Topic: Economics
Economic Math in Today's Economy Ask yourself, based on what you have heard reported, if you believe GDP for the year 2008 was higher or lower than year 2007 GDP. If you answered lower, you'd be wrong.by EJ Moosa
(libertarian)
Monday, August 3, 2009
Ask your self, based on what you have heard reported, if you believe GDP for the year 2008 was higher or lower than year 2007 GDP. If you answered lower, you'd be wrong.
There is something amiss. The reporting of the economic situation in the United States is moving beyond the absurd. And I am uncertain as to the real reason why.
We have been told that this was the worst economic recession since the Great Depression. Then we are told that things were worse than what they had expected. Which is it? It must depend on the objective of the administration in charge on the day of the report. If it is to get new control of the economy via legislation, it's worse. If it is to booster the President's approval ratings, it's better.
Last week, media reported that first quarter GDP was worse than originally reported, but that the 2nd quarter was better than we expected and so things are getting better. This is proof of the positive effects of the Stimulus Plan passed earlier this year. Ignore the fact that both quarters point to a shrinking US economy.
Then, when I reviewed the numbers from the Bureau of Economic Analysis, which is the government agency that reports these numbers, I am astonished by what I find.
Review the GDP numbers for 2007 and 2008. Do you notice anything peculiar? Maybe that year 2008 GDP is 2.59% higher. Is this how we now define a recession?
Change the chart to look at the data on a quarterly basis (they actualize the number for this), and tell me what you see.
Can this be right? The first negative quarter of GDP was the fourth quarter of 2008? That we have only had three negative quarters in a row(despite the media reporting we have had four and this is the first time since the Depression? This is the recession we are told started in December 2007 under Bush, and is therefore his fault? Yet the economy grew by 2.59%? This is not your grandparent's recession.
If the economy was not shrinking when it was being reported to us it was, and if the economy is not growing and at the same time we are being told things are improving, what in the world is going on. It does not make sense.
Yet, we have had Legislation rammed down our throats because things are so horrible. Bailout plans, economic stimulus plans, and now the Health Care Legislation that is now being touted as what the economy needs to survive. Not to mention Cap and Trade legislation that is going to create millions of new "green" jobs" . It's such a crisis, that they do not have the time to even read the legislation.
Ask yourself if these proposals would have had a chance if the American Public knew where our economy really was.
Where is the truth in what is really happening in our economy? Why are the media not asking more questions or pointing out that if we grew by 2.59%, then how is it a recession?
Are you concerned that we are redefining the benchmarks by which we judge our economy, at the will of those in charge of the government? Are you concerned that that our future prosperity is being legislated away so that we can save our economy?
What are your thoughts?
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The views expressed in this
article are those of EJ Moosa only and do not represent
the views of Nolan Chart, LLC or its affiliates. EJ Moosa is
solely responsible for the contents of this article and is not an
employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
It is the "economy" which they wanted to preserve that was at risk, not the economy itself. The basic economy can never "fail" completely unless the currency becomes absolutely worthless. Although, they have done plenty to put the currency at risk [money creation], it still is nowhere near worthless and never was at a point of extreme risk.
The economy which was at risk before all the bailouts, etc. was the controlled economy that advantages the meganational financial empire. As we have witnessed and will witness, the power structure will do ANYTHING to preserve that. What they are doing is transferring "real" value from people and companies that actually work and produce to those who don't. Numbers and reports are constantly adjusted to meet these goals.
What I fear the most is that we are moving rapidly towards the goal of subjective versus objective economic goals.
If things "feel bad" we must act. If things "seem expensive" we must act. If you cannot "afford" your housing, we will help make it affordable. If we "beat" the estimates, then things are getting better. Nothing could be further from the truth.
And you are certainly correct as we are transferring real value. Will the masses wake up, or will they continue to say "what's in it for me?" "Cash for Clunkers" affirms the "what's in it for me" attitude.
I doubt many people grasp that we could have a growing economy yet it not make one nickel in profit. There is a word for that sort of economy. And history has shown that they do not survive in the long run.
Regarding the first consideration, here is a note from the site:
"Chain-type estimates provide the best available method for comparing the level of a given series at two points in time. Chained-dollar estimates are obtained by multiplying the chain-type quantity index for an aggregate by its value in current dollars in the reference year (currently 1996) and dividing by 100. For analysis of changes over time in an aggregate or in a component, the percentage changes calculated from the chained-dollar estimates and the chain-type quantity indexes are the same. Thus, chained-dollar estimates can be used to compute "real" (i.e., inflation-adjusted) rates of growth."
The greater consideration: I cannot agree more. It is becoming impossible to debate the numbers because they are changed with apparently relative ease.
It alludes to 1984. They make up lies and sell it as truth. They also realize the only way to pass their legislation is to make up a crisis. Is our economy bad? yes. Is it like the Great Depression? not even close.
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