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US GDP Will Be Revised Higher By $500 Billion Following Addition Of "Intangibles" To Economy
Those who have been following the US debt to GDP ratio now that the US officially does not have a debt ceiling indefinitely, may have had the occasional panic attack seeing how this country's leverage ratio is rapidly approaching that of a Troika case study of a PIIG in complete failure. And at 107% debt/GDP no explanations are necessary. Luckily, the official gatekeepers of America's economic growth (with decimal point precision), the Bureau of Economic Analysis have a plan on how to make the US economy, which is now growing at an abysmal 1.5% annualized pace, or about 5 times slower than US debt growing at 7.5% annually, catch up: magically make up a number out of thin air, and add it to the total. And it literally is out of thin air: according to the FT the addition will constitute of a one-time addition of intangibles, amounting to 3% of total US GDP, or more than the size of Belgium at $500 billion, to the US economy.
The US economy will officially become 3 per cent bigger in July as part of a shake-up that will see government statistics take into account 21st century components such as film royalties and spending on research and development.
Billions of dollars of intangible assets will enter the gross domestic product of the world’s largest economy in a revision aimed at capturing the changing nature of US output.
Brent Moulton, who manages the national accounts at the Bureau of Economic Analysis, told the Financial Times that the update was the biggest since computer software was added to the accounts in 1999.
“We are carrying these major changes all the way back in time – which for us means to 1929 – so we are essentially rewriting economic history,” said Mr Moulton.
What exactly will constitute GDP growth going forward? In a word, intangibles: films, books, magazines and iTunes songs.
“We’re capitalising research and development and also this category referred to as entertainment, literary and artistic originals, which would be things like motion picture originals, long-lasting television programmes, books and sound recordings,” said Mr Moulton.
At present, R&D counts as a cost of doing business, so the final output of Apple iPads is included in GDP but the research done to create them is not. R&D will now count as an investment, adding a bit more than 2 per cent to the measured size of the economy.
Nothing like adding intangibles in the fluid, ever-changing definition of what constitutes an economy.
Naturally, the only reason for this artificial "boost" to the US economy which apparently can be any old arbitrary number agreed upon by a few accountants, and which always goes up post revision, never down, is to make US debt/GDP under 100% once again, if only very briefly. Surely a few months later something else can be "added" to GDP making the US economy appear better than it is once more.
Finally, all of the above is a distraction for idiots.
As most people should know by know (this logically excludes economists), the only factor leading to economic "growth" is the expansion of liabilities of the financial system, whereby new credit (in a healthy environment, not one centrally-planned by several Princeton real-world rejects, where the central bank is forced to create all credit expansion with money that never leaves the banks and the capital markets closed loop) creates new money, creates demand for products and services, and circulates in the economy.
This can be seen in the chart below which shows the nearly perfect correlation between total bank liabilities in the US, as per the Fed's Flow Of Funds report, and total US GDP.
Bottom line: the BEA can capitalize air consumption if it thinks it will make US GDP soar, but unless new credit and bank liabilities are created not due to forced supply but demand, and unless the private financial sector is finally willing to start lending money (which for the entire duration of QE it has not) US growth will stall and then proceed to decline.
Case in point: total US commerical bank loans are still lower than they were the day Lehman filed.
In other words, all the GDP "growth" since the Lehman failure has come on the back of money "created" by the Fed.
And there are still those who think the Fed will ever unwind...
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Ya got me-:)
When you have nothing, and make someting of it.
The pricks that pooled Student loans and credit card (advances to kill people ) are last on my invite list! Some people might disagree with me. (I respect their ignorance)
To the asshole that thinks student loans aren't abused? http://www.zerohedge.com/news/2013-02-28/delinquencies-student-loans-sur...
In the " Old Days" I would get mad<
I blew two accounts by shorting so I'm with you there.
What a joke !
Bu this isn't.....Robert Johnson on the Oligarchs: “They’re All Standing on the Deck of the Titanic Looking in Each Other’s Eyes” http://po.st/vrPaOZ via @po_st
so wait, do you mean to tell me music, film, and books were previously not part of GDP? Hollywood revenues were not part of GDP? how in the world is that possible? or is this an addition of some fungible concept like goodwill, whereby these works of art carry some nebulous value on top of their sales/licensing numbers?
