US GNP

[Jim Williams]

Having had all my gravity motors from patents blown up by this board, I'm going to attempt to explain what I'm seeing in the GNP on the chance someone can find a flaw in my reasoning and blow that up too. It is my hope someone can show me where I'm wrong. For data I refer to the Bureau of Economic Analysis of the Dept of Commerce at www.bea.gov
Click on Interactive Data, then Frequently requested NIPA tables, then Table 1.1.5 GNP.

Two statistics I note in particular. When I add up the Personal Expenditures on durable and non durable goods in total, then subtract Personal Expenditures on sevices, I end up with a negative number that equals, based on a US population of 300,000,000, of more than $5000 per American per year. My understanding of such things is that unless money is generated from manufacturing and agriculture first, i.e. durable and non durable goods, that money is unavailable to pay for services. Yet Americans are spending $5000 each per year more on services than we generate from manufacturing and agriculture to pay for those services. If we are not generating enough to pay for services, yet we pay for them anyway, where is the money coming from if not the manufacturing and agriculture amounts generated by other countries? What that means to me is that in other countries productivity that would have been available to pay for their own services, Americans spend on themselves instead. If this is all true, American service is parasitic on American productivity and World productivity as a whole.

Secondly, how is it not true that in 2005, 67% of Government expenditures and investment was on national defense alone with only 32% for everything else Federal?

[racer270]

Jim,
they must have one like this....out back....in D.C.
or they just never plan on paying the bill,..................:)

[Kirk]

The joys of fiat money.

[ovyyus]

If only I could post-date all my cheques until, say, 2070 then I might write up endlessly and perhaps lease a small tropical island in order to host an all expenses paid never-ending 110% tax-deductable Bessler 'research' party where all the drinks are on my great-great grandchildren - god bless their little unborn souls. Isn't that how it works? lol

[Jim Williams]

ovyyus

If my reading of figures is correct, then the US is billing Australia right now for services Americans are buying for themselves, but not generating from our own manufacturing and agriculture returns with which to pay. If we don't generate it, but spend it anyway, where does that extra $5000 plus per American per year come from? So, thanks again Australia and your children for your financial help.

If I'm wrong in my calculations, I'd be more than happy to have someone explain it to me.

[scott]

where does that extra $5000 plus per American per year come from?

I would guess it comes from the Fed's printing presses. It's called "monetizing debt."

[winkle]

does that mean i will soon be able to invest with my monopoly money

[rlortie]

The $2.00 Bill

IF YOU'RE AS OLD AS I AM ... THIS IS A RIOT

The $2 Bill. Everyone should start carrying them! I am STILL laughing!!
I think we need to quit saving our $2 bills and bring them out in public.
The younger generation doesn't know they exist.

On my way home from work, I stopped at Taco Bell for a quick bite to eat. In my billfold are a $50 bill and a $2 bill. I figure that with a $2 bill, I can get something to eat and not have to worry about anyone getting irritated at me for trying to break a $50 bill.

Me : "Hi, I'd like one seven-layer burrito please, to go."

Server: "That'll be $1.04. Eat in?"

Me: "No, it's to go."

At this point, I open my billfold and hand him the $2 bill.
He looks at it kind of funny.

Server: "Uh, hang on a sec, I'll be right back."

He goes to talk to his manager, who is still within my earshot.
The following conversation occurs between the two of them:

Server: "Hey, you ever see a $2 bill?"

Manager: "No.. A what?"

Server: "A $2 bill. This guy just gave it to me."

Manager: "Ask for something else. There's no such thing as a $2 bill."

Server: "Yeah, thought so."

He comes back to me and says ...
"We don't take these. Do you have anything else?"

Me: "Just this fifty. You don't take $2 bills? Why?"

Server: "I don't know."

Me: "See here where it says legal tender?"

Server: "Yeah."

Me: "So, why won't you take it?"

Server: "Well, hang on a sec."

He goes back to his manager, who has been watching me like I'm a
shoplifter, and says to him, "He says I have to take it."

Manager: "Doesn't he have anything else?"

