Crash-Proof

On the forty-second page of “Crash-Proof: How to Profit from the Coming Economic Collapse” author Peter D. Schiff, wrote (emphasis added):

The GDP started out as the GNP (gross national product) during World War II, when it was used to measure wartime production capacity. It was never intended to be used as a measure of the country's economic well-being, and its shortcomings are laughably numerous.

By definition, the GDP is the sum total of the monetary value of all final goods and services bought and sold within U.S. borders in a given year. The distinction between GDP and GNP, incidentally, is that GDP doesn't care about the nationality of the producer. It includes everything transacted within our borders, even BMWs manufactured in North Carolina. (GNP, which is almost never used, would exclude foreign manufacturers in the United States and include goods and services produced by U.S. firms operating abroad.) GDP this includes the totality of consumer, investment, and government spending, plus the value of exports, minus the value of imports.

One big problem with GDP, although represented as a measure of economic health, is that it makes no effort to distinguish between transactions that benefit the nation's health and those that subtract from it. Destructive activities are included as well as productive activities. The GDP may not have been designed to measur economic well-being, but since it is used for that purpose, everything it includes—every monetary transaction that takes place anywhere and anytime within its time frame—is, by definition, progress and a contribution to the nation's economic health. Thus Hurricane Katrina added to the GDP despite tragic losses to the populace, as do other negative expenses, such as crime prevention costs, expenses incurred in divorces, medical costs, and national defense expenditures.

Another serious shortcoming is that it ignores everything that doesn't take place under the rubric of monetary trade. Money has to change hands. Functions performed in running a household, for example, are excluded because no money is

More information about “Crash-Proof: How to Profit from the Coming Economic Collapse” (and the book itself) is available from:

• Amazon.com
• Barnes & Noble
• Powell's Books

(John Wiley & Sons, February 2007. Hardcover, 272 pages. ISBN: 0470043601; EAN: 9780470043608.)

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