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Using gross domestic product (GDP), as a measure of national economic growth has its drawbacks. At LewRockwell.com, Alasdair Macleod analyzes the biggest problems in calculating economic growth with GDP. He writes:
An important error in statistical analysis is that mathematical economists have lost sight of what their beloved statistics represent —none more so than with GDP.
In this analysis, I explain why GDP is simply the total of accumulating currency and credit which is wrongly taken to reflect economic progress — there being no such thing as economic growth, only the growth of credit. Once that point is grasped, the significance of this basic error becomes clear, and the fiat currency paradigm is revealed for what it is: a funny money game that will go horribly wrong.
There is only one escape from it, and that is to own the one form of money that is no one’s counterparty risk; the one form of money that always comes to humanity’s rescue when fiat fails.
And that is gold. It is neglected by nearly everyone because it is the anti-bubble. The more that people believe in fiat-denominated assets, the less they believe in gold. That is until their funny-money games implode, inevitably triggered by sharply rising interest rates.
Read more here.
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