This Guy Explains it Wonderfully
Our inconsistent Fiscal Reality
I have tried on several occasions to explain why all the talking heads claim, “The Economy is doing amazing,” while the majority of the middle class is being wiped out and having to do things like choose between paying their utilities, their mortgage, or buying food is total garbage. This guy, Lance Roberts, is brilliant and explains the crux of the issue better than I can (here).
The bottom line is that consumption is a terrible metric for economic growth because it assumes the ability to spend into prosperity while discounting the funding source. Consumption-based growth measurements always end up with far too much fiat chasing far too few goods. Consumption-based growth measurements always have an inflationary end result that redistributes wealth from ordinary people to the most wealthy and reduces the standard of living for most people.
This is because the consumption-based calculation method always requires more fiat currency to be created even when goods and services are contracting, making the total “pie” of goods and services smaller with more fiat available to buy them. This is required because people and organizations can not consume if more currency is unavailable. It is like force-feeding a star of my 600-pound life from an all-you-can-eat buffet forever and expecting them to lose weight.
It is a much better measure of economic growth in production because it directly measures how much the total “pie” of goods and services has increased. Focusing on this type of measurement frequently leads to deflation that stabilizes the gap between the wealthy and the average person while raising everyone’s standard of living. This is because there is no drive to produce currency. Manufacturers and service providers will compete to deliver goods and services at the quality, quantity, and cost that will result in totally clearing their inventories at a profit, rendering a stable foundation on which to expand.
Please read the article linked at the end of the first paragraph. It is really good, and the author explains things beautifully.
John 8:31-32
31 So Jesus said to the Jews who had believed him, “If you abide in my word, you are truly my disciples, 32 and you will know the truth, and the truth will set you free.”
God Bless you
-Sam