Server: "Yeah, a fifty.
I'll get it and you can open the safe and get change "

Manager: "I'm not opening the safe with him in here."

Server: "What should I do?"

Manager: "Tell him to come back later when he has real money."

Server: "I can't tell him that! You tell him."

Manager: "Just tell him."

Server: "No way! This is weird. I'm going in back."

The manager approaches me and says ...
"I'm sorry, but we don't take big bills this time of night."

Me: "It's only seven o'clock! Well then, here's a two dollar bill."

Manager: "We don't take those, either."

Me: "Why not?"

Manager: "I think you know why."

Me: "No really, tell me why."

Manager: "Please leave before I call mall security."

Me: "Excuse me?"

Manager: "Please leave before I call mall security."

Me: "What on earth for?"

Manager: "Please, sir."

Me: "Uh, go ahead, call them."

Manager: "Would you please just leave?"

Me: "No."

Manager: "Fine ... have it your way then."

Me: "Hey, that's Burger King, isn't it?"

At this point, he backs away from me and calls mall security on the phone
around the corner. I have two people staring at me from the dining area,
and I begin laughing out loud, just for effect. A few minutes later this 45-
year-oldish guy Comes in.

Guard: "Yeah, Mike, what's up?"

Manager (whispering):
"This guy is trying to give me some (pause) funny money."

Guard: "No kidding! What?"

Manager: "Get this .. .A two dollar bill."

Guard (incredulous): "Why would a guy fake a two dollar bill?"

Manager: "I don't know. He's kind a weird.
He says the only other thing he has is a fifty."

Guard: "Oh, so the fifty's fake!"

Manager: "No, the two dollar bill is."

Guard: "Why would he fake a two dollar bill?"

Manager: "I don't know!
Can you talk to him, and get him out of here?"

Guard: "Yeah."

Security Guard walks over to me and......
Guard: "Mike here tells me you have some fake bills you're trying to use."

Me: "Uh, no."

Guard: "Lemme see 'em."

Me: "Why?"

Guard: "Do you want me to get the cops in here?"

At this point I am ready to say, "Sure, please!" but I want to eat,
so I say "I'm just trying to buy a burrito and pay for it with this
two dollar bill.

I put the bill up near his face, and he flinches like I'm taking a swing at him.
He takes the bill, turns it over a few times in his hands, and says ...
"Hey, Mike, what's wrong with this bill?"

Manager: "It's fake."

Guard: "It doesn't look fake to me."

Manager: "But it's a two dollar bill."

Guard: "Yeah?"

Manager: "Well, there's no such thing, is there?"

The security guard and I both look at him like he's an idiot, and it dawns
on the guy that he has no clue. So, it turns out that my burrito was free,
and he threw in a small drink and some of those cinnamon thingies, too.
Made me want to get a whole stack of two dollar bills just to see what
happens when I try to buy stuff. If I got the right group of people, I could
probably end up in jail. You get free food there, too.

The key to wisdom is...curiosity with balance.

[Jim Williams]

Well, OK, I'm going to attempt to be a bit more clear. First I go to this address http://www.bea.gov/bea/dn/nipaweb/TableView.asp#Mid Then I do this.

Under Personal Consumer Expenditures, I add the amounts for durable and non durable goods together, then subtract from that services. The total I multiply by a billion, then divide by the US population of 300,000,000. The remaining negative amount is what Americans spent in 1995 on services in excess of what was generated by what was spent on manufacturing and agriculture combined.

My understanding is that if money isn't first generated in durable and non durable goods, then it isn't available to pay for services. Yet as Americans we are spending $5000 plus more a year than we generate to pay for those services. If we are not generating that money, but spending it anyway, where does that money come from except from other countries return generated from their own manufacturing and agriculture?

My way of calculating this spending excess seems so simple to me I suspect I'm missing something obvious in my calculations that a CPA or financial person would just jump on it like that. The reason I'm asking on this board is because there are some really bright minds out there and I'm wondering if anybody can catch what, if anything, I'm missing.

Thanks for your responses. A Bessler's wheel would really help the US and World's economy if it exists and a reason for my interest in this board.

