GDP

We can no longer use the time honored method of determining the health of our economy by looking at the Gross Domestic Product, (GDP) since that includes government spending which has been exaggerated by Qualitative Easing. This is a euphemistic phrase used to describe the process by which the Federal Reserve, (The Fed), creates money. QE 1 started in November of 2008 and ended in April of 2010 and QE 2 which started in November of 2010 and ended in July of 2011 put 2.3 trillion dollars into the economy. QE 3 which started in September and has now added 85 billion per week for the last seven weeks for a total of 600 billion. Since these programs are adding about one trillion per year to the GDP and since the GDP is around 15 trillion this is a 6% boost to the GDP. The past three years the reported GDP has been less than 3% so without this government stimulus we would officially be in a recession which is what most people have figured out on their own. This process of creating money may eventually bring the economy around but how long it will take and how much in debt we will go is any bodies guess. The one thing for sure is that sometime in the future we will pay the piper with high inflation and that is a tax that primarily hurts the poor, the very people the government is trying to help. Just one more example of the unintended consequences of good intentions. By using that phrase I am giving the government the benefit of the doubt but many others are not so generous. Some say that the government knows full well the harm to the poor this will cause but it is just another use of kick the can down the road and let whoever is in office at that time worry about it.