PHANTOM GDP

All eyes were on the U.S. , while the U.S. House, Senate and President Obama
jockeyed for position on raising the U.S. Debt Ceiling. The Dollars position, as the principal world trading currency, was at stake while those in Washington [D.C.], and in academic circles, squabbled over they way, means and impact of raising he debt ceiling. Drama aside, it was a forgone conclusion that a "deal" would be done and the
debt ceiling would be increased to accommodate U.S. deficit spending.

The side-bar to Washington's theatrics, economic growth [ measured in GDP ], was hinted at in the House passed [H.B. #2560] Cut, Cap and Balance bill, but never brought to the floor by Senator Harry Reid, for Senate vote. Gross Domestic Product, GDP,is the benchmark measure used internationally to snapshot a nations economic growth. The U.S. snapshots GDP on a quarterly, basis; and, during the quarter, when the debt ceiling drama was playing in Washington, the U.S. GDP had stalled at around 1%. Without growth, government revenue, remains stagnant, absent an increase in taxes, often masked as fees, to offset government spending.

The way GDP has traditionally been calculated [ all goods and services ] essentially is a miss-measure that overstates real economic growth by a factor equal to the amount of government costs and services included in the GDP computation. Since the miss-measure GDP computation has universal appeal, true economic growth remains phantom to the delight of Wall Street, London and world financial markets. The GDP miss-measure is a harbinger for future financial melt-downs.

Among the minority of others, China, appears recognize the GDP anomaly, by its recent downgrade of U.S. debt obligations. Others will likely realize the U.S. has been and will continue, for the foreseeable future, to experience negative GDP. This has ominous consequences for todays inter-connected world, and is one factor in the flight to gold and other precious metals. Absent an accurate measure of a nations economic growth, and a stable benchmark currency, the surplus capital necessary for economic growth, will be locked in gold and precious metals, and world economies will unravel.

This U.S. and U.S. dollar, can no longer serve as a benchmark currency. The failure of the U.S. to balance its budget, per the U.S. Balanced Budget Act of 1985, yes 1985, was the first signal to the world that new measures and new benchmarks would be necessary if sustainable, shared, economic growth were to be achieved on a world basis. The latest U.S. budget antics [yr. 2011, 26 years later ] are a signal that the U.S. is in a downward economic spiral and can no longer be viewed as a stabilizing force, and the U.S. dollar, a reliable currency.

The U.S., as a system of governance, has displayed it's inherent flaws; arrogance, fashion, feelings, and ego, trump reason. New measures and a new type of benchmark currency will be needed before financial stability can be achieved on a world basis; otherwise,one country will fail, followed by the next, and by the next; signs of which are appearing in Europe and with the Euro.