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Gdp Growth

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It's only important if you are embroiled in the largest pyramid selling scam since the Pharaoh Khafu bought one of a banker in Giza a few thousand years ago.

That wasnt a scam. A real pyramid was supplied. (I thought it was Khufu).

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what is so wrong if gdp stands still.

Mostly because without "growth" the debt burden increases rather than diminishes. Loss of growth simply exposes the fundamental flaw in the entire system (that the debt can never be repaid).

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its amazing that confidence can be lost if growth is flat or negative.

But if we had borrowed more, we could have created growth through spending on non-jobs and of course the magic 'G-word' means that would mean we'd be good for the extra borrowing!

Edited by Caveat Mortgagor

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what is so wrong if gdp stands still.

GDP is the mother of all yardsticks for politicians.

It can be massaged up with borrowing, and the cure to all previous borrowing is more growth, as they beleive that deficit spending should be a percentage of GDP.

Its a nonsense that has led us to where we are today.

Overborrowed.

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Increasing GDP is easy; employ 100,000 people to dig holes and another 100,000 people to fill them in and GDP will increase by say 2% and then just borrow the money to pay their wages.

Just as growing turnover of a company is incredibly easy if you borrow a lot and just blow it on generating sales. It COULD get you somewhere if you're investing wisely but if not you've most likely you'll have distorted your company to running on easy money and when it comes to an end they'll be big trouble.

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what is so wrong if gdp stands still.

Three things:

Firstly in the UK the population is increasing at nearly 1% a year. So static GDP means average material standard of living per person is falling every year.

Secondly the continuing development and deployment of labour saving technologies means that each worker can, on average, produce more each year. This improvement is typically about 1% per year. If GDP is static that means that you need fewer workers each year to achieve that output and therefore you'll get higher unemployment. You could argue that workers could work fewer hours and have more leisure time, but the static costs of employing someone ensure that employers would rather have fewer employees working the same hours than have the same number of workers working fewer hours.

Thirdly there is a large cohort of middle aged people in this country who have been granted generous pension and healthcare entitlements into their retirement. The costs of these entitlements are so large that the only hope of being able to pay for it is through a decent amount of economic growth between now and then. The alternative is either a bankrupt state - this is arguably what has happened to Greece, for example - or a state where education, transport, defence and other public services are slashed to the bone to make way for spending on the retired. This is arguably already happening in the UK where the government has promised a more generous state pension whilst asking students to pay £30K for their poxy degrees and cutting police numbers etc. etc.

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Increasing GDP is easy; employ 100,000 people to dig holes and another 100,000 people to fill them in and GDP will increase by say 2% and then just borrow the money to pay their wages.

Yeah but we want GDP and tax take to increase, even though we are now going to borrow less. Maybe we should ring up Gordon Brown and ask him what the answer to that one is.

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Increasing GDP is easy; employ 100,000 people to dig holes and another 100,000 people to fill them in and GDP will increase by say 2% and then just borrow the money to pay their wages.

...and they in turn use the borrowed wages as collateral to borrow to buy a roof over their heads and other whims and wishes....it's a self fulfilling prophecy that will eventually run itself into the ground once it runs out of steam. ;)

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Govt's have made promises which rely on perpetual growth. Therefore without GDP growing the entire ponzi govt system collapses which is why it scares the crap out of them what it stalls.

However the economy expands and contracts it's a natural cycle.

Our political elites are trying to beat gravity.

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Yep, well governments need positive inflation to retain control over people

Govt's have made promises which rely on perpetual growth. Therefore without GDP growing the entire ponzi govt system collapses which is why it scares the crap out of them what it stalls.

However the economy expands and contracts it's a natural cycle.

Our political elites are trying to beat gravity.

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Excellent post gimble. Because of technological improvement that is happening on a global level we should be seeing rising output each year.

And in fairness on a global level the GDP growth is quite spectacular. I believe it is running around 4% right now. Its mainly developing nations applying the existing technologies where they weren't applied before. Like farm combines replacing farm workers and animals.

I believe British GDP is still below 2007 levels. So going on 4 years with no growth.

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Excellent post gimble. Because of technological improvement that is happening on a global level we should be seeing rising output each year.

And in fairness on a global level the GDP growth is quite spectacular. I believe it is running around 4% right now. Its mainly developing nations applying the existing technologies where they weren't applied before. Like farm combines replacing farm workers and animals.

I believe British GDP is still below 2007 levels. So going on 4 years with no growth.

THIS IS THE PROBLEM!

http://www.google.co.uk/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:GBR&dl=en&hl=en&q=uk+gdp#ctype=l&strail=false&nselm=h&met_y=ny_gdp_mktp_cd&scale_y=lin&ind_y=false&rdim=country&idim=country:GBR&ifdim=country&hl=en&dl=en

What you are seeing is GDP going off a cliff... because we are not growing everything we import becomes comparatively more expensive i.e. gas, cotton, etc. this is expressed as the ongoing inflation we are having.

That is compounded by the fact that because UK business aren't growing UK wages are generally static as well as the ongoing redundancies.

So we have low GDP, high inflation, wages going nowhere, job numbers decreasing... and some people seem to think we are out of recession and there has never been a better time to buy....

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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