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Wednesday, July 09, 2014

Government Lies Expanding

The government lies about inflation, employment and, now, GDP.

After the atrocious drop in Gross Domestic Product in 1Q2014, government apparatchiks are coming up with creative ways to bolster GDP. Their latest gimmick is to reclassify some expenses as income. That moves them to the positive side of the ledger, not in reality, but in the fantasy world of GDP. GDP has always been a very poor way to judge the economy. For instance, if the crime rate goes up, the government hires more police. That's obviously an expense and should subtract from GDP. But, no, government considers that “growth.”

Now, the government has decided that Research & Development expenses should be counted as income when it comes to GDP. From an expenditure to income, government crazies think no one notices that GDP no longer is a gauge of the economy's health. Eventually, they are going to reclassify more expenditures to income and we'll never have another official recession.

Can't wait for that day.

Our take: the economy went into recession in the 1990s and has been in one ever since. The government continually adds to the GDP lies, first by understating inflation (which shows negative growth in GDP for the past few decades), and now by inverting the meaning of “income.”

If you reported your income and expenses on your income tax return the way the government does, you'd be in prison before long. And, you'd be counted as “employed” as well.