[BfloGuy]

Now this makes me interested in what constitutes "domestic product".

And well it should.

Keynesians believe that spending [any kind of spending] drives the economy and Keynesians developed the GDP equation to reflect that belief. And since a lot of money is spent in Washington, ispso facto, its GDP must be high.

GDP is a measure of nothing but spending. It does not measure economic growth. That is a result of capital growth -- something the GDP and the Keynesians completely ignore. Capital growth only occurs when entrepreneurs and consumers save part of their earnings to be reinvested in production.

That concept is rejected by Keynesians and the current administration who wish desperately for a "bottom up" recovery which will never come.

[ex91B10]

"GDP is a measure of nothing but spending."

I remember being stunned upon learning [many moons ago] that spending on health care was included in the GDP. Dying folk spending money to stay alive isn't what I'd call "growth".

[corkoman]

Well they don' teach THAT in college civics class. Seriously, how is it that only now through FR is that made clear?

Is it too much to ask that we start a new index of actual production and decouple that from "spending".

I will vote to not include as a product the Fed printing money.

Thanks Bflo - I nominate you for head of the New GDP Initiative.