American Economics Thread

[HighGround]

The economy can't expand without raising energy consumption too even in the shortish kind of term.

You need to create more products and services in order to introduce more money supply without causing inflation (real wealth growth).

And how do you create more products or services? Bet you can't do it with your electricity consumption stagnating/falling for years certainly.

Incorrect.

Metalworking, chemicals, and other forms of processing are incredibly energy intensive industries that produce low value goods.

Off shoring these industries and using electricity on higher-value goods like software, healthcare, and luxury handbags makes way more money with way less electricity.

China has been an importer of luxury goods for years even though they are objectively, bad value. Not a whole lot of electricity spent on creating these products.

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Yeah, you can also I guess count various financial engineering creations as GDP, like Bob sold some virtual Tesla shares to Steve, Goldman Sachs bought a virtual ES futures contract from Citadel, but that is just illusionary,

Ordinary people get no standards of living increased from that. Only 10% of elites get richer through void assets and fund returns.

I guess the fact that my refrigerator is way better than the one it replaced is actually financial engineering. Never mind that it’s more efficient, bigger, and sexier. The fact that it’s more expensive is clearly an anomaly and a trick since it reduced my electricity usage.

But that is the whole point, force people to buy assets, to boost the elites, through inflation.

An economy can only expand through productivity, not from virtual accounting differences.

How can you prove they had any productivity rising through energy utilization improvements,

When their exports are falling, and production of all key materials and industrial products (the end results measures) is also falling too, etc.

Of course, shutting off production plants (deindustrialization) in favor of more law offices will lead to less energy consumption.

The US didn't get better at "being more efficient" at utilizing energy like you keep saying, but it simply changed the structure of the economy.

So, just because they changed the structure of the economy doesn't mean that they can now "grow" without energy.

It simply meant that they could decline more and more. All the while their media tell you about their "giga GDP".

That is because, with every new useless financial or litigation transaction, or bullshit job, they are one step away from surviving past another 5 years.

You are confusing real economy (productivity) growth, with GDP and GDP growth, which is an accounting interpretation.

I agree its productivity that matters and not electricity demand.

Let’s see number of cars produced by US remains steady, but number of workers? Consistently goes down. Almost like productivity steadily increases.

Don’t mix up electricity demand and productivity.


——————————————

Look folks. There are plenty of criticisms you can make of United States and plenty I make myself, but deluding yourself and trying to argue about how something isn’t “real”, or how something doesn’t “count” isn’t doing you any favors.

In fact, the very “real” cost of healthcare adds a couple trillion to US GDP, at the expense of people’s health and financial stability. United States would be better off if the healthcare sector was way smaller with much more affordable healthcare. GDP would also be smaller, but people would be healthier.

and that’s not “fake” GDP. That’s actually very “real” US GDP showing very huge issues with an aspect of the US economy.

So please, enough with this obsession over electricity demand. It may go up, it may go down in the future, but it is only one indicator of many that we need to consider when assessing the US economy. Be smart. The economy is far more complex than a single graph.

 

[broadsword]

I guess the fact that my refrigerator is way better than the one it replaced is actually financial engineering. Never mind that it’s more efficient, bigger, and sexier. The fact that it’s more expensive is clearly an anomaly and a trick since it reduced my electricity usage.

A refrigerator, even for a model like the American side-by-side, does not consume much electricity. An air conditioner consumes way more. But the improvement in its efficiency is only incremental. Factory machines and equipment would be off the home appliance chart.

 

[Serb]

Incorrect.

Metalworking, chemicals, and other forms of processing are incredibly energy intensive industries that produce low value goods.

Off shoring these industries and using electricity on higher-value goods like software, healthcare, and luxury handbags makes way more money with way less electricity.

China has been an importer of luxury goods for years even though they are objectively, bad value. Not a whole lot of electricity spent on creating these products.

Yeah, but then you are also left with an increasingly large chunk of your military rusting and crumbling over time without you having any ability to repair it, not to mention some rapid procurement, build-up, or surge capacity for one's pipe dreams about defeating China.

You are also left with a hollowed-out middle class that once worked in manufacturing, they now gradually move down into the lower class and end up with low-value retail, hospitality, and personal services type jobs with lower wages (because the value of labor is generally much lower there vs traditional manufacturing), this creates very asymmetrical economic distribution,

- Because the upper class then goes fully into law (protecting oligarchs), finance (growing oligarchs' money), medicine (this is a popular sector because of all the rich elderly boomers rapidly aging now), and tech (only actually "productive" things in the economy, to a certain extent, mainly because you don't need many hard assets and infrastructure to produce here, something that the US lacks clearly, so everyone focused on this. But also with a lot of redundancy and waste in general). Inequality on steroids.

