U.S. economy grew at 6.4 percent annual rate in first quarter as consumer spending drives robust recovery

[none]

what data?

GDP

is this a geopolitical thing?

 

[laughing dog]

what data?

GDP

If you mean that initial estimates of GDP are prone to drastic revisions, then I agree. Of course that was true of GNP as well.

If you are saying that estimates of GDP are shit because the world is not like it was in 1950s, then your position is based on ignorance of what GDP measures or is simply idiotic.

GDP measure the dollar value of spending on final goods and services produced in the United States. The main categories are Personal Consumption Expenditures, Gross Private Domestic Investment (spending on equipment, structures and changes in business inventories - all tangible items), Government spending on goods and services (which excludes all forms of transfer payments), and Net Exports (Exports of goods and services - imports of goods and services).

GDP is also a measure of the total value added produced in the United States.

 

[RVonse]

what data?

GDP

Government spending on goods and services (which excludes all forms of transfer payments),

Without looking up the exact numbers it is clear that government is now a much higher percentage of the economy than it was in the 1960's. Which is why government should not be included or if it is included the government portions should be footnoted. The government can not produce goods and services. It never has and never will. It can only transfer someone else's wealth via taxation and give it somewhere else and saying otherwise is highly disingenuous. And the fact they are including the government on these transfer payments for GDP is highly inaccurate despite what your official definition may be.

Taken to the extreme it becomes clear. If all of the GDP was government there would be no economy at all. There would still be money to pass around but there would be no one producing anything to buy. We could have a GDP increase of 100% but if it was all the government that GDP data would tell us nothing at all.

 

[laughing dog]

Government spending on goods and services (which excludes all forms of transfer payments),

Without looking up the exact numbers it is clear that government is now a much higher percentage of the economy than it was in the 1960's. Which is why government should not be included or if it is included the government portions should be footnoted. The government can not produce goods and services. It never has and never will. It can only transfer someone else's wealth via taxation and give it somewhere else and saying otherwise is highly disingenuous. And the fact they are including the government on these transfer payments for GDP is highly inaccurate despite what your official definition may be.

Taken to the extreme it becomes clear. If all of the GDP was government there would be no economy at all. There would still be money to pass around but there would be no one producing anything to buy. We could have a GDP increase of 100% but if it was all the government that GDP data would tell us nothing at all.

First, the notion that government cannot produce goods or services is false. Fire protection is a service. National Defense is a service. Police are a service. All three can be provided by government and typically are provided by government.

Second, when the government purchases goods and services, it is purchasing them from the private sector. When the armed forces buy meat to serve the troops., it buys meat from the private sector. When the gov't buys Fords or buses, it buys them from the private sector. A Ford that is produced in the US should be counted in GDP whether it is sold to a household, a business or a gov't entity.

The notion that gov't production of services or goods is not real production because it requires the transfer of income or wealth via taxation is rather naive. After all, Ford requires the transfer of income or wealth whenever it makes or sells a vehicle.

When one is measuring the production of final goods and services, who buys those goods and services is not relevant to measuring the total amount.

 

[RVonse]

Government spending on goods and services (which excludes all forms of transfer payments),

Without looking up the exact numbers it is clear that government is now a much higher percentage of the economy than it was in the 1960's. Which is why government should not be included or if it is included the government portions should be footnoted. The government can not produce goods and services. It never has and never will. It can only transfer someone else's wealth via taxation and give it somewhere else and saying otherwise is highly disingenuous. And the fact they are including the government on these transfer payments for GDP is highly inaccurate despite what your official definition may be.

Taken to the extreme it becomes clear. If all of the GDP was government there would be no economy at all. There would still be money to pass around but there would be no one producing anything to buy. We could have a GDP increase of 100% but if it was all the government that GDP data would tell us nothing at all.

First, the notion that government cannot produce goods or services is false. Fire protection is a service. National Defense is a service. Police are a service. All three can be provided by government and typically are provided by government.

Ok. I guess the post office would be another example too.

Second, when the government purchases goods and services, it is purchasing them from the private sector. When the armed forces buy meat to serve the troops., it buys meat from the private sector. When the gov't buys Fords or buses, it buys them from the private sector. A Ford that is produced in the US should be counted in GDP whether it is sold to a household, a business or a gov't entity.

This is where I see the big difference. When the government buys the Ford it isn't purchased by the free market. The money that purchased that Ford was not given freely by someone's wants and needs.

The notion that gov't production of services or goods is not real production because it requires the transfer of income or wealth via taxation is rather naive. After all, Ford requires the transfer of income or wealth whenever it makes or sells a vehicle.