Have government employees ever been calculated into the GDP?
This is simply political correctness applied to government stats. Who could possibly be surprised.
The Fed will unwind... all at once.
WTF seems to be the prevailing thought every week now.
Where do we go from here?
I wonder if films like GI Joe 2 count as a negative intangible?
No, but Too Big To Fail did?
America has full employment and hundreds of million of new "carbon dioxide manufacturing" jobs.
I liked the platinum coin idea better.
Bubble Bernanke and the Fed have to do printing catchup with Japan.
The Fed is ready to buy all the debt Obama and his admin can come up with.
It's going to hit $17 trillion soon with a ramp to $25 trillion in 4 years or bust.
The Fed will then make trillions of debt disappear. The US federal Reserve bankster debt shell game.
LOL, 9 TRILLION Dollars Missing from Federal Reserve
http://www.youtube.com/watch?v=GYNVNhB-m0o
9000 new green jobs created in 2012.. but their estimate was 500,000. 1.8% efficiency.
Why don't they add goodwill as well? There's got to be some brand value to the ole USA trademark. All those flybys and songs and pretty costumes for the First Responders/Standing Arounders. Marketing. That's where the money's at.
GDP: a number that means nothing, estimated off fake numbers, that shows only which particular agenda is being serviced needs it to show.
These mofos would try to convince you that a foot is 13 inches.
GDP: An imaginary number representing how many times the same dollar passed back and forth. It's all pretty much bullshit.
"These mofos would try to convince you that a foot is 13 inches."
I once convinced a girl that 6" was 9" her sence of measurement hasn't been the same since.
So they don't even try to make their BS seem rational anymore. Why should they? The vast majority of america idle can't understand or don't care what it means anyway.
https://www.youtube.com/watch?v=q6TRVXG4kQE
Hopefully they are adding Bitcoin profits then.
I was attempting to have sex, but my partner said my dick was intangible.
Dont forget the GDP multiplier effect that Nancy "you have to pass it to see whats in it" Piglosi said about unemployment welfare and obamastamps. They are stimulative!
We are living the model now. : (
I would say that this fake number designed to make the big lie about the American recovery look real was a fucking joke. But government will stop at nothing to control the image and to lie about the collapse of Middle Class America. Now they have another way to fudge and already hoax GDP. Just more evidence that the collapse is real and the government has become a propaganda machine full of lies. All they do now is support the sending of jobs overseas, make wars across the globe and fill America's increasing for profit prisons with millions of inmates.
Government and their bankster masters are a lie. They are a cabal of murderous criminals whose existence is predicated on living off of us like we are their farm animals. They live off of our product and our souls. The lie is that we need them instead of the other way around.
The lie that is them keeps all governments working feverishly to control speech and thought because they cannot have the sheeple discover the truth and begin to withhold and use for themselves the product of their efforts and lives.
The lie, the basis for their entire existence, must be sustained by more lies, control and fear and the killing of the truth and truth bearers. Here we have a fine example of lies being used to sustain the lie, while things like NDAA is them preparing to kill the truth and truth bearers. hujel
Is porn already included?
The unemployed can't look for jobs 16 hours per day.
Goodwill on the USA balance sheet should be up at least a trillion after defeating the terrorists last week.
These are not serious people. They are like high schoolers plotting to change their grades.
And what's the tax angle on this?
Short < SHIT Coins<
Yen, my friend. Get your best trades in place before August.
