The GDP Illusion

I could really kick myself for not seeing through all the bullshit put out by G7, G20, The Fed, BoE, ECB, BoJ.

I have got it all wrong for the past two years! I have been telling you all this time that, on account of the unsustainable level of debt wherever you look, that the dreaded double-dip and banking crisis 2 are just a matter-of-time away. I could kick myself for having got it so wrong for so long, and so I apologise to you dear readers, one and all, for having led you up the garden path and having caused you so many sleepless nights!

You see, I have only just realised that we are still in the first dip and banking crisis 1: it hasn’t gone away, you see, but has been with us all along!

I could really kick myself for not seeing through all the bullshit put out by G7, G20, The Fed, BoE, ECB, BoJ, the NSO and the OBR, and all the rest. They said we were coming out of recession and kept banging on about the recovery. But there was no recovery: they bailed out the busted banks with our/your money and then gave a push on the bit of string called recovery – cash-for-clunkers, scrappage schemes, shovel-ready projects – all the usual Keynesian bullshit, paid for with our/your money, so that it looked like a recovery, until you look behind the smoke and mirrors and realise all this talk about GDP growth is nothing of the sort.

Let me explain. When the GDP shows an increase that does not mean that the actual activity in the productive economy has increased by even a box-load of widgets. “But, how could that possibly be?” you exclaim. Ha! Because the bullshit lies, like a trap for the unwary, in how GDP is calculated, and what it conveniently leaves out.

The UK’s GDP, for example, has been static for nine months, but have prices been static? Next, the inflation figures, the eurozone CPI, is running way below the actual rate, I’m sure you will agree from your own experience, and real inflation is far ahead of GDP growth. And then the GDP itself is a synthetic calculation, counting an increase in taxation, for example, as an increase in GDP, so when VAT goes up by 2.5%, so GDP rises. Then again, exports/net imports are another component, but when you let Sterling devalue by 25%, GDP rises again. Lies, damn lies, and statistics!

As I emerge coughing and spluttering and spitting from this dreadful wooden-horse of a device, whereby the infidel mandarins have invaded my rational being with all their bogus bullshit, all I see as I wipe my eyes in sheer disbelief, as though emerging from Plato’s cave and blinded by the unexpected light, is that the banking crisis 1 has morphed back into the same crisis; that I am still standing in the same dip as when this deceitful device crept up on us in the dark; that all the boffins have been doing is hoping and praying for growth, and inflation, to resume. Well, the inflation has, but there is no real growth at all.

Real growth can only be delivered by the productive private sector, which does things and makes things that real people actually need. If the private sector has been providing growth, then unemployment would be coming down, no? Well, in the UK and US the long-term unemployed/unemployable is rising, and as for the PIGS, don’t even go there – except on holiday, but only with hard currency, a stern resolve never to be duped again, and a return ticket!