But in the government's case it was either taxation (theft) or borrowing (with no intention of payback). Furthermore, what do you call it when the government borrows money to dig holes in order to fill them again just to keep people employed? Would that be included in GNP definition as well? What about if the government buys that vehicle from China? The government can make all kinds of buying choices the real market would never do because they have an infinite amount of printing capability. Despite all the rhetoric otherwise, our politicians do not have to worry about balancing their budget and can make purchasing decisions not based on a rational market.

When one is measuring the production of final goods and services, who buys those goods and services is not relevant to measuring the total amount.

Your statement is accurate with our government's definition of GNP, no argument. I just do not believe it reflects reality measuring the production of a free market economy. And it gets more and more distorted the larger government slices into our economy.

That is not to say I believe the stimulus checks are bad and should not go out. It just means that I do not trust a GNP metric based on production coming from those checks.

 

[laughing dog]

This is where I see the big difference. When the government buys the Ford it isn't purchased by the free market. The money that purchased that Ford was not given freely by someone's wants and needs.

But that does not change the fact that the Ford was produced and sold - which is what GDP measures.

But in the government's case it was either taxation (theft) or borrowing (with no intention of payback).

You are mistaken - the US gov't has never defaulted on its borrowing.

Furthermore, what do you call it when the government borrows money to dig holes in order to fill them again just to keep people employed? Would that be included in GNP definition as well?

If that were to happen (which to my knowledge never has), it would be included in GDP just as it would if an entity in the private sector did the same thing. Interestingly, if the person hired was not a US citizen, it would not be counted in GNP because GNP (Gross National Product) measures the value of final goods and services produced by US citizens, regardless where they are.

What about if the government buys that vehicle from China? The government can make all kinds of buying choices the real market would never do because they have an infinite amount of printing capability. Despite all the rhetoric otherwise, our politicians do not have to worry about balancing their budget.

When anyone in the private or public sector purchases an item from China, that is an import and it is explicitly excluded from GDP.

Your statement is accurate with our government's definition of GNP, no argument. I just do not believe it reflects reality measuring the production of a free market economy. And it gets more and more distorted the larger government slices into our economy.

GDP measures the value of final goods and services produced in the US during the year. Who purchases the items are irrelevant to the amount produced. Do you think that US exports purchased by foreign governments do not reflect production in the US?

That is not to say I believe the stimulus checks are bad and should not go out. It just means that I do not trust a GNP metric based on production coming off those checks.

If you mean you do not think the induced spending from those stimulus checks will be sustained in GDP over time, I agree. But if you mean that the GDP estimates are over-estimating the value of final goods and services produced in the US, you are mistaken.

 

[Treedbear]

...

Second, when the government purchases goods and services, it is purchasing them from the private sector. When the armed forces buy meat to serve the troops., it buys meat from the private sector. When the gov't buys Fords or buses, it buys them from the private sector. A Ford that is produced in the US should be counted in GDP whether it is sold to a household, a business or a gov't entity.

This is where I see the big difference. When the government bought the Ford it was not purchased by the free market. The money that purchased that Ford was not given freely by someone's wants and needs.

Seems like a distinction without a difference if the purpose of GNP is to measure production.

The notion that gov't production of services or goods is not real production because it requires the transfer of income or wealth via taxation is rather naive. After all, Ford requires the transfer of income or wealth whenever it makes or sells a vehicle.

But in the government's case it was either taxation (theft)

As a citizen you've freely consented to being taxed just as you've consented to obeying any other law. Therefore, not theft. But that doesn't conflict with your right to protest taxation.

or borrowing (with no intention of payback).

Of course it gets paid back. The lenders are paid interest on their investment in government bonds. Nobody is forcing them to buy bonds. They are eager to do so.

Furthermore, what do you call it when the government borrows money to dig holes in order to fill them again just to keep people employed? Would that be included in GNP definition as well?

No, but where is that true?

What about if the government buys that vehicle from China?

No, of course not. Where is that counted as part of GNP?

When one is measuring the production of final goods and services, who buys those goods and services is not relevant to measuring the total amount.

Your statement is accurate with our government's definition of GNP, no argument. I just do not believe it reflects reality measuring the production of a free market economy. And it gets more and more inaccurate the larger government slices into our economy.

Then you need to find some other measure that conforms to your definition of the free market. But it would leave out a lot of information that serves as a useful measure of how prosperous we are as a society.

 

[Bomb#20]

You are mistaken - the US gov't has never defaulted on its borrowing.

Hmm. Money is a debt instrument. Back when we were on the gold standard, money was convertible to gold; a dollar in someone's pocket was in effect a promise to give him a certain number of grams of gold on demand. So when Congress passed a law in 1934 authorizing the government to alter the exchange rate from $20.67 to $35.00 an ounce, it seems to me it was defaulting on its debts*. If you disagree, can you explain why?

(* Which is yet another good reason the gold standard is a bad idea.)