How does one take into account private lending, seperate from commercial lending? I see it by the 10's of millions weekly even daily some weeks (remember this is just my observation) in the Southern California , actually the Los Angeles County, Orange County, Riverside County, San Bernardino County is all I participate in. So many private hard money lenders. I even know business owners who put $5,000,000 of their own money and source hardmoney flips all day long. Meaning they fund loans where other small investors put in 40%, and they put in the other 60%. The small investor then invest more capital in rehabbing/remodeling then sells it to a desperate to jump in buyer. There are plenty buyers with 750 FICO scores. Steady W2 Incomes from careers not just jobs, but limited capital. So the Government Teet helps facialite with FHA 3.5% downpayment loans at historically low (3.5% soon to be 2.5% 30yr fixed) interest rates. So the average joe is back to demanding this lipsticked pigs, and this time around eveyone is making sure htey don't miss out on the flip game. I've been flipping for the past 4 years with personal very limited capital. The cash that's pouringing now is ridiculous. Specially the foriegn cash.
The Investor gets his 12%-15% Steady return. The broker who sells the loan product to sales reps gets his 1% of a wholesale volume. The sales rep gets his commission split off of the 3-4% premium the investor pays while the brokerage gets the remainder. The small investor makes his profit. The two real estate agents get their commission splits and their brokerages keep the remainder. The only person who doesn't come out ahead financially on paper is the homebuyer. Except wait, it's a bubble!!! so in 6_12 months the motherfucker will look like genius because he invested $9,000 plus another $6,000 for downpayment and closing costs. Has a place to live which was bought for $300,000, but now it can be sold to next guy who will be getting a 2.5% 30 yr fixed and can easily pay (borrow) $400,000 . Better yet wait until next year after the next hiccup and the QE levee's just break and now you have buyers at 1.5% 30 yr fixed mortgages. Those mother fuckers will be pounding on your door to buy it at $500,000.
It's stupid and it shouldn't happen again, but I lived through it once and stayed way too cautious, this time I'm leveraging to the hilt and getting what I can and ride this mother fucker until it pops. For those that were not in the real estate game when it first popped Dec 2006 (New Century BK), then Aug 2007 (ABC Conduit aka AHS BK) , then you have no idea how easy it is to hit the exit in Real Estate before the lemmings that are all in it realize that the building is on fire.
Case in point. Hemet California Nov 2005, I remember going in very cautious because subprime was already starting to show the stress via the rules and standrads of the wholesale banks. Of course only about 5 of us 500,000 licesed proffesionals in the country could see it coming. Anywas, by Nov 2006 When we put he Hemet house on the market everything was breaking down, the Rates rising and underwriting guidelines tightening killed the demand. All the cracks in the portfolios started showing up via emergency sales of one wholesale bank to another. Emergency wind downs of direct lenders. Retail Direct Lenders losing their credit lines from the Wall Street big boys. It was happening all around us the signs were obvious.
So I told my partner on the deal. "We've never not made a good amount of money ona flip. And we have definately never lost any money on a flip. We certainly can't afford to lose on a couple to learn a lesson. So let's try and keep our clean sheet. You see how things are going in our industry (I owned a mortgage brokerage back then) let's bail the fuck out and call it quits. They are gonna hate us in hemet but we cant risk losing even one penny of our capital. Let's drop the price 20% below market. We'll get an offer right away and of course kill the market but fuck it." (at this point properties were sitting ont he market, prices were slowly creeping down, it was an eery feeling after so many years of the exact opposite). SO we dropped from $200,000 to $160,000 and sold right away and we walked away with a $2,500 profit. We check that market a year later and we were the highest price sale for the following 12 months. awwww the good old days. When I was 25 yrs old. Yes I was a product of the bubble, but at least I did it learning a very valuable lesson and learnig it hard with my own money.
Nice read.
Do not fight the Fed on its own turf.
Buy gold, silver, land.
Bernanke is a believer, not a deceiver. The experiment has failed. Trade accordingly.
Gov is clamoring over legalizing the illegals too, adding ~10 million to US workforce.
Got your trade in place?
Have we reached peak bullshit, yet?
Peak bull$hit comes in the summer shortly before Jack$hit Hole.
A new peak is reached each day.
We got jizz banks too, we have that going for us.
My computer must be infected or something. When I search Google for "banana republic" it keeps showing me a map of the US. Next thing you know it will show me supposed US civilian "leaders" in military uniforms, medals and all.