Consider just how much of the finance sector is actually just some computer algorithms trading some virtual numbers in voids with one another. Not a capacity to really employ that many people. Very similar to software, you essentially just make it once, then replicate and distribute it globally with next to no additional costs, and only slightly tweak it in its lifetime. So, not enough high-paying jobs for everyone.

The US now essentially destroyed both its geopolitical standing, and sociopolitical cohesion, for just a few years of some oligarchs and the upper class, that are latched onto them, having a blast and time of their life for a while. But, now is slowly a time for a delayed repayment.

And all of this happened (inequality rising, real wages falling, political polarization rising on all levels, no single positive social trend) when the US GDP was rising, so that's why you should abandon it as some kind of metric.

How can something signal that the economy is growing, when all that happened? Who is crazy here?

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, yet 2.5% is the supposed inflation this year!? Yeah, I guess...

Yeah, software, rent-seeking type healthcare, luxury goods make money, but not money for you, but for those shareholders. What makes money for you is your paycheck and what determines your wealth is how much you can buy with that. That is what a growing economy is.

I guess the fact that my refrigerator is way better than the one it replaced is actually financial engineering. Never mind that it’s more efficient, bigger, and sexier. The fact that it’s more expensive is clearly an anomaly and a trick since it reduced my electricity usage.

But that fridge would have typically been bought from another country. For example, the US sells $87.3M refrigerators to China, while it buys $3.13B from them. The US also has massive deficits in them and imports them like no tomorrow from other countries too like Mexico and South Korea, overall it imports 6 times more than it exports. So, seeing it decrease your electricity usage didn't actually signal any "progress" in the economy, it just signaled further deterioration of the situation.

I agree its productivity that matters and not electricity demand.

Let’s see number of cars produced by US remains steady, but number of workers? Consistently goes down. Almost like productivity steadily increases.

Don’t mix up electricity demand and productivity.

Yeah, but the number of imported auto parts from the rest of the world also increased, probably doubled in the last 20 years.

Look folks. There are plenty of criticisms you can make of United States and plenty I make myself, but deluding yourself and trying to argue about how something isn’t “real”, or how something doesn’t “count” isn’t doing you any favors.

In fact, the very “real” cost of healthcare adds a couple trillion to US GDP, at the expense of people’s health and financial stability. United States would be better off if the healthcare sector was way smaller with much more affordable healthcare. GDP would also be smaller, but people would be healthier.

and that’s not “fake” GDP. That’s actually very “real” US GDP showing very huge issues with an aspect of the US economy.

So please, enough with this obsession over electricity demand. It may go up, it may go down in the future, but it is only one indicator of many that we need to consider when assessing the US economy. Be smart. The economy is far more complex than a single graph.

I agree that electricity is not the main problem in the US, that is just one of the glaring symptoms, whereas there are other structural rots that they should worry about more since they are the first principles causes for the majority of things they experience and will experience soon.

However, this doesn't change the fact that the falling electricity usage in the US isn't a sign of admirable "progress", some "alien" high-tech energy utilization miracle like you vaguely hinted before, or I got that impression I guess,

But simply them being able to pay with their virtually generated, globalized dollars for tangible goods from China and the rest for now ("importing" that energy and hard work in a sense). I guess that's where they have most of their "productivity" happening only, in issuing $$$.

The energy consumption and metalworking + chemicals, that you mentioned, are, in fact, productive because they create something.

The current US economy doesn't create much other than their dollars for which they can pay for tangible things from abroad for now.

Fun Fact: And then those dollars return right back from the RoW, into the US, like a boomerang, into assets that are held by the exact same oligarchs who moved out the manufacturing in the first place (into not just 90% of the stock market that they control, but the majority of the US housing stock that somebody could have actually lived in). So, when you see "US GDP growth", understand the full story that was behind it.

Everything will be easier for you once you understand that this is simply a battle between a crooked political system and EVIL VS avg. people.

 

[vincent]

You guys arguing about linkage between electricity usage and GDP is missing a crucial fact: the American financial system is a giant vampire squid with tentacles in every corner of the globe. Every time a USD transaction takes place, an American correspondent financial institution takes a cut. The amount of electricity usage for the transaction is negligible, but the value extracted is substantial, with almost no work for the Americans.
The amount of interest earned from useless loans to third world countries and ”consulting fees” are quite substantial as well. All use negligible amount of electricity.

 

[Serb]

You guys arguing about linkage between electricity usage and GDP is missing a crucial fact: the American financial system is a giant vampire squid with tentacles in every corner of the globe. Every time a USD transaction takes place, an American correspondent financial institution takes a cut. The amount of electricity usage for the transaction is negligible, but the value extracted is substantial, with almost no work for the Americans.
The amount of interest earned from useless loans to third world countries and ”consulting fees” are quite substantial as well. All use negligible amount of electricity.

