Quantum Windbag
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- May 9, 2010
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Obama has decided to reinvent the GDP to magically make things look better.
U.S. Government Invents New Way Of Calculating GDP - Seeking Alpha
In other words, the original fake formula to make the government look good is not working well enough, so we have to pretend that fictional money actually exists, which will post the GDP, and make it look like we are paying less taxes, even though we aren't.
In March 2013, the U.S. government invented a new way of calculating GDP. The Financial Times reported that starting from July 2013, U.S. GDP would become 3% bigger due to a change in statistics. As this adjustment in GDP calculation is pretty significant, I will discuss the new items in the U.S. GDP, what the consequences are and how investors should act on this revision in statistics.
GDP = private consumption + gross investment + government spending + (exports − imports), or
.
The government made a significant change in the gross investment number (I), which now includes R&D spending, art, music, film royalties, books, theatre. This change in GDP statistics has not been implemented elsewhere in the world. So the U.S. is the first to accomplish this rewriting of the GDP number.
Research and development (R&D) spending, which shouldn't even be accounted for as investment, adds a significant amount to the U.S. GDP number. It accounts for around 2% of U.S. GDP. Art, music, film royalties, books and theatre add another 0.5% to U.S. GDP. Another adjustment has been made to pension accounting. Previously, pension spending was included in GDP. After this adjustment however, we also look at the "promise" to pay out pensions. So we are talking about imaginary numbers that are now included in GDP. A last example is found in real estate. Commissions, legal bills and expenditures on real estate transactions are included in GDP as "investment." Obviously these expenditures aren't associated with real production.
U.S. Government Invents New Way Of Calculating GDP - Seeking Alpha
In other words, the original fake formula to make the government look good is not working well enough, so we have to pretend that fictional money actually exists, which will post the GDP, and make it look like we are paying less taxes, even though we aren't.