Gross Domestic Product. This is how economies of the world over measure their “growth.” This is an important measuring stick for nations because the thought is, that if we aren’t growing, we’re contracting. We currently live in a growth at all costs type of world and that has had many perverted affects on this planet and life in general. Since GDP is so important, how is it measured?
According to The Bureau of Economic Analysis we factor in 4 components to calculate GDP. Of those 4 components, consumer spending makes up a whopping 70% of overall GDP!! Your first thought might be, well that makes sense, if people are spending more money that is good for the overall economy. Like we stated in the beginning, if we aren’t growing, we’re contracting. If spending equals growth, that would mean saving equals contraction. That means that according to United States GDP calculation it is a bad thing for consumers to be saving money. When you look at it through that lens it is no wonder why everything in this world is geared toward spending and if you can’t afford it you can just take on debt to be able to have it now. This is called Consumerism.
Last week President Joe Biden talked about 2021 GDP numbers and said, “Last year, we had the fastest economic growth in 38 years” while referencing this chart:
It is very simple. Why do we have GDP growth? Consumer spending. Why do have more consumer spending? Printing money. If you tell people to stay home while simultaneously sending them stimulus checks, what do you think is going to happen? They’re going to spend!
I often refer to a lot of these government statistics as showing an illusion of growth. That is because everything looks like growth until you factor in the amount of money creation it took to get that “growth.” GDP is no different. It is a statistic to help show the illusion of economic growth. The chart below is the growth of our money supply from 1980 to present. They muddy the water by charting it in billions. 4,000 billion = 4 trillion. 20,000 billion = 20 trillion.
That’s a ton of money creation!! Now lets look at the US GDP numbers in the same time period.
They look pretty similar don’t they? Morale of the story: the more money we create the more economic “growth” we have. It is no wonder why we have the fastest economic growth in 38 years! We’ve printed more money than ever before!
Instead, GDP should be measured entirely by what a country produces. The more you produce the more growth you have. America ships all it’s production overseas and the only thing we continue to produce is money.
The value of any good will inherently trend towards its cost of production. How much does it cost to produce a dollar?
A couple points I’d like to touch on is 1) why do people spend more than they save and 2) why is it harder to save now than ever before?
1). Whether consciously or subconsciously people spend most of their money versus saving it because it is worth less the more of it we create. Every day, month, and year your dollar buys you less so people are incentivized to spend it to get the most bang for their buck.
2). It is harder to save money because the cost of goods and services are going up at a faster rate than our wages can compensate. We are spending more of our paychecks on gas, groceries, utilities, clothes, taxes, education, medical bills, rent, and housing than ever before. This is the called inflation and it is a direct theft of your purchasing power.
Conclusion
Bitcoin restores the worlds ability to save again since it cannot be printed out of thin air. It requires real economic output in order to create Bitcoin. With the hard cap on its supply you can be assured that over time your purchasing power will remain steady or increase. This allows for people to defer consumption, save, and be prepared for a rainy day. If nobody can save money and we are all indebted we become slaves to our jobs. We spend less time with loved ones since we need that next paycheck. We send our kids to daycare so we can work. We put our elderly in a nursing facilities because we don’t have time. It doesn’t allow us to stand up for what we think is right because our life depends on that next paycheck.
Government statistics are always going to be skewed toward their agenda and incentive structure. You can make a chart say many things based your intended goal. The GDP chart I posted at the top of this writing wasn’t the original chart they published. This one below was, let me know if you can notice the difference. Hint: the goal is to make the growth look even more substantial at first glance.
Last but not least, something to consider and think about. The world wants to be “net-zero”, go green, renewable for everything. How can we possibly achieve this goal with a monetary and economic system that requires growth at all costs? A “green” world is impossible with an inflationary monetary policy. This planet has a finite amount of resources on it and in order for humans to appreciate that we need a finite monetary system that allows for deferred consumption. Growth at all costs ultimately cuts environmental corners and this whole “net zero” initiative is a bunch of bullshit until we rid ourselves of the money printer.