U.S. Economy is Still Growing but GDP Growth Rates Are Mostly Fraud

Yesterday’s news told us that the U.S. economy is still growing. But GDP growth rates are mostly a fraud. They measure economic activity – but do so clumsily; you don’t really know what is going on. When the feds give back “tax rebates,” for example, the money goes into the economy as people spend it. GDP rates go up. But how could there actually be more net spending? Since there are no savings in the U.S. economy, every penny is spent, no matter what. If it had not been given back to its rightful owners, the feds would have spent every penny of that money themselves.

There are only so many hours in the day…and only so many resources to work with. The real question is what is done with them. If they are used to produce things, to build factories, and to add to the nation’s capital, people become wealthier. If they are squandered – using up capital instead of adding to it – people become poorer. GDP figures don’t tell you want is really going on. But when an economy becomes too dependent on credit and consumer spending, GDP figures actually become perverse; they measure the rate at which the nation impoverishes itself.

Bill Bonner
for Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

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