RISING GDP- A TOOL FOR POLITICIANS AND LIARS

source: mises.org

Many of us took a course or two, perhaps more, of Economics as undergraduates.  Everything taught in those foundational courses is known as Keynesian Economics, and as students we are led to believe that it's the only proper way to understand economic phenomenon. One of the things we learned about is something called "Gross Domestic Product". This number attempts to measure how much the economy has produced over a given period of time, usually on an annual basis. The media, politicians, authors, and various television "experts", constantly discuss how vital it is for the GDP to increase in order for the nation to be prosperous and avoid disaster. On any given day, the media will have extensive coverage of Congress and it's actions in regards to the government's budget, the decisions made at the Federal Reserve, and a mention will be made about Wall Street and the Dow Jones Industrial Average. This has convinced entire generations of people that government has a vital role to play in the economy, and without an ever increasing GDP the world will end. However, the truth is something altogether different. The GDP is a tool of politicians and politics, not economics.

We must understand that the economy is made up individuals and businesses making decisions that will affect their daily lives. Government has very little to do with the economy on a daily basis. Government imposes taxes, laws, and regulations that can certainly affect people's lives, but these things do not make economic choices. People make economic choices. People can decide to buy a used vehicle instead of a brand new vehicle, or they can buy a house, or they can decide to spend their money on illegal activities: drugs, gambling, etc. In a free society, people are allowed to spend their money as they see fit. And it should not be a surprise to anyone that when allowed to make choices most people will usually make good economic choices.



Most everyone is probably asking: how is all of this connected, and what does it have to do with anything? GDP fails to account for several very important factors. First, illegal activities are not taken into account. In the US, hundreds of billions of dollars worth of illegal drugs are bought and sold every year, but these activities are not measured. Second, the market for used goods is ignored. In 2016, 41 million used cars and trucks were sold in the US, at an average price of  $19,227. This comes to roughly $788 Billion worth of sales just in the used car industry, and none of it is considered part of GDP. Last, and most importantly, GDP fails to accurately account for the change in the value of money, also know as Inflation. Inflation can raise or lower prices, having a significant impact on how GDP will be measured. The Bureau of Economic Analysis is responsible for measuring GDP in the US, yet they depend on the Federal Reserve to provide information in regards to inflation. The Federal Reserve has many detractors that argue it's models and ideas are outdated, some of those detractors are found within the Federal Reserve itself.

I have mentioned this before, inflation is the giant monster hiding in the basement that nobody wants to acknowledge. To quote the great economist Ludwig Von Mises, "The great inflations of our age are not acts of God. They are man made or, to say it bluntly, government made. They are the off shoots of doctrines that ascribe to governments the magic power of creating wealth out of nothing and making people happy by raising the "national income".

Let's replace the term "national income" with something used in current society: GDP. Congress and the Federal Reserve have to simply push more money and credit into the marketplace, by either borrowing trillions of dollars as does Congress or by the various creative tricks employed by the Federal Reserve. In either case, they are creating wealth out of nothing, and it appears as if the economy is strong and growing. Politicians can then make televisions appearances and make grand proclamations at election time.

The Lying Politician

 There is an important question which nobody wants to ask. If the GDP is measuring the output of the economy, and a positive number indicates the economy is growing, why hasn't everyone gotten wealthier? If the nation is getting wealthier, as indicated by GDP, why does Congress feel the need to continue a "War on Poverty" that began during the 1960's, has cost trillions of taxpayer dollars, and has no end in sight? For the simple reason that government can not create wealth, government can only create inflation. People create wealth by making good economic choices. A government handout may help some folks pay bills just to get by, but ultimately it is up to the individual to build their own wealth by making good choices in life. Any person, regardless of their income level, has the ability to save and spend wisely, and to make other choices in life that will decide the outcome of their lives.



https://mises.org/library/gdp-tool-politics-not-economics

https://www.businessinsider.com/where-drug-money-goes-2016-3

https://www.cnbc.com/2016/12/05/used-vehicle-sales-look-set-to-hit-all-time-high.html

https://files.stlouisfed.org/files/htdocs/publications/review/11/07/bullard.pdf

 https://thetruthstillmatters.blogspot.com/2017/01/the-economy-is-still-sluggish.html

ANOTHER SCHOOL SHOOTING BY A DISTURBED TEENAGE COPYCAT KILLER

Another terrible tragedy has struck our schools, this time in Santa Fe, Texas.

