5 ms·

GDP growth is "more money". Money is created when people borrow against land. Most borrowing is against land. The boomers+ have stopped borrowing because they a

GDP growth is "more money". Money is created when people borrow against land. Most borrowing is against land. The boomers+ have stopped borrowing because they are going to die soon. Ergo end of "growth". GDP is a very bad thing. Also 10% of GDP is "imputed rent" - the rent you would pay to yourself for your home if you were to rent it out. Ten percent. Yet again all tied into land lending/prices.

seizethecheese 11y ago
> GDP growth is "more money" This is not true. A measure of the amount of money in the economy, as tracked by the Fed, has risen around 50% since 2008 [0] while GDP has only grown a few percent per year. [0]: https://research.stlouisfed.org/fred2/series/M2 https://research.stlouisfed.org/fred2/series/M2
- branchless 11y ago
  ok it's also velocity, but in general once a boom starts and the taps come on it's both. Now I agree they are pushing on a string. If velocity is held as a constant then creating more => "growth".
- dredmorbius 11y ago
  While it's true that money supply's grown and GDP hasn't by nearly as much, that's not the correct response -- OP mis-defined GDP.
  - branchless 11y ago
    I went on to qualify that I'm assuming velocity holds constant. I really think GDP is a terrible measure. We need something that reflects the actual amount of "good stuff" getting done, not the amount of fiat created by banks to ramp the same pile of bricks.
    - dredmorbius 11y ago
      While we're agreed on the deficiencies of GDP, the original issue was how economists define growth -- and, well, that's how, and is what Gordon's book addresses. Mismeasures notwithstanding, to a first approximation, GDP likely works fairly well. Not that it's not the fiat created by banks, but the turnover (revenues) generated in the process which would inflate GDP. Something I've been meaning to look into -- and which will likely upset a maths friend of mine on G+ -- is whether financial sector activity really ought be counted as productive. Much of it I suspect isn't.
      - branchless 11y ago
        That's my whole point. Loads of money is created for lending against land without a single brick being placed as banks force people to pledge all their future labour in exchange for the temerity to exist.
dredmorbius 11y ago
Incorrect. More money => inflation[1]. GDP growth is more total overall spending, plus certain adjustments, in real, constant currency units. That is, inflation adjusted. The problems around GDP tend to be that: 1. It discounts nonfinacialised quality-of-life improvements. 2. It neglects the negative costs of financialised quality-of-life detriments. I believe that the Wikipedia article links to several alternative measures of GDP. I find Herman Daly's discussion of these pretty good, or you might check to see what the WorldWatch Institute's come up with, to name another likely source. ________________________________ Notes: 1. So, you might ask, what of QE, why all this money and no inflation? Good question, and people are pursuing that. My theory is that a) the money's largely gone to banks and large institutional investors, b) see Robert Gordon, there's a long term secular decline in growth, so they're looking for alternative investments, resulting in c) Gee, stock markets and housing have been going gangbusters, but isn't that just asset price inflation, i.e., inflation on Stuff Rich People Buy? Seems fairly likely, particularly if you plot the Dow or S&P 500 average against the Fed's balance sheet (proxy for money supply / QE. Head over to the St. Louis Fed's FRED plotting toy[2] to see for yourself.\ 2. It's actually a pretty cool toy. The sort of thing you might imagine a megolomanic conspiracy controlling the global money supply to come up with.[3] 3. I kid, I kid. It's the lizard-men.
- branchless 11y ago
  We've had rampant land price inflation which is not correctly reflected in the stats. GDP uses a deflator and that deflator doesn't reflect land prices, therefore printing through land doesn't show up fully.
  - dredmorbius 11y ago
    Quite possibly. I'd amended my post prior to your reply, addressing this in part.
- erikpukinskis 11y ago
  After just watching another Bernie Madoff documentary, Is it possible it's in those kind of imaginary assets?
deleted 11y ago
[deleted]

seizethecheese 11y ago

> GDP growth is "more money" This is not true. A measure of the amount of money in the economy, as tracked by the Fed, has risen around 50% since 2008 [0] while GDP has only grown a few percent per year. [0]: https://research.stlouisfed.org/fred2/series/M2 https://research.stlouisfed.org/fred2/series/M2

branchless 11y ago
ok it's also velocity, but in general once a boom starts and the taps come on it's both. Now I agree they are pushing on a string. If velocity is held as a constant then creating more => "growth".
dredmorbius 11y ago
While it's true that money supply's grown and GDP hasn't by nearly as much, that's not the correct response -- OP mis-defined GDP.
- branchless 11y ago
  I went on to qualify that I'm assuming velocity holds constant. I really think GDP is a terrible measure. We need something that reflects the actual amount of "good stuff" getting done, not the amount of fiat created by banks to ramp the same pile of bricks.
  - dredmorbius 11y ago
    While we're agreed on the deficiencies of GDP, the original issue was how economists define growth -- and, well, that's how, and is what Gordon's book addresses. Mismeasures notwithstanding, to a first approximation, GDP likely works fairly well. Not that it's not the fiat created by banks, but the turnover (revenues) generated in the process which would inflate GDP. Something I've been meaning to look into -- and which will likely upset a maths friend of mine on G+ -- is whether financial sector activity really ought be counted as productive. Much of it I suspect isn't.
    - branchless 11y ago
      That's my whole point. Loads of money is created for lending against land without a single brick being placed as banks force people to pledge all their future labour in exchange for the temerity to exist.

dredmorbius 11y ago

Incorrect. More money => inflation[1]. GDP growth is more total overall spending, plus certain adjustments, in real, constant currency units. That is, inflation adjusted. The problems around GDP tend to be that: 1. It discounts nonfinacialised quality-of-life improvements. 2. It neglects the negative costs of financialised quality-of-life detriments. I believe that the Wikipedia article links to several alternative measures of GDP. I find Herman Daly's discussion of these pretty good, or you might check to see what the WorldWatch Institute's come up with, to name another likely source. ________________________________ Notes: 1. So, you might ask, what of QE, why all this money and no inflation? Good question, and people are pursuing that. My theory is that a) the money's largely gone to banks and large institutional investors, b) see Robert Gordon, there's a long term secular decline in growth, so they're looking for alternative investments, resulting in c) Gee, stock markets and housing have been going gangbusters, but isn't that just asset price inflation, i.e., inflation on Stuff Rich People Buy? Seems fairly likely, particularly if you plot the Dow or S&P 500 average against the Fed's balance sheet (proxy for money supply / QE. Head over to the St. Louis Fed's FRED plotting toy[2] to see for yourself.\ 2. It's actually a pretty cool toy. The sort of thing you might imagine a megolomanic conspiracy controlling the global money supply to come up with.[3] 3. I kid, I kid. It's the lizard-men.

branchless 11y ago
We've had rampant land price inflation which is not correctly reflected in the stats. GDP uses a deflator and that deflator doesn't reflect land prices, therefore printing through land doesn't show up fully.
- dredmorbius 11y ago
  Quite possibly. I'd amended my post prior to your reply, addressing this in part.
erikpukinskis 11y ago
After just watching another Bernie Madoff documentary, Is it possible it's in those kind of imaginary assets?

deleted 11y ago

[deleted]