Yeah, but that is done mostly by algorithms now, so realistically that US financial institution doesn't even need that many people employed for that.

So where does that money end up? It isn't distributed to the broader economy and well-being - it goes back to share buybacks and dividends like usual, and a few programmers.

Essentially it ends in nothing. Idk, maybe also on some other exotic useless quant virtual trading strategy of that financial firm as expected.

That is the whole point of this, higher electricity usage = higher manufacturing = more people employed, less virtualized economy, and a strong middle class.

No electricity usage = no production = 99% of some voided transaction that ends on the books of some corporations without touching real people and wages.

If you think that the economy is powerful and people are economically happy somewhere where this happens so often, then this is a different story.

 

[Serb]

Just like in other areas of the economy. Where do the increased profits (from the "ever-increasing GDP") from a bunch of mega-corporations and private equity firms cornering the markets successfully and gouging prices, all over the country, go (higher GDP)? They certainly don't go into building new hard assets, or infrastructure (communication networks, transportation systems, schools, hospitals, power supplies, water infrastructure), as that is too "cost-inefficient" in their turbo-capitalism, indeed they go right into new executive golden parachutes (as their rewards for successful capitalism), share buybacks, dividend payments, further buyouts, and cannibalization of smaller firms, further lobbying efforts, all in the efforts to do rent-seeking even more effortlessly in the future, etc, and the cycle continue until the collapse. Growing in reverse.

 

[Proton]

Just like in other areas of the economy. Where do the increased profits (from the "ever-increasing GDP") from a bunch of mega-corporations and private equity firms cornering the markets successfully and gouging prices, all over the country, go (higher GDP)? They certainly don't go into building new hard assets, or infrastructure (communication networks, transportation systems, schools, hospitals, power supplies, water infrastructure), as that is too "cost-inefficient" in their turbo-capitalism, indeed they go right into new executive golden parachutes (as their rewards for successful capitalism), share buybacks, dividend payments, further buyouts, and cannibalization of smaller firms, further lobbying efforts, all in the efforts to do rent-seeking even more effortlessly in the future, etc, and the cycle continue until the collapse. Growing in reverse.

These corporations bring capital flows into the country which is used to purchase goods.
Or maybe the Chinese - among others - are just idiots; selling their produce for monopoly money?

 

[FairAndUnbiased]

I would suggest that you stop looking for confirmation bias. Or are you really under the illusion that all social indicators are universally going down? Or that the negative effect of covid on US is just going to linger in perpetuity?

I am sure that the editors at Pravda believed much of what they wrote too.

Incorrect.

Metalworking, chemicals, and other forms of processing are incredibly energy intensive industries that produce low value goods.

Off shoring these industries and using electricity on higher-value goods like software, healthcare, and luxury handbags makes way more money with way less electricity.

China has been an importer of luxury goods for years even though they are objectively, bad value. Not a whole lot of electricity spent on creating these products.



I guess the fact that my refrigerator is way better than the one it replaced is actually financial engineering. Never mind that it’s more efficient, bigger, and sexier. The fact that it’s more expensive is clearly an anomaly and a trick since it reduced my electricity usage.




I agree its productivity that matters and not electricity demand.

Let’s see number of cars produced by US remains steady, but number of workers? Consistently goes down. Almost like productivity steadily increases.

Don’t mix up electricity demand and productivity.


——————————————

Look folks. There are plenty of criticisms you can make of United States and plenty I make myself, but deluding yourself and trying to argue about how something isn’t “real”, or how something doesn’t “count” isn’t doing you any favors.

In fact, the very “real” cost of healthcare adds a couple trillion to US GDP, at the expense of people’s health and financial stability. United States would be better off if the healthcare sector was way smaller with much more affordable healthcare. GDP would also be smaller, but people would be healthier.

and that’s not “fake” GDP. That’s actually very “real” US GDP showing very huge issues with an aspect of the US economy.

So please, enough with this obsession over electricity demand. It may go up, it may go down in the future, but it is only one indicator of many that we need to consider when assessing the US economy. Be smart. The economy is far more complex than a single graph.

The new refrigerator is statistically Made in China, replacing a statistically Made in USA old model. Even if made in the US, the IP is likely to be Chinese since many US appliance companies are owned by Chinese companies or simply rebrand Chinese IP models, such as GE appliances owned by Haier and almost every company using Midea as their microwave supplier.

Funny thing - if you add the entire US manufacturing sector to China, US GDP is still bigger than China's. Throw in Japan's, and its still bigger.

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That means that even if China competes in literally every single high value industry