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The Anti-Concepts of Money: What is GDP?

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Published : September 25th, 2023
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If you’ve read the Introduction from this Anti-Concepts of Money series we can now discuss the Anti-Concept: GDP

The Anti-Concept of GDP

Let’s discuss thet anti-concept, Gross Domestic Product or GDP for short. Armed with an understanding of anti-concepts, it should be obvious from one of the ways it’s calculated. From Wikipedia:

Y = C + I + G + (X − M)

Y GDP
C Consumption
I Investment
G Government expenditures
X Exports
M Imports

As you read this, consider if consumption can be added to investment. They are treated as like terms. Isn’t this the hallmark of an anti-concept?

These allegedly like terms are to be added into a single sum. And then there’s government spending! Consumer spending is certainly not investment. But government spending is another beast altogether. It is enabled by either taxing productive people or by borrowing (I will address this kind of borrowing, below).

One is supposed to just accept that all of these things contribute to the economy. It’s like adding production + destruction. The sign is wrong, destruction should be subtracted.

Good Growth vs Bad Growth

There can be only one purpose to presenting such a hash of different things as if they can be subsumed under a single concept. That purpose is to smuggle the idea that any increase in any one of them is equivalent to an increase in any other. If GDP goes up, well then, the economy grew. Growth is good, isn’t it? It is growth if the government borrows to dole out welfare. It is the same kind of growth if you borrow on your credit card to go on a bender to Las Vegas!

GDP makes economists think that a debt-fueled spree is growth. It’s very hard to try to think, much less communicate to others, that some kinds of growth are good and some kinds are bad. Usually, it comes out as a muddle, reduced to the low-resolution position that some amount of growth is good, but if the economy grows faster than that magic threshold rate, then it’s bad. Or a more nuanced muddle is that some government policies lead to bad growth, and some are more efficient.

Growth as defined by an increase in GDP is also an anti-concept.

A Proper Measure of the Economy

A proper measure of the economy would be based on some kind of national balance sheet, not a statement of the gross revenue. It would look at how much additional capital was accumulated (or decumulated), not on how much people binged on consumer goods.

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Additional Resources for Earning Interest on Gold

If you’d like to learn more about how to earn interest on gold with Monetary Metals, check out the following resources:

The New Way to Hold Gold

In this paper we look at how conventional gold holdings stack up to Monetary Metals Investments, which offer a Yield on Gold, Paid in Gold®. We compare retail coins, vault storage, the popular ETF – GLD, and mining stocks against Monetary Metals’ True Gold Leases.

The Case for Gold Yield in Investment Portfolios

Adding gold to a diversified portfolio of assets reduces volatility and increases returns. But how much and what about the ongoing costs? What changes when gold pays a yield? This paper answers those questions using data going back to 1972.

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Keith Weiner is a technology entrepreneur and president of the Gold Standard Institute USA. He was the founder of DiamondWare, a Voice Over Internet Protocol software company, which he sold to Nortel in 2008. He is an Objectivist who has his PhD from the New Austrian School of Economics, with a focus on monetary science. Keith, who currently trades and analyzes precious metals and commodities, advocates a return to a proper gold standard and laissez-faire capitalism. He lives with his wife near Phoenix, Arizona.
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