I better get this thing fixed soon. hujel
We had a great recovery going, and perhaps Fed would have been unable to unwind, but the Boston Marathon bombing is going to set everything back. Wait to hear that as an excuse for economic underperformance . . .
Well sure, Waterford/town/ville/whatever was closed down by an unsaid martial law decree for some 24-48 hours, so about 7/8s of the quarters GDP is lost.
Fucking Lost I Tell Ya!
Yes but surely all that police overtime added about 9/8ths, the increase in donut consumption alone must have been epic.
+1
The only people allowed on the streets were law enforcement and donut chefs.
Just add all of the money "saved from ending" the Vietnam, Iraq, Korean, WWII, and Afghan wars. Easy 5 trillion or more right there.
Put more lipstick on the pig............
Well this explains why they removed the word "lunatic" from the criminal code recently.
It reminds me of the time Italy in the 1980's decided to revise it's GDP by including the "black" economy, this added about a third to GDP figures. The Italian press were crowing that their economy was now bigger than the UK's. To which one Great lady Mrs Thatcher replied she was pleased for them and and that as EU contributions were calculated on GDP at the time then she hoped they would be happy contributing more to the EU and receiving less back.
After this they removed those figures.
Why is it, that it takes a "Chapter", to define ones understanding of financial prowess?
Some people feel the need to discuss what is already, "common knowledge"? Being Human means having the ability to share knowledge. Knowledge is shared learning?
Put a hole in my cranium. Bernanke must be an alien?
They have another card to play, they can add Goodwill.
... and the Salvation Army.
Now we're talking my language.
I've been amortizing intangible assets as a serial federal income tax dodge (completely legal, mind you) for... um, let's see, just did the damn thing... 13 years. Ah, well, time to readjust the cost basis, I guess.
What gets me about this is that I never knew books were intangible, as they note:
intangibles: films, books, magazines and iTunes songs.
Call me stupid, but once in high school a Spanish teacher whacked me on the head with a big textbook because I did not answer his question en Espanol which, after all, was the rule of the class. That book sure felt like a tangible object hitting my head.
So, I guess I've been wrong all along. All those books I've been buying up at garage sales and my stunning Playboy and Sports Illustrated collections are actually intangible assets. So, yes, I will adjust my taxes next year, and instead of counting books and magazines as part of my inventory, they will be added to the basis of my intangible assets and duly amortized over a 15-year period.
I will have to tell this to others in the trade. These books an magazines is no more tangible. They be's IN-tangibal, my brothas! Meaning, we ain't nevah gonna pay no fuckin' taxes, at least not for the next 15 years, tru dat. Praise the freaking lord, hallelujah!
Glad the government straightened that out for me, but couldn't they have done so before April 15?
I do needs tha deducshuns! Muthafuckas! Always a day late and a dolla short, bitchez!
Seriously, this is a major clusterfuck. Having been in the publishing business, I can tell all first-hand that income derived from the sales of books, films, and music are already accounted for the in the GDP, and that the "intangible" aspect of what? having created the book, film or song and holding the rights to such material is somehow producing revenue?
Dudes, I have a ton of unpublished material, stuff I'm working on, thinking about, etc. I should be fucking rich, goddammit!
These people are completely full of crap. Totally out of control and likely living in some goddamm parallel universe.
I spent two hours on the phone tonight with the only person I can talk to about the state of the economy without getting weird looks and I'm glad I did. We're beginning to make plans for what happens when the SHTF, which, we believe will be very fucking soon.
Coordination, planning for when this shit finally all falls apart, which it must, with mathematical certainly (thank you Ann Barnhardt), so that instead of being casualties, we'll be the first to stop the shit, clear the markets and start anew.
Fuck these assholes. Bring it on, bring it on, bring it on, because if you don't bring it soon, assholes, we'll be more prepared than you think and will shove it right up your ass. Fuck you, Obama, Bernanke and the 10000 cops who participated in the Boston false flag.
I've had more than my fill of this crap. Kiss my very TANGIBLE ass, muthafuckas.
