We have all been trained to believe in GDP as some all-powerful measure of growth and power. It’s not anything of the sort. When you have the ability to print money at will to bid up the cost of the goods purchased with that money, how is that telling you anything about the health of the country, the people… or frankly anything at all?
Russia’s economy shouldn’t be larger than Germany’s in real terms, since most of Russia’s output is base commodities, which have the lowest value-added component of any good in a market.
This tells you how out of whack the world is in terms of the diversion of capital to unsustainable activity it actually is if a commodity producer is leading a manufacturing giant in wealth generation. This is exactly why the currency shift from debt-based to commodity-based money is going to be so painful.
And why the debt issuers are willing to risk nuclear war over it occurring. To them this is the end state of their power.
Is there really $10,000 difference between a BMW 230i starting at $37.5k and a Ford Mustang in terms of raw input commodities, especially when, in the real world we’re talking more like $15,000? No. Both are roughly 3500 lbs of aluminum, steel, leather and plastic.
But in terms of them being a tool for potential wealth creation, the two care are, really fungible. They can transport up to 3 people (realistically) and a little bit of cargo somewhere to do whatever it is that they do.
If we sell more BMW’s as a percentage of Mustangs sold, are we expected to impute a higher capability of sustaining wealth production because of higher overall spending as measured by GDP?
Sadly yes.
This is why, fundamentally, GDP is a poor measure of ‘growth.’
With the changes coming to the monetary architecture of the world, the ruble’s real purchasing power will finally be expressed, forcing commodity inflation in real terms on those whose currencies are overvalued.
Gresham’s Law has never been wrong.
Overvalued money circulates to procure unearned goods in the real world.
Undervalued money is hoarded because savings is the pre-requisite of capital deployment.
We are at the end of the cycle where the pile of real wealth has built up for decades unable to express itself while the ultimate psy-op fuels the biggest Ponzi scheme in history.