You did nail it exactly with your analysis with regards to the GDP.
Problem is with the current yahoos now in the WH and the Congress, the GDP is inaccurate as it takes into account goobermint spending.
Anyway you cut it, the private citizen and private industry pays for the ingredients, the labor and the resources that make up the economic pie that all of us eat from.
The reduction in the standard of living here is happening with the net buying power of the average private citizen eroding at an alarming rate.
The bozo's on Humpback Hill think they can print money and then dole it out to its kool-aid drinkers as a means to increase the velocity of money.
With current conditions, that's a wet dream shooting blanks. (sorry about that statement, but it does apply on the mark).
The only way for the economy to rebound and the dollar to strengthen is to cut the size of goobermint, reduce taxes, tighten credit, raise the interest rates, pay down the national debt, remove the strangleholds of over regulation to industry, reduce corporate income taxes as it is the only means stimulate manufacturing. We also need to institute fair trade, not free trade.
As a country we need to invest tax dollars now into infrastructure vs art work and ACORN, as examples.
A nation's true wealth is derived from manufacture of domestic goods from domestic resources with balanced domestic consumption. Also, private investment (savings) is a must to allow for technology improvements within domestic industry. If I had a billion laying around, no way would I invest it in a bunch of strip malls or condos now (as examples).
Finally, we need to stop playing political footsies with special interest groups w/ regards to energy policy. We have the resources now to develop an independent energy grid and we need to do it. Nuclear is way lagging in that regard.
INHO, people do not want to accept reality and fact. In reality the NWO wants to bankrupt us and is well on the way. Greed and deceit are well and alive and growing.
GDP has always included government spending, but I agree with you... It’s inaccurate. There is no market mechanism to test the value of government services. The only thing that ensures that government spending is not pure waste is that it’s got to get through the political system. But the political system is broken. At the same time, I don’t think that really has much to do with inflation. It has more to do with redistribution.
The only way that it impacts inflation, I think, is that the taxpayer has got to pay for that waste, and the higher taxes are, the less reason people have to be productive. Less production means even fewer goods, so that it takes less money to have the situation that you have “too much money chasing too few goods.” That’s why I hedged my statement by saying that the only way it can happen is if GDP is growing too fast, “or productive capacity is declining.” There are a lot of ways productive capacity can fall. I think that what happens in the oil industry will be the key to whether this ends good or bad, however. If the price of oil goes up, which might happen if world oil demand outpaces supply, or if the dollar continues to fall, then you’ll see inflation caused by reduced capacity, as well as a further decline in GDP. If the price of oil comes down, then you’ll see the reverse.