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Miracle Grow for GDP: New Accounting Trick

Written by Gary North on April 29, 2013

The U.S. economy will grow by 3% in July. How do I know? Because a statistician with the government says so, that’s how.

How does he know? Because the new accounting methodology guarantees it.

Here’s how it works! From now on, money invested in research and development will be counted as an addition to GDP.

But what if the research fails to produce anything of value? No matter. It will produce something of value: a higher GDP figure for the government to report.

The government’s stat man said this: “We’re capitalizing research and development, and also this category referred to as entertainment, literary and artistic originals, which would be things like motion picture originals, long-lasting television programs, books and sound recordings.”

And you thought re-runs of Magnum P.I. do not make America richer.

I wonder how much richer America is because of Bowling for Dollars?

Yes, we count output of successful research and development as adding to GDP. But that’s way too narrow a definition. It is too focused on development. What about research? We have to count research!

This is the cost-of-production theory of value resurrected from the conceptual grave!

I guess this means that sinking dry holes are productive.

Well, why not? The government counts government expenditures as productive. Dry holes are surely as productive as the federal government. Probably they are a lot more productive. Think Iraq. Think Afghanistan.

The Bureau of Economic Analysis is going to revise all past GDP figures, all the way back to 1929. The statistician admitted, “we are essentially rewriting economic history.”

See how productive new ideas are? This rewriting of economic history will be funded by the government.

Don’t call this a conceptual dry hole. Call it government productivity.

This new approach is being adopted all over the world. This is the new international standard.

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6 thoughts on “Miracle Grow for GDP: New Accounting Trick

  1. Phillip the Bruce says:

    R&D is often a dry hole. But government is always a black hole.

  2. Too true

  3. Very creative accounting! My hat's off to the brilliant pencil-pusher who came up with this one. It just proves that they'll do anything to cover up monetary inflation. Does this mean that all those losses from Solyndra and the other messes will now, magically become a benefit to the economy? Perhaps on paper at least. The rest of us that operate under regular economic rules know that when you lose billions of dollars they're gone.

  4. I think the "Miracle Grow" people would be insulted.

    At least it actually does stimulate real growth that you can see and benefit from.

  5. Well, if giving someone a massage or babysitting can count as employment, there's no reason this can't count as expenditures. (How do politicians sleep at night, being the dishonest louts they are?)

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