[scott]

My understanding is that if money isn't first generated in durable and non durable goods, then it isn't available to pay for services.

I think this is your misunderstanding. Like all fiat currencies, US dollars become available when the Fed prints them.

It's called monetizing debt.

from: http://nesara.org/articles/faq_banking.htm

What is monetizing debt?

The term monetizing debt or monetization is the act of creating and introducing currency into circulation through debt. The currency created is used to buy goods and services. People repay that newly created currency through their future labor of creating goods and services. Goods and services are traded for goods and services, but with the amounts of currency being borrowed, do so only through long periods of time.

Banks today have a special government license to create currency by monetizing debt. Banks create currency out of thin air, but once introduced into circulation, the currency is very real. By monetizing debt, banks increase the quantity of currency in circulation. Since the supply of goods and services typically continues to rise, so must the quantity of currency in circulation increase to maintain a stable exchange value.

Also see:
Gold Isn’t Money, Yet
http://www.lewrockwell.com/north/north149.html

and:
The Economic Reformation Coming to America
http://www.financialsense.com/fsu/edito ... 1120b.html

-Scott

[Jim Williams]

First, I can't the address I gave to work. www.bea.gov is an alternative, then look up Table 1.1.5 under interactive data. Very sorry

To Scott

I see what you are driving at. I believe you'll find this money printed is a reflection of what is generated from productivity, but understanding it all remains beyond me. I'll pusue your references. Thanks

[Jim Williams]

Not being real quick I just don't know when to give up, so I'm going to build this model and ignoring experience hope it clarifies what I'm trying to say.

Imagine there is this country called the US consisting of a circle of land. For reasons unknown the inhabitants of this land eat canned tomato paste for food and nothing else. This circle of land contains many tomato farms, a town and a tomato canning factory, but that's it.

There are three kinds of people that inhabit the land. There are the farmers who till the land and generate tomatos. There are people who charge fees for their services, like doctors, lawyers and actors, who live in the town. And there are people who work in the canning factory making canned tomato paste and also provide guards to protect all the people from each other and guard the perimeter of the circle to prevent invasion from other countries. These people are the government.

The way it works is like this. The farmers harvest their tomatos and take them to the canning factory and are repaid in canned tomato paste. There's no direct charge for the canning but being the government the farmers are charged taxes by the canner. The farmers take their canned tomato paste to town where they pay with the cans for services, i.e. health care, land disputes with other farmers and catch an ocassional movie. These people who charge fees are also charged taxes by this same government. The government charges these taxes to pay for the canning, the police and the armed forces.

Without the tomatos there is no tomato paste with which the farmers can eat or pay for services or the government. Without tomato paste everyone starves to death, farmers, servants and government alike. My point is that everyone is dependent on the tomato harvest to be paid. It is also not possible for the servants in particular to be paid more tomato paste than the farmers are able to generate.

Yet when one checks the BEA figures of the US GNP one finds that the servants are paid more than the farmers are able to produce. This isn't true of all countries. So where does this extra tomato paste come from but from farmers in other countries for Americans to pay for their own services, because the American servants are paid anyway? I don't know. Good luck sorting out this model.

[jim_mich]

I could get into a discussion about how tomato paste is replaced by paper script, which then gets loaned many times more than the original tomato paste, which causes the imbalances that you see. But I would much rather spend my time working on Bessler wheel ideas.

[terry5732]

Good call Jim. Obviously a common sense answer wouldn't get any where with those lacking........

[Fletcher]

Jim W .. A countries wealth is mostly illusory. Their dollar is traded & what is paid for it & what price it sells at against other countries has a lot to do with the confidence other traders feel about that currency, not tangible assets.

Basically it is credit going forward based on the likelihood that that country won't default on its loans (be able to service the interest, not pay the principle). If nobody wants your currency or your govt has to offer very high interest rates to attract buyers then internally things can get very rough for your citizens (who also live on credit) & can result in complete economic meltdown & eventual third world status.

I think the accounting practices of countries leave a lot to be desired but as long as they all play the same game then they are all in the same boat together & no one is going to necessarily mutiny.