Recently I’ve been reading economist Mark Skousen, who has countered the popular notion that we live in a consumer-driven economy. Although statistics like that are technically true, Skousen argues, they’re more tautology than fact. This is because the calculation of GDP largely consists of consumed goods. It doesn’t include savings & investment. GDP is a product of the Keyens school, along with the undue focus on consumption. Both are still around today. And just as Keyens didn’t care much for savings & investments, neither does the GDP.

Skousen has been pushing for a metric called “Gross Output” (see http://www.mskousen.com/Books/Articles/0104go.html), which accounts for “intermediate causes” in production (e.g., savings & investments, R&D) along with consumption. Looking at gross output, he estimates that consumption only accounts for about 1/3 of our economy at most, and that patterns in consumption tend to lag Gross Output, which is just what we see with the stock market: If it dips at one time, consumption/retail sectors dip 9 or so months later.

And thanks for the link, I’ve got it bookmarked, I just don’t know how to label it…

As co-proprietor of this blag, I should apologize for the misleading name. Indeed, John and I picked out the name for this site before Blago became a national sensation, and thus have no association with him or his awesome hair. Instead, we actually got our name from here: http://www.xkcd.com/181/

Proof that government is sick and stupid and has no business telling anyone what to do:

They recommend loosening up credit so people can borrow and spend more. In other words, give the drunk another bottle so we can continue on the same destructive path that got us to this catastrophe in the first place. Pass the crack pipe, people minds are starting to uncloud…