Now empirical arguments don't refute apriori ones but I was thinking, if zimbabwe prints so much money, and money printing causes increased spending, then why isn't their GDP huge like, bigger than ours?
Because printing money does not equal wealth creation?
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I could be wrong about this, but I thought I'd give it a shot.
Zimbabwe's GDP is probably huge measured in ZWD. The number would be much larger than the US GDP measured in USD. But if you were to convert the Zimbabwe's GDP from ZWD to USD (1USD=7070707ZWD) then the US's GDP would be much larger nominally.
fakename:money printing causes increased spending
I'm not sure how true that is. Money printing bids up prices, sure. If I printed $100 of counterfeit money, I'd spend $100 more than I otherwise would have. But wouldn't that, in the end, just take away $100 worth of purchasing power spread between everybody else who holds dollars? And in that case, that's $100 worth of purchasing power that can't be spent, isn't it?
I need to study this stuff some more I think!
It might be huge in their own currency but I doubt it would be very impressive once it was converted to dollars. A fair GDP calculation would require adjusting for inflation, but it could still be deceptively positive based on government spending. Also, government price fixing pollutes the data (that's why you can't trust US numbers from the WWII years) and Zimbabwe has been doing that too.
Does Zimbabwe actually publish anything like a GDP? It's hard to imagine Mugabe's government publishing anything negative about themselves.
DBratton:Does Zimbabwe actually publish anything like a GDP?
Not sure how accurate this is but (from Wikipedia):
Spending doesn't equal economic growth. Saving and investment do. Crusoe cannot enrich himself by eating more, he can only do so by building a home, nets, etc. (investment) in order to increase future production. Also, printing more money doesn't increase wealth. If you have a higher supply of something, it's value will decrease. That's what happens when you print a lot of money.
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DBratton:It might be huge in their own currency but I doubt it would be very impressive once it was converted to dollars. A fair GDP calculation would require adjusting for inflation, but it could still be deceptively positive based on government spending. Also, government price fixing pollutes the data (that's why you can't trust US numbers from the WWII years) and Zimbabwe has been doing that too.
So GDP is an even more useless statistic than I thought!? I mean, if a country's GDP can rapidly change just according to how exchange rates are recorded than the value of the reciepts of an economy is an extremely nominal phenomenon. Assuming that zimbabwe wasn't inflating it would have a huge GDP of 10000000000 as opposed to US GDP of 1000000 but when quoted in US dollars it equals .001 dollars! And yet, an increase in the money supply is supposed to increase GDP?
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