atg, hedonic pricing doesn't impact autos. the computer industry is another story. over 50% of gdp growth (and, therefore, productivity) is an illusionary, non real, number added by statisticians.
>>I agree that the measurements of macro economic quantities like GDP and inflation are lacking, but this has no direct connection with the stock market bubble, zero savings, credit expansion and worsening trade balance.<<
i'm not sure about the trade balance. however, i couldn't disagree more on the stock market bubble, credit expansions and savings implosion. consumer confidence is through the roof based on the "new economy" illusion. people bid up shares to absurd levels that they NEVER would have before b/c the RULES ARE DIFFERENT IN THE NEW ECONOMY.
the foundation for the new economy is... increased gdp growth and increased productivity. albeit, statistically manipulated gdp growth and productivity growth. it is a fake new economy.
try to lend money in japan or get them to have negative savings. not going to happen. they are not drunk w/ the "new economy." they were, in the late 80s. very drunk. the hangover, they found out, is a b*. so will we. fake numbers will get part of the blame for all this irrational behavior - and rightly so.
keep in mind, too, that alan g justifies his exceptionally loose monetary policy on "increased productivity!" the fact it doesn't exist in real dollars doesn't faze him a bit.
there is a tight relationship between the fake numbers and the irrationality in the various markets. compounding the problem is the spiral effect. the more the market goes up, the more debt people take on, the less they save, the more the market goes up.
these cycles are fun until they are not. then folks jump out of windows. |