 

[laughing dog]

You are mistaken - the US gov't has never defaulted on its borrowing.

Hmm. Money is a debt instrument.

No, it is not. When the US prints $10 dollar bills, it is not issuing debt because there is no promise of repayment.

Back when we were on the gold standard, money was convertible to gold; a dollar in someone's pocket was in effect a promise to give him a certain number of grams of gold on demand. So when Congress passed a law in 1934 authorizing the government to alter the exchange rate from $20.67 to $35.00 an ounce, it seems to me it was defaulting on its debts*. If you disagree, can you explain why?

Under the gold standard, paper money was convertible to gold at an established price. But there was no promise that the price of gold would remain constant. In effect, paper money was an asset and asset values are not guaranteed.

A devaluation (an increase in the price of gold under a fixed exchange rate system) does have the same effect on wealth as a partial default, but it is not a default on loans.

 

[Treedbear]

No, it is not. When the US prints $10 dollar bills, it is not issuing debt because there is no promise of repayment.

Back when we were on the gold standard, money was convertible to gold; a dollar in someone's pocket was in effect a promise to give him a certain number of grams of gold on demand. So when Congress passed a law in 1934 authorizing the government to alter the exchange rate from $20.67 to $35.00 an ounce, it seems to me it was defaulting on its debts*. If you disagree, can you explain why?

Under the gold standard, paper money was convertible to gold at an established price. But there was no promise that the price of gold would remain constant. In effect, paper money was an asset and asset values are not guaranteed.

A devaluation (an increase in the price of gold under a fixed exchange rate system) does have the same effect on wealth as a partial default, but it is not a default on loans.

I'd agree with that. Under the same logic I think you could say putting more money into circulation is defaulting on debt, even without a gold standard, because it inflates the price of all assets. But if you go down that road then by the same token when a company issues more stock it's defaulting on its debt. Right?

 

[Bomb#20]

Under the gold standard, paper money was convertible to gold at an established price. But there was no promise that the price of gold would remain constant. In effect, paper money was an asset and asset values are not guaranteed.

Hmm. Back when the gold standard was in effect, "gold clauses" were common in contracts. If you're telling me convertible currency wasn't understood to have such a clause, well, other government contracts from that era certainly did. For instance, the Fourth Liberty Bond came with a clause reading "The principal and interest hereof are payable in United States gold coin of the present standard of value."; they didn't mature until 1938 but their gold clauses were abrogated in 1933 and 1934 legislation.

A devaluation (an increase in the price of gold under a fixed exchange rate system) does have the same effect on wealth as a partial default, but it is not a default on loans.

Well, it would be hard to argue that the WWI war bonds weren't loans.

 

[Bomb#20]

I'd agree with that. Under the same logic I think you could say putting more money into circulation is defaulting on debt, even without a gold standard, because it inflates the price of all assets.

Not seeing how that can be construed as a default except when there's an underlying promise to redeem the currency for a specific asset at a specific exchange rate. With unconvertible money and floating exchange rates, all the people accepting it as payment know, or should know, that they're gambling that the government will manage the money supply responsibly.

But if you go down that road then by the same token when a company issues more stock it's defaulting on its debt. Right?

In the first place, nobody here was going down that road -- the company didn't promise not to issue more stock. And in the second place, if the company issues more stock at the current market stock price then the resulting dilution of ownership is compensated for by a proportional increase in the market cap of the company. So nobody is getting stiffed. Contrariwise, if the company issues more stock at a discount, and doesn't offer it to all shareholders on equal terms, (so it really is a de facto default regardless of whether some technicality has us labeling it otherwise), that's a really good way to get a minority shareholder lawsuit.

 

[none]

economics versus monetary theory.
go for it.

 

[laughing dog]

Under the gold standard, paper money was convertible to gold at an established price. But there was no promise that the price of gold would remain constant. In effect, paper money was an asset and asset values are not guaranteed.

Hmm. Back when the gold standard was in effect, "gold clauses" were common in contracts. If you're telling me convertible currency wasn't understood to have such a clause, well, other government contracts from that era certainly did. For instance, the Fourth Liberty Bond came with a clause reading "The principal and interest hereof are payable in United States gold coin of the present standard of value."; they didn't mature until 1938 but their gold clauses were abrogated in 1933 and 1934 legislation.

A devaluation (an increase in the price of gold under a fixed exchange rate system) does have the same effect on wealth as a partial default, but it is not a default on loans.

Well, it would be hard to argue that the WWI war bonds weren't loans.

No one is arguing that bonds are not loans, so I fail to see your point in bringing that up. Those bonds were redeemed by the US government, so there was no default. Are you saying they were not redeemed?

 

[Bomb#20]

Those bonds were redeemed by the US government, so there was no default.

