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Politics : American Presidential Politics and foreign affairs
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To: DuckTapeSunroof who wrote (31278)1/9/2009 8:35:04 PM
From: TimF  Read Replies (1) of 71588
 
But the OPPOSITE of "taking money out" of the housing stock would be: "putting more money INTO" the housing stock.

They borrowed money from the inflated value of the housing stock, the opposite of the housing stock inflating is the housing stock deflating, which has been happening for a few years now.

More to the point the GDP gains where temporary, a temporary gain means you lose that gain later, losing that gain amounts to a reduction of spending and economic activity and thus negative GDP growth. We are experiencing that now.

But that was not a sustainable input, like productivity growth, or investments into capital stock might be.

Exactly, as the current negative economic growth shows. But it was part of the GDP. If your measuring GDP growth you still count it. GDP doesn't depend on the increase being sustainable. If it isn't sustainable that means the GDP will go down later (or at least that growth will be lower later), but for the period in question GDP did actually increase by an amount that includes those temporary factors.

If you want to measure some form of self defined adjusted GDP growth to remove temporary factors, than you have to add the temporary factors back in when the bubble pops, or your double counting a negative factor.
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