Thursday, September 2, 2021

Private Economy is the Real Economy


Government economists define GNP to include government spending.   This way the more government spending, the higher the GNP.   So if they need to "grow the economy" all they have to do is increase government spending.  The more the government is spending, the more power they have. 

The reality is that government is a leach on the real productive economy.  They are taking resources from the productive parts by taxation and money creation (inflation).   Government does not add to the economy, it sucks life out of the economy.   

If we subtract government spending from the official GNP and scale for inflation, we get the following graph which gives a better idea of the Real Economy.

First, looking at this graph it is crazy for the stock market to be up by about a factor of 7 in the last 12 years.   The real economy is not doing anything close to that kind of growth.

Next, the idea that government spending fixed the recession last year so it was only 2 months is silly.   Sure they got the "official GNP" back up, but the real economy is still way down.