Well, when you redeem your IOUs at 59 cents on the dollar, I suppose you can claim you redeemed them and there was no default. But your creditors probably won't see it that way.

Default of the Fourth Liberty Bond

Are you saying they were not redeemed?

Not saying that at all; what's at issue is the failure to make good on what was promised.

Suppose in 2019, expecting prices to go up, you paid $1400 for a peculiar futures contract from a commodity trader, a contract promising that in 2021 he will deliver to you either one ounce of gold or one ounce of palladium, whichever you choose. (Gold and palladium were both going for $1300 at the time.) Fast forward to 2021, gold is $1800, palladium is $3000 an ounce. The trader says "Here's your ounce of gold." You say, "Hang on, I choose palladium." He says "Screw you, I've redeemed the contract, you made a profit, what's your beef? We're done.".

He has in some sense "redeemed" the contract; but would you agree with the trader that he didn't default?

 

[laughing dog]

Those bonds were redeemed by the US government, so there was no default.

Well, when you redeem your IOUs at 59 cents on the dollar, I suppose you can claim you redeemed them and there was no default. But your creditors probably won't see it that way.

Doesn't matter how they feel. Either the loan is not legally paid back (i.e. default) or it is.

Not saying that at all; what's at issue is the failure to make good on what was promised.

Suppose in 2019, expecting prices to go up, you paid $1400 for a peculiar futures contract from a commodity trader, a contract promising that in 2021 he will deliver to you either one ounce of gold or one ounce of palladium, whichever you choose. (Gold and palladium were both going for $1300 at the time.) Fast forward to 2021, gold is $1800, palladium is $3000 an ounce. The trader says "Here's your ounce of gold." You say, "Hang on, I choose palladium." He says "Screw you, I've redeemed the contract, you made a profit, what's your beef? We're done.".

He has in some sense "redeemed" the contract; but would you agree with the trader that he didn't default?

No. Words have definite meanings. Defaulting on a loan means not paying it back.

 

[Bomb#20]

But in the government's case it was ... borrowing (with no intention of payback).

You are mistaken - the US gov't has never defaulted on its borrowing.

Either the loan is not legally paid back (i.e. default) or it is.
...
Defaulting on a loan means not paying it back.

So when you told RVonse that the US has never defaulted on its borrowing, the reason it's true is because "default" means "not legally paid back", and when the government stiffed its creditors in 1934, Congress passed a law making paying back creditors 59 cents on the dollar legal.

So RVonse: In the event that in the future the government buys something by borrowing with no intention of payback, don't worry about it -- we can count on Congress to pass a law to make it legal.

 

[none]

Either the loan is not legally paid back (i.e. default) or it is.
...
Defaulting on a loan means not paying it back.

So when you told RVonse that the US has never defaulted on its borrowing, the reason it's true is because "default" means "not legally paid back", and when the government stiffed its creditors in 1934, Congress passed a law making paying back creditors 59 cents on the dollar legal.

So RVonse: In the event that in the future the government buys something by borrowing with no intention of payback, don't worry about it -- we can count on Congress to pass a law to make it legal.

it's called negotiations in commerce
nothing Burger

 

[laughing dog]

Either the loan is not legally paid back (i.e. default) or it is.
...
Defaulting on a loan means not paying it back.

So when you told RVonse that the US has never defaulted on its borrowing, the reason it's true is because "default" means "not legally paid back", and when the government stiffed its creditors in 1934, Congress passed a law making paying back creditors 59 cents on the dollar legal.

They did not pay 59 cents on the dollar, they paid one dollar for each dollar.

So RVonse: In the event that in the future the government buys something by borrowing with no intention of payback, don't worry about it -- we can count on Congress to pass a law to make it legal.

There is no evidence the US gov't had no intention of paying the loans back when they were made. And the US gov't did pay back the loans. You have no basis in promoting such blatant falsehoods.

 

[Bomb#20]

There is no evidence the US gov't had no intention of paying the loans back when they were made.

It was a hypothetical. You're the one who answered a general comment about intention with a claim about historical performance.

They did not pay 59 cents on the dollar, they paid one dollar for each dollar.
...
And the US gov't did pay back the loans. You have no basis in promoting such blatant falsehoods.

Take it up with Wikipedia.

"The terms of the bond included: "The principal and interest hereof are payable in United States gold coin of the present standard of value."...

However, when the US Treasury called the fourth bond on April 15, 1934,[20] it defaulted on this term by refusing to redeem the bond in gold, and neither did it account for the devaluation of the dollar from $20.67 per troy ounce of gold (the 1918 standard of value) to $35 per ounce. The 21 million[1] bond holders therefore lost 139 million troy ounces of gold, or approximately 41% of the bond's principal."​

(Source: Default of the Fourth Liberty Bond )