Looking at the definition of GDP in wikipedia, it says that it includes "exports minus imports". But I'm wondering how US China trade has been accounted for in the past few decades. The lop-sided flow of goods from china to the US should presumably have had a large negative effect on US GDP. But from listening to Peter Schiff it sounds like some trickery is going on. If the Chinese buy US treasuries with their dollars, does that somehow count as US "exports"?
What Went Wrong with Economics
Well government spending counts as part of the GDP. Selling treasuries is one way to finance government spending. The money the Chinese spend on US treasuries doesn't then sit in government coffers. It gets spent on teacher's salaries and that sort of thing and thus contributes to the GDP numbers.
GDP: A Meaningless Statistic.
Sale of financial assets is not included in GDPs, because it doesn't involve creation of goods and services but merely exchange of claims on capital.
Anyway, they should ditch the 'minus imports' part, because as Milton Friedman once succinctly put it, the best thing for any nation is to import as much as possible in return for exporting as little as possible.
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