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.
However, I do not focus on one set of numbers...I look at the average blue collar workers around me, the flight of US manufacturing overseas and the collective picture of all of the efforts of our own goobermint marching to seize more power.
That in of itself (the continued willful and goal-minded) growth goobermint duration a serious and global recession is idiotic at first glance, however, that is not case.
Previously, easy money and irresponsible lending couple with an corrupt banking and political system lays forth nothing but disaster for you and me and this country.
We have the worse crack addict ever now running this country and they (the legislative and executive branches) are hooked on the money-power drug soon to OD.
We have a much much larger problem than the polished / slanted / deceitful numbers the goobermint hands out and the state run media shills for continuously.
Zero will go down in history as the worse POTUS to ever hold the office.
Currently, U6 numbers are pushing 25%.... and until that number is cut in half and people back to work, all the goobermint BS numbers mean doodley squat. (a doodle is a bunch of baby chicks, with one sometimes referred to as a diddle.)