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> The asset markets are wrong. They’re wildly overestimating the value of our existing stock of real assets, and the output/income they’ll deliver in the future

> The asset markets are wrong. They’re wildly overestimating the value of our existing stock of real assets, and the output/income they’ll deliver in the future. See: “Irrational exuberance.” Bingo! Massive stock bubble driven by easy money and (more recently) corporations buying back their own stock (with borrowed money) to drive up the price of the stock remaining on the market. Besides, GDP doesn't represent the total of "real wealth" or productive activity either. The GDP is inflated because it contains all activity regardless of whether it was actually productive or not. For example, if the government hired a million people to dig ditches and fill them up again, that would raise the GDP, but it sure wouldn't increase the nation's wealth. They've even changed how the GDP is calculated to make it look bigger: http://seekingalpha.com/article/1368001-u-s-governments-new-way-of-calculating-gdp http://seekingalpha.com/article/1368001-u-s-governments-new-...

bsbechtel 11y ago
I find it interesting that when the cost of goods such as food and gas go up, it's called inflation, but when the price of assets go up, it's called a bubble. Sure, there are differences (a bubble assumes the price will go back down), but it's still interesting to me....both are driven by the same thing, the price of money.
- sukulaku 11y ago
  I was using the word in an imprecise way. You could say "price inflation" and mean rising prices, or you could say "inflation" and mean an increase in the money supply. The price of money is the interest rate for borrowing it, but "inflation" in general refers to a decrease in purchasing power (through an increase in the money supply).
  - bsbechtel 11y ago
    My comment was more of a general observation of terms applied to different asset classes, not particular to your comment. Thank you for the clarifications though :-)
forgetsusername 11y ago
>They've even changed how the GDP is calculated to make it look bigger Only conspiracy theorists would think the purpose of changing the GDP calculation is to "make it bigger". What effect does "making it bigger" have? If it's a contrived figure, the markets will take that into account. Then again, conspiracy theorists always assume they "know" better than everyone else.
- jazzyk 11y ago
  I am fine with the new method of calculating GDP, _if_ all the past GDP numbers are adjusted to make comparisons meaningful (the same way you adjust stock prices after splits). Oh, and careful with name-calling. I used to be like you and call some people "conspiracy theorists" - until Snowden.
- sukulaku 11y ago
  > What effect does "making it bigger" have? It makes the economy look better. In a nutshell, governments want people to think everything is alright, even when it's not. There's a massive bubble in US stocks, for example, and when (not if) that bursts, it may well take the rest of the economy with it, and then it'll be worse than 2008. As long as people can be manipulated into believing that the economy is recovering, having to face reality can be postponed. As for "conspiracy theorists", you've been trained to point and laugh at them, but you shouldn't. For example, how does a hijacked passenger plane crash into the fucking Pentagon without the most powerful military in the world stopping it? Not without the aforementioned military letting it happen, that's for sure. Feel free to start questioning everything you're told by the mainstream media any time now..

bsbechtel 11y ago

I find it interesting that when the cost of goods such as food and gas go up, it's called inflation, but when the price of assets go up, it's called a bubble. Sure, there are differences (a bubble assumes the price will go back down), but it's still interesting to me....both are driven by the same thing, the price of money.

sukulaku 11y ago
I was using the word in an imprecise way. You could say "price inflation" and mean rising prices, or you could say "inflation" and mean an increase in the money supply. The price of money is the interest rate for borrowing it, but "inflation" in general refers to a decrease in purchasing power (through an increase in the money supply).
- bsbechtel 11y ago
  My comment was more of a general observation of terms applied to different asset classes, not particular to your comment. Thank you for the clarifications though :-)

forgetsusername 11y ago

>They've even changed how the GDP is calculated to make it look bigger Only conspiracy theorists would think the purpose of changing the GDP calculation is to "make it bigger". What effect does "making it bigger" have? If it's a contrived figure, the markets will take that into account. Then again, conspiracy theorists always assume they "know" better than everyone else.

jazzyk 11y ago
I am fine with the new method of calculating GDP, _if_ all the past GDP numbers are adjusted to make comparisons meaningful (the same way you adjust stock prices after splits). Oh, and careful with name-calling. I used to be like you and call some people "conspiracy theorists" - until Snowden.
sukulaku 11y ago
> What effect does "making it bigger" have? It makes the economy look better. In a nutshell, governments want people to think everything is alright, even when it's not. There's a massive bubble in US stocks, for example, and when (not if) that bursts, it may well take the rest of the economy with it, and then it'll be worse than 2008. As long as people can be manipulated into believing that the economy is recovering, having to face reality can be postponed. As for "conspiracy theorists", you've been trained to point and laugh at them, but you shouldn't. For example, how does a hijacked passenger plane crash into the fucking Pentagon without the most powerful military in the world stopping it? Not without the aforementioned military letting it happen, that's for sure. Feel free to start questioning everything you're told by the mainstream media any time now..