Comment 34640

By A Smith (anonymous) | Posted October 09, 2009 at 08:44:54

Grassroots >> Jon C is correct, it does not matter where the funding comes from, as GNP is based on EXPENDITURES.

JonC >> GDP is a fictional assessment at this point in time as any increase in the given time frame is the result of debt increase.

What JonC said initially and what he is saying now are two different things. Initially JonC implied that the GDP numbers presented here... were not real. He thought this because he observed that the world had taken on large amounts of external debt.

After taking a look at the formal definition of GDP, JonC now correctly understands that borrowing has nothing to do with GDP, because GDP reflects the PRODUCTION of goods and services within a border. In this way, whether a country borrows or lends, it has nothing to do with how much they produce.

To bring this back to Hamilton, whenever we receive money from other taxpayers, this does not add to our GDP, rather it would be counted as an import. If the goal is to get back to being a wealth CREATOR, our focus should shift from simply getting free stuff, to actually producing more stuff.

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