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Category Archives: The GDP Paradox

The GDP Paradox

07 Friday Jul 2017

Posted by australia4mpe in The GDP Paradox, Uncategorized

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Gross Domestic Product (GDP) is said to be a estimate of a nations economic growth. How a country’s GDP is calculated is using the following formula:

GDP = C + G + I + NX.

“C” is equal to all private Consumption, or Consumer spending in a nation’s economy, “G” is the sum of Government spending,  “I” is the sum of all the country’s investment, including businesses capital expenditures & “NX” is the Nation’s total net exports, calculated as total exports minus total imports (NX = Exports – Imports).

Where this formula gets it totally wrong is it just assumes private consumption (C) is equal to consumer spending & the total business Investment (I) is an addition, which is failing to account for the sum of principal + interest payed out of a forever deficient volume of  circulation only ever comprised of some remaining principal.

As a result this is likewise failing to conclude that most if not all government expenditure (G) is not investing taxation into any nation, but instead perpetually reintroducing or laundering the principal & interest formerly stolen out of circulation in all private debt back into circulation again as an ever greater escalation of government debt. This is in fact what funds government expenditure, apposed to taxation that is likewise paid out of circulation — either directly or indirectly into the banks coffers to service the ever greater escalations of government debt.

Although GDP accounts for imports & exports (NX) this only accounts for just one variable of reflation & deflation under banking.

Therefore what makes GDP an insane contradictory paradox is firstly it is adding the sum of deflation instead of subtracting it which irrationally estimates growth based upon non-existent inflation, & secondly even if we did have inflation you can not just assume any existence of inflation is a true indicator of growth either.

“Real growth, however, can only be determined when any increase in circulation is always equal to remaining debt & always equal to represented property value, where there quite literally is no inflation or deflation.”

So too is Debt-to-GDP misleading not only because the GDP aggregate itself is failing to subtract what it is always adding, but the debt is only referencing government debt apposed to all debt including private debt. It is assumed a low Debt-to-GDP ratio indicates a country is producing enough to service its debt without incurring further debt, which is mathematically impossible regardless so long as we are all paying the added cost of interest in private debt. This is in effect what artificially inflates prices by however much interest we pay out of circulation above the sum of principal just spending money today, that is at any given point in time deflationary (circulatory deflation) in regards to the remaining volume of circulation always available to industry & commerce.

David Ardron.
Advocate / mentor, Co-founder, Co-director – Mathematically Perfected Economy™ (au)

(Published : July 07, 2017, last edit Nov 11, 2017)

 

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