. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264
    I can answer this question.

    GDP simply is what it is. Most people who rely upon GDP data know what it means and understand it's limitations.

    If you think about it what you are really asking is whether or not GDP should be used as a barometer of the general economy, esp as a policy tool in the hands of folks who are not so keen to the limitations of the indice.

    Again I think this answer is definitely no.
     

Share This Page