GDP — the real story
Judging the state of the economy using government statistics is impossible, because they are designed to deceive. Amazingly, people just accept them, which will be their undoing.
The statistical inexactitude among many others, is GDP which is central to everything. Here is the Bank of England’s definition:
“Gross domestic product is a measure of the size and health of a country’s economy over a period (usually one quarter or one year). We also use it to compare the size of different economies at different points in time.”
In other words, it is being confused with economic progress, which is actually unmeasurable. Here is our accurate definition:
“Gross domestic product is total credit deployed in the economy for qualifying activities over a stated period of time”
For the Bank’s definition to be correct assumes that all credit deployment is productive, financing the production of goods and services or their consumption. It can only be true in an economy when there is no government intervention. But governments do intervene heavily in many ways to distort the relationship between production and consumption.
The distortions introduced by socialising governments are bad enough. We should know this from the collapse of state-directed economies such as the USSR and China under Mao Zedung, particularly compared with the extraordinary success of post-war Hong Kong under its free market regime with minimal government intervention.
It is even worse when governments debase the currency. It allows a government to
