Thursday, 5 December 2013

GDP? its a pointless statistic

If one statistic lies above all others it has got to be GDP and very closely followed by the "Official Inflation Figures"

GDP is simply a guess as to Turnover or Revenue of the whole economy, but there are so many approximations, so many guesses, so many substitutions, so many assumptions, and frankly so many lies contained within the methodology it is a pointless statistic.

The raw figures are always overstated so that Politicians can say " Our Debt is not so bad in relation to our GDP" i have one big question? are we going to pay back our debt with GDP?

A far better statistic is to compare the size of the Governments debt against its actual income ITS TOTAL TAX REVENUE. That would be quite an eye opener and proves beyond any reasonable doubt what a real financial mess all western governments are actually in.

The other farce regarding the GDP numbers is that to allow for inflation a GDP "Deflater" is used.The problem is that the deflater bears little resemblance with actual true inflation reality. One bent statistic now collides with another bent statistic.

This is because official inflation figures are used as the deflater, the problem is that these same official inflation figures do not actually measure TRUE INFLATION they radically understate true inflation,which means that GDP is therefore always radically overstated.

Compound this overstatement over many years and the GDP figure becomes ridiculous. If a true and honest rate of inflation was used as the deflater then there has been no growth, i repeat NO GROWTH in the western economies since millennium night, in reality we have quite dramatic negative growth over this same period.

Bent and meaningless GDP figure - Artificially low rate of inflation as the deflater = pointless statistic

All debt accrued by the Government will be paid if at all! out of tax revenues. Therefore simply compare the Governments debt against the same Governments total tax revenue, that is the only ratio that matters.  It is also an extremely easy and accurate number to calculate, and wholly relevant. The GDP number is a farce to hide the real mess that Governments have now got themselves into. Debt will be paid from Tax income, so all you need to do, is quantify the debt and quantify total tax income. That will show how many years it will take to pay off all the Government debt, it is a frightening figure for all Western Governments.

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