Well I agree it's a distraction for idiots, but not with Tyler's financial veritas: As most people should know by now (this logically excludes economists), the only factor leading to economic "growth" is the expansion of liabilities of the financial system.
The only real growth comes from ENERGY, and unless we discover another oil filled planet floating around out there and hitch it to earth's bumper, this delusional Wally World we have going called Western Civilization will shut it's doors. The Moose out front should have told you.
Yes and this current form of civilization - since the Industrial Revolution - can NEVER be repeated, because all easily-exploited resources are being maxxed-out.
Hey the Romans and others cut down every tree in sight for their ships, wars and what not; but trees can be grown back, whereas it is impossible to "grow back" oil, coal and all other resources formed over many millions of years, which are crucial for form of civilization ... yea even gold which is harder and harder to find.
Our species had one chance to do whatever our purpose might have been (to be really intelligent?) and we achieved Life 101 Fail.
Nay mind: Whatever it is that accounts for the Universe has an infinite number of dice to roll, so some may fall right someplace.
Actually oil, coal etc do get replaced it just takes a long time and over the next billion years it is likely we will not be the only intelligent species that will occupy this planet and gold will be recycled and placed in new concentrations. The only thing that declines over time are the heavy elements used to make bombs and nuclear reactors.
That was kinda my point.
Thanks for expanding and clarifying ... though if our local star goes supernova, the experiment with an intelligent life form will have to be in another solar system.
Another great tree-chopping ecocidal all too temporary civilization was the Assyrians. Not to be confused with the Syrians (totally different society). These guys built Nineveh, a giant fortress city across the Tigris from present day Mosul. Anyway Assyrians were known for building seige machines. In fact, to my knowledge there is no record of them ever having lost a siege. Anyway I digress. These siege machines were built from the cedar trees that once used to cover Iraq. A forest so dense that light didn't even hit the ground, like the Amazon. Lebanon also used to be covered in giant cedar trees (many of which went to build Solomon's temple and other great bronze age edifices), as did the Sinai "desert", hence the name Cedar-Sinai Medical Center.
Man burns down and destroys everything he sees. Should have devoted one or two verses to that propensity in the good book.
The return of the trillion dollar platinum coin in another form. This will not create one real job. Govt. jobs are not real. their so called products are "intangibles".
The return of the trillion dollar platinum coin in another form. This will not create one real job. Govt. jobs are not real. their so called products are "intangibles".
Seriously. Print a million trillion dollar coins with Krugman's face on them. Fucking pathetic state we're in.
Welcome to the world of Bullshit Obama....
Fucker has no bounds...
Obama is not responsible for any of this; he has about enough economic knowledge to maybe balance his checkbook. Its the boyz.
That's just full fucking retard. But you know, the sheeple might just be dumb enough to fall for it.
sheeple don't even know what "intangibles" mean. They do know what, "cheese me" means.
Houdini would be proud of these guys.
I'm writing a song. I just boosted GDP. You're fucking welcome.
I just took a dump and threw it in my garden. Surely that has added to the US GDP?
I am working to renew the forest by breathing and taking a dump in the woods, "intangibly" making standing lumber inventory go up.
rabbit caught in the headlights : "it will go away, it will go away !"
WTF is an intangible addition to GDP? lol
Definition of Intangible: Unable to be touched or grasped; not having physical presence:
So an imaginary addition to GDP will boost GDP by 50000000 Billion Monopoly Intangible Dollars.
Jesus they aren't even trying to hide their BS anymore.... they must be fresh out of ideas lol.
This is like the 85 Billion Bernanke monitizes every month, it is an intangible, unable to be touched or grasped. It only exists to the extent that someone marked it down as an IOU to some country at sometime in the future via treasuries. We live in a world of philosophical incantations. If you can think it, surely it exists, but yet you can't touch it. One trillion yen, no problem. One plus one hasn't equalled two for a longtime now.
WTF? Aren't all economic transactions recorded by GDP? You know; if you sell books, ipads, itunes, or any product of value that's recorded?
Now we know the second wave of the depression is coming; because they need this imaginary boost to offset Q2's negative performance!
