Contrary to official US government statistics, the economy is shrinking at an alarming rate.
When you calculate real GDP growth, you have to adjust for inflation. If the size of the economy stays the same, but inflation is 10%, then the raw GDP will be 10% bigger.
When economists calculate “inflation adjusted GDP”, they use the CPI as their inflation adjustment factor. However, the CPI severely understates true inflation. Inflation is misreported as economic growth.
For example, suppose that true inflation is 20% and the CPI is 5%. Without any inflation adjustment, the economy grows 10%. When you adjust via the CPI, it seems that the economy grew by 5%, when it really shrunk by 10%. This leads to the lie “Deficit spending and inflation stimulate the economy.” Inflation causes the economy to appear to grow, because the inflation adjustment uses the CPI instead of true inflation.
Gold is a much more accurate measure of inflation. There are short-term fluctuations. Over a period of 5-10 years or more, gold should track true inflation pretty closely. It is more accurate to say “The value of the paper dollar is crashing.” rather than “The value of gold is skyrocketing.”
I calculate inflation-adjusted per capita GDP correctly. I use gold as my inflation adjustment, rather than the biased CPI.
Here is USA per-capita GDP in ounces of gold.
Here’s the same information on a log scale. On the log scale, it’s easier to see how the rate of shrinkage is increasing.
I use this page as my source for GDP data. I use udagold as my source for the price of gold. “% Gain” is the change in one year. “Cum % Gain” is the cumulative change. “Ann % Gain” is the cumulative gain converted to an annualized amount.
|Year||Per Cap GDP||Gold||GDP/Gold||% Gain||Cum % Gain||Ann % Gain|
Notice the severe decline from 2000. In the year 2000, per capita GDP was 130 ounces of gold. In 2011, it was only 30.3 ounces of gold. That’s a decline of nearly 75%, at an annualized rate of 10%.
Measured in ounces of gold, real GDP has decreased every single year since 2000!
A pro-State troll might say “There’s a gold bubble.” I don’t see any evidence of that. Even if there is a slight gold bubble, that doesn’t explain a 75% decline over 11 years.
Some people object that GDP is not a fair measure of economic activity. Many useless things are counted as part of GDP. Lawyer salaries count as part of GDP. The financial industry counts as part of GDP. However, GDP is the most widely-cited measure of economic activity. There is no way for me to measure “GDP minus useless things”, so I just use GDP.
When professional liars talk about inflation-adjusted GDP, they use the CPI as their inflation index. The CPI severely understates true inflation. This causes inflation to be misreported as economic growth. This leads to the lie “Inflation stimulates the economy.” Inflation causes the inflation-adjusted GDP number to increase, because inflation is not properly counted. If you measure GDP in ounces of gold, then the economy is crashing at an alarming rate.