The tragedies do not occur in a vacuum. Mentally disturbed or antisocial teenagers see other such events on the news and decide they want to have five minutes of fame for themselves. 

There is just one way to end these tragedies: the news media must stop covering these stories.

 Gun control, metal detectors, armed guards, transparent backpacks, or any other ideas will not be effective. The only way to resolve this problem is to stop making these people famous.

Limiting the use of anti-psychotic drugs, such as certain anti-depressants, may also help as almost all of the mass shooters of the past 20 years have been users of anti-depressants. Holding the parents accountable may also help, but just a little bit.

For the sake of our future generations, I hope our society will have the wisdom to do what be done in order to end these tragedies.

SOCIALIST VENEZUELA IS BREATHING IT'S LAST

I have been covering the story of Venezuela rather closely over the past year, some of my previous posts can be found here and here, and in short articles for those that follow me on Facebook. To review some pertinent facts: Venezuela is governed by incompetent Socialist dictators that have ruined the nation and it's economy. The misguided dictators have nationalized private property and control almost all the means of production within the nation, and they compounded their foolish decisions by setting price controls and creating massive hyperinflation. The situation is so terrible, Venezuelans are fleeing their country by the hundreds of thousands.

 The only hope the Venezuelan government ever had at accomplishing anything with their economic boondoggle was the money brought in by PDVSA, the state owned oil company. However, even that has been a complete failure. The state owned oil company owes many of it's assets to properties seized from private businesses. Many of the skilled laborers and technical experts needed to run the company departed when the government began seizing properties, and they were replaced by overwhelmed, incompetent, and starving, ruling party favorites. As a result of this total calamity, Venezuela's oil production has fallen from 3.4 million barrels a day to less than 1.4 million barrels a day. But, the situation has only gotten worse. In a first of it's kind legal action, ConocoPhillips has seized properties owned by PDVSA. The US and other nations froze various assets owned by the Venezuelan government, and Venezuela's creditors are now filing lawsuits in order to gain access to those assets.

The mindless idiots of the Socialist party that control Venezuela have made a great many stupid decisions, and have left the nation, it's economy, and it's people in a state of ruin and despair. They owe billions of dollars to individuals and companies from whom they seized assets, in what can be compared to armed robbery. It is most likely that money will never be paid back, and what properties were seized by the power hungry Socialists will be lost forever. Perhaps the only chance Venezuela has for any sort of positive future is for the public to realize how badly the Socialists have botched the situation, and to unite and vote them out of office. However, things have been so bad for so long, it will take several decades for Venezuela to recover from the last 19 years of bungled government.

WHO CAN AFFORD THESE SUPER CURES??

Who can afford a one time medical treatment that costs hundreds of thousands or even millions of dollars?
Almost nobody.
Only the most wealthy in society have the resources to pay for some of these whiz-bang George Jetson futurist cures at millions of dollars per treatment. Private health insurance and government funded Medicare will never cover the cost of these technological marvels.

What has caused this situation?
In a word, Inflation. The US and the Western World in general, are being destroyed by inflation. Inflation is a condition in which the value of currency is reduced, thereby giving the appearance of rising prices. It is NOT healthy for any society to have a period of prolonged inflation, because prices will rise faster than wages and the public will become impoverished. Let's look at the rising cost of living in this country, it has risen exponentially over the past 40 years, but wages have been stagnant. The cost of medical care and education have reached levels that would have been unimaginable thirty years ago. These new medical breakthroughs are following the same trend of rising prices, only in this case the government is actively pushing them along. I think the best explanation was given by the great economist Ludwig Von Mises over sixty years ago, he said

"The great inflations or our age are not acts of God. They are man-made, or to say it bluntly, government made. The are the off shoots of doctrines that ascribe to governments the magic power to create wealth out of nothing and making people happy by raising the national average." 

Moonshot Medicine: Who Can Afford It?

HOW POLITICAL CORRECTNESS DESTROYS PEOPLE'S LIVES

I found this on social mendia and decided to copy it verbatim. Political correctness is a destructive ideology that is being used to silence creativity, personal opinions, and the Truth. There is no better way to silence the Truth, than through public shaming and peer pressure.

It snowed all night long, so the morning went like this:
8:00: I made a snowman
8:10: A feminist passed by and asked me why I didn’t make a snow woman.

