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How the Great GDP Hoax is Stealing Your Wealth

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  • How the Great GDP Hoax is Stealing Your Wealth

    You hear the finance gurus on television often refer to the GDP as an indicator of how the economy is doing. It is a number used by investors. It refers to the "Gross Domestic Product". Economists are talking about any recovery of the economy in terms of jobs, consumer spending, and our exports. All this time it is how and where we are spending money. The real indication of how the economy is doing is in what we produce that we can export, how much we spend and invest, and what we sell as opposed to what we buy. This is what is what makes up the gross domestic product.

    The problem is that the way the GDP number is calculated is deceiving. The GDP = Consumption + Business investment + Government spending + Exports - Imports. You may hear economists on TV say that the GDP has grown lately, and that is a good sign that the economy is recovering. Next time you hear that you need to pause and think about how the GDP is calculated and what this means when we use it as an indicator of economic growth. Look at what is really happening in the economy and compare it to the growth in this number. It might explain a lot about why the current administration in Washington is convinced that government spending is the solution, and why it is deceiving everyone into believing them.

    If you recognize that any component of the GDP that grows significantly, and drives the growth of that number, is simply another "bubble" you will see the growth is fake. There is no momentum in the growth and the aberration will eventually correct itself. You can also see that when the government encourages one of the components of this calculation, they are trying to manipulate an indicator. That is why they encourage consumer spending, despite the growth in debt it creates. It is why they believe government spending will create growth. You would think they would encourage business investment, and to some extent they do, but when Americans are deep in debt, it is harder to get them to invest than it is to spend. As far as our exports are concerned, the continued decline of the value of the dollar due to both the government's skyrocketing debt and consumer debt, that number will continue to be a drag on GDP. The government will continue to attempt to compensate by encouraging spending of all kinds to prop up a weak number. The only way to get these numbers growing legitimately, in a way that we can have confidence in it is to pay down our debts and start producing more products and services we can competitively export. These are two things we are having significant difficulty doing.

    So how does this affect your wealth? In short, it steals it. You are told the economy is doing well because the GDP is improving, and it is used to justify more borrowing. Some advocate that the debt is okay as long as it is growing in proportion to the GDP. When the numbers are disproportionate and wildly out of balance the growth is due to a "bubble" that will soon burst. In the end, the value of the dollar is hurt and that means the dollars you have and that you earn each paycheck will buy less. This is a process that has been going on since 1913, when the Federal Reserve Act established the Federal Reserve. It was further facilitated in 1971 when Nixon took us off the gold standard and allowed the Federal Reserve and the Federal Government to print money without accountability. Now inflation is a hidden tax that is eating away at your wealth. It is a problem that is accelerating with the passage of time. The Federal debt in 2008 has begun to explode beyond our imaginations. This could be a precursor to failure of the dollar as a currency.

    What can you do? You need to be aware of what is happening and making sure you spend less than you make and save as much as you can. Put your savings into some form of gold holdings until the crisis passes. Then your buying power for that money will be preserved and you'll be able to trade it into the new currency later without losing the vast majority of it in the period of hyperinflation that will occur. Food will be expensive during that period, as will transportation and clothing. These basic needs must be planned for. For more information about how to sell the dollar to preserve your wealth, see my article on this.

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