Why you are at why not just double count GDP and undercount US debt by half, that'll cure the recession overnight...
Hopefully they discussed this great idea at the G20 meeting so the rest of the world can solve its problems as well. Just think how much saki and kobe steaks could add to the Japanese GDP.
And the whole concept of GDP just gets more and more credible every year.
I am at the moment imagining a shaman standing in front of a rock painted with dials and knobs gesturing towards them and solemnly intoning "Gee Dee Pee".
Artificial money + artificial GDP = artificial "growth" = artificial prosperity = artificial country = artificial people.
In 1984, Winston Smith is an employee at the Ministry of Truth, his job is to go through historical archives and change them to fit the current propaganda.
The party can never be seen to be wrong.
The only other way to boost that POS equation is for the Gub'ment to spend, or now I guess pretend to spend.
Just doing my part in adding to the gdp by creating an intangible.
" Finally, all of the above is a distraction for idiots."
Welcome to costco, i love you.
in Greece they did something similar some years ago, the GDP increased when the goverment decided to include "services" not counted so far such as prostitution.
all part of the dumbing down of society compliments of the liberal political establishment in politics, govt., schools and the media.
my penis is now 10 inchs...and ritholtz's nose is a foot...all thanks to the corrupt fascist democrat party and its paid hoodlum the repubs...thank ya barry
That and a quarter will add exactly zero jobs to the economy. What would it look like if they subtracted all real debt from GDP?
I can go to a bank for a loan and tell them that my debt to income ratio and assets are stellar now that I can include "intangibles" in the equation. My beacon just shot through the roof!
Surely GDP is simply back calculated from value added tax receipts?
Its a simple calc...
Value Added Tax Receipts / Value Added Tax Rate = GDP
It's that fucking easy.
I'd love to post something. Show me the money.
Is it just me or is this double counting? Isn't R&D already included in the final sales price of all iPads and other products sold? After all, it would be foolish for Apple to exclude these costs when determining the price at which they are willing to sell their product.
If the government is going to do this, what will be the next scam they will play to make the economy look bigger?
Next they'll add the value of our DNA.
Good point. Especially now that biotech companies are trying to get patents on human genes.
Yes, it is double counting... purely illegal accounting measures.
Just wait until they add up all the R&D by big Pharma... shit dog, our GDP will be a fat spliff flyin' so high, you be thinking was rainin'.
http://www.youtube.com/watch?v=RljdyXeft04
I have an extra dart board if they need one.
What about the value of all the intangibles which have a negative value? You know... Congress...SCOTUS... NEA... AFGE... my cat...
Being alergic to them, I am no fan of cats. But you shouldn't insult your cat by lumping it with Congress and other government entities.
I am going to make a fortune, on account of being an artistic farter from way back.
OK farts are sorta intangible, but mine have had artistic merit and a pleasant odour, at least for me.
I foresee a market of bottled farts and derivatives to infinity, possibly involving a traded carbon tax.
In any case my farts must be as much part of GDP as anything else, not least the wind coming from sundry schools of economics.
"In God We Trust" on the currency is the Mother of all intangibles.
I remember when WorldCom capitalized its expenses. The word "fraud" was tossed around quite a bit.
Pretty much proves my belief that US GDP is really somewhere around $5 trillion. The rest is complete bullshit.
There are many products that never make it past the R&D stage. THEY ARE NEVER SOLD. So now the process of producing nothing counts in GDP.
If I make 1000 drawings before I finalize the design of one product, it now counts as 1000 different products?
WOW!!!!
It also used to be called cheating to count inventory as an asset instead of a liability. Now it is common practice.
I HAVE A GREAT IDEA!!!! Count debt as income and collect taxes on it!!! Whoo hoo
So... the next time you have a wank, you're going to need an IRS form...
Okay, let me see here.... (types on keyboard)
We'll just open this up and drop in, oh, I don't know.... $500 Billion? Why not? (types more on keyboard)
There fixed it for ya.
"No shame these people. Change the rules until they are meaningless."
Or (might as well) change the rules BECAUSE they are meaningless (anyway).