8:15: So, I made a snow woman.
8:17: The neighbors’ nanny complained about the snow woman’s voluptuous chest.
8:20: The gay couple living nearby grumbled that it could have been two snowmen instead.
8:25: The vegans at No. 12 complained about the carrot nose, as veggies are food and not to decorate snow figures with.
8:28: I was called a racist because the snow couple is white.
8:31: The Muslim gent across the road wanted the snow woman to wear a headscarf.
8:40: Someone called the cops who showed up to see what was going on.
8:42: I was told that the broomstick of the snowman needs to be removed because it could be used as a deadly weapon. Things got worse after I mutter : “Yeah, if it’s up your a**”
8:45: Local TV news crew showed up. I was asked if I knew the difference between snowmen and snow-women? I reply, “Snowballs” and am called a sexist.
8:52: My phone was seized and thoroughly checked while I was blindfolded and flown to the police station in a helicopter.
9:00: I’m on the news as a suspected terrorist bent on stirring up trouble during this difficult weather.
9:10: I was asked if I have any accomplices.
9:29: A little known jihadist group has claimed it was their plot.
There is no moral to this story. It’s just the America we live in today!

MIRACLES HAPPEN, CNN JUST PRAISED RAND PAUL

Senator Rand Paul, son of the famous libertarian Ron Paul, has once again committed an act of heroism by lambasting his own party, and CNN loved him for it. We've said it many times, there is no difference between the two parties at the national level. When Democrats are in power the Republicans talk conservative fiscal responsibility and balanced budgets, when Republicans are in power the roles are reversed. The ONLY exception to this was back during the 1990's when Newt Gingrich rammed the first balanced budget in many years right down everyone's throat. The media, and both parties, hated Gingrich for doing his job the right way. I imagine that Rand Paul will soon come under fierce scrutiny by everyone  in the media and politics, including his own party and his closest friends in the Senate. Nobody likes it when the ugly Truth is exposed.

THE MARKETS ARE FALLING AS PREDICTED

The financial markets around the world have finally begun to drop, as I have been saying they would. Why are they doing this? The reasons are complex, but easy to understand. To put it briefly, the Federal Reserve and Congress have abandoned their duty of ensuring the safety of our money and instead focused all their attention on scoring political points by convincing everyone that the government can create jobs and cause economic growth. This is a complete fabrication or lie. The only thing governments can do is to collect taxes, and create laws and regulations which affect the economy in the long term. However, a century ago during the First World War, governments realized they could borrow money from the future or just print it, and then spend almost limitless amounts of money which they created out of thin air. This spending pattern creates inflation. Inflation is defined as a period of rising prices, but this is caused due to a drop in the value of money. Putting excess amount of money into an economic system will always reduce the value of the given currency and thus raise prices.

This leads us to our current situation. The financial markets have tumbled because of fear that the Federal Reserve may raise interest rates. The Fed should have raised interest rates during the George W. Bush administration, right after 9-11. It's become too late to try to combat inflation, it is beyond control. I wrote about this on 01/20/2017, specifically I said:

"The amount of monetary inflation in the economy is beyond belief; it has become a super-sized bubble waiting to burst. When the inflation bubble finally bursts, the Federal Reserve will scramble to find enough cash to keep the banking system "liquid". During the 2007 Recession, Congress stepped in and put hundreds of billions of dollars in to the system in order to keep it moving. Basically, taxpayer money was used to prop up privately owned businesses. The taxpayers will never see that money again; it has disappeared into the TARP program. Over the past ten years, the Federal Reserve has pushed Trillions of dollars into the economy hoping it would stimulate a bit of economic growth. Their plan failed"

Now the chickens have come home to roost. Trump can not do anything about this, nor could any other resident of the White House. Congress is powerless, they've already put us in $20 TRILLION debt, they simple don't have any more money to waste. The Federal Reserve is also helpless, their policy of Quantitative Easing failed, and they have no other tools that will help.

What will happen next? An economic disaster the likes of which we have never seen.


http://money.cnn.com/2018/02/06/investing/stock-market-turmoil-global/index.html
https://thetruthstillmatters.blogspot.com/2017/02/the-hubris-of-janet-yellen-federal.html
https://www.investopedia.com/terms/i/inflation.asp
https://thetruthstillmatters.blogspot.com/2017/01/our-money-is-not-safe-hungry-sharks-are.html