Official GDP numbers are deceptive because they chart—and include—the growth of government debt. In order to come to grips with America’s real economic prognosis, you must tease apart modest economic growth from the monstrous accretion of public debt.
In his latest book, “The Real Crash: America’s Coming Bankruptcy, How to Save Yourself and Your Country,” financier Peter Schiff does just that, noting that, “From 2008 to 2009 our national GDP (of around $14 trillion) contracted by $212 billion. To prevent any further dips, the government aggressively spent, borrowing heavily to do so. To the relief of just about everyone, these moves did stop the nominal contraction. From 2010 to 2011 the U.S. GDP expanded by $502 billion, and from 2011 to 2012 it added an additional $508 billion. All told, from the end of 2008 the U.S. economy added a cumulative $798 billion in GDP. But those gains came at a very high price.”
“The combined federal deficits for the same time frame come in at a staggering $4.2 trillion! In 2009 alone the feds chalked up a chart breaking $1.4 trillion in debt (the deficit was a mere $161 billion in 2007). In other words, we borrowed five times more than we grew. This ‘strategy’ for growth is no different from an individual who loses half his income, but continues to spend by running up credit card debt.”
Could this be described as economic growth? But that’s just how we are describing our current economy, and for the large part, expert economists, politicians, investors, and academics all agree..”
UPDATE (May 30): Writes Nixter Jeelvy on Facebook : “GDP = Aggregate Demand = all the money SPENT within a year, within the nation. It’s no measure of wealth, Lord Keynes and his pipe dreams be damned.”