Posted 16 April 2012 - 10:32 PM
GDP growth is a sack of shit. It would be like analysing a company by looking at its P&L but ignoring its Cash Flow statement and Balance Sheet.
Is any of this 'GDP Growth' productive? Is it all just cycling money round the system?
Put it this way if I built a block of luxury in the middle of Dartmouth moors for £2m, then the day after I finish I spend another £1m demolishing it and restoring the area to how it was before according to the way we look at growth I have just grown the economy by £3m, when actually I have reduced the store of wealth in the country by £3m.
GDP by itself tells you nothing worth knowing, and a government totally obsessed by it will create 'growth' in a unproductive or even negative way.
The truth is that the economies of rich countries, including the UK, are being kept alive by another and astonishingly under-reported bull market — in government debt. This is the bond bubble; and when it bursts, as it surely will, the result will be a recession far deeper than the crash from which we are trying to recover.
17 September 2011