Spending burrowed money is not legimate GDP increase?

Discussion in 'Economy' started by Norman, Jan 10, 2011.

  1. Norman
    Offline

    Norman Gold Member

    Joined:
    Sep 24, 2010
    Messages:
    6,493
    Thanks Received:
    983
    Trophy Points:
    280
    Ratings:
    +5,972
    Ok here is a other economic question...

    The argument is; US is just spending burrowed money and thus growing their GDP. So the growth isn't legitimate. Obviously I am talking about real GDP, nominal GDP doesn't tell a thing.

    Obviously GDP is going to give you a completely wrong kind of numbers if there is some type of bubble / overvalued currency going on. But I don't really understand this burrowing argument very well, because if you burrow money overseas it doesn't count as GDP right?

    Anyway discuss about GDP.
     
  2. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264
    "burrowed" money was very clever. Freud is smiling.

    Bubbles create some real GDP volume which contracts when the bubble contracts, a net neutral effect long term, quite deceptive short term.

    Right now we are in the short end of that deceptive cycle. A lot of our economic weakness is just an adjustment to collapsed bubble(s). So our economy today is actually healthier than it seems. While 4-6 years ago our economy was a whole lot more anemic than it seemed.
     
  3. MajinLink
    Offline

    MajinLink Member

    Joined:
    Nov 15, 2010
    Messages:
    145
    Thanks Received:
    17
    Trophy Points:
    16
    Ratings:
    +17
    Practically every nation has a national debt, so borrowing money to hire or give to places and companies can increase jobs thus helping out the economy. The thing is if we don't stop reckless spending, we won't have that money to borrow anymore. Taxes will go up and spending will go down. Everyone's fucked
     
  4. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264
    the moral to the story is that everybody is fucked.

    In some circles that is a good thing!
     
  5. Norman
    Offline

    Norman Gold Member

    Joined:
    Sep 24, 2010
    Messages:
    6,493
    Thanks Received:
    983
    Trophy Points:
    280
    Ratings:
    +5,972
    I don't agree with this at all. US still took massive amount of debt and is screwed no matter what. Also the currency is at least IMO a bubble, so the GDP will fall too.

    The GDP will also fall because a lot of the capital has been "consumed". Which of course shows as GDP of today at expense of GDP of tomorrow...

    Anyway I do like to understand that argument a little better as I have seen it couple of times, maybe someone knows what I am talking about here...

    It's not nice to say we are all fucked though =(.

    BTW I am not talking about bubbles here, but the act of burrowing money... Bubbles of course increase GDP because they are inflationary and make you spend, while also making your currency attractive.

    For example I saw this on youtube the other day (2:50---->):

    [ame]http://www.youtube.com/watch?v=sEQ2EdQFSHA[/ame]


    Anyway I just heard of some other guy who said something akin to some debt not being calculated in the GDP or something like that. Maybe someone is familiar with this...
     
    Last edited: Jan 10, 2011
  6. uscitizen
    Offline

    uscitizen Senior Member

    Joined:
    May 6, 2007
    Messages:
    45,941
    Thanks Received:
    4,791
    Trophy Points:
    48
    Location:
    My Shack
    Ratings:
    +4,807
    Aside from the gambling in the market which is not real growth, most all of our "growth" for a decade or so has been the direct result of govt overspending.
     
  7. william the wie
    Offline

    william the wie Gold Member

    Joined:
    Nov 18, 2009
    Messages:
    7,322
    Thanks Received:
    677
    Trophy Points:
    175
    Ratings:
    +1,625
    Not possible, virtually all government services are loss prevention services like police, fire and so on. The few attempts at positive services like education and social security have generally been less than successful. Politicians understand loss prevention and do reasonably well in that area. CYA and the rest of the bureaucratic BS tends to be highly effective in loss prevention but not in production of positive goods and services, it's the nature of the beast.
     
  8. uscitizen
    Offline

    uscitizen Senior Member

    Joined:
    May 6, 2007
    Messages:
    45,941
    Thanks Received:
    4,791
    Trophy Points:
    48
    Location:
    My Shack
    Ratings:
    +4,807
    Not at all, the more money given out to the people the more goods that are bought.
    And you forget the MIC, the war goods produced? The govt purchased billions of dollars in digital TV converter boxes alone.
    Every dime of the unemployment money spent has rolled right back into the economy.
    The military hardware refurbishing business in my area were booming.
    They refurbish helos and tanks and more stuff. All contractors.

    and the military was buying so much ammo that the price for non military use at least doubled.
     
    Last edited: Jan 10, 2011
  9. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264
    absolutely correct.
     
    • Thank You! Thank You! x 1
  10. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264
    I would respond but your post was either gibberish or I can't keep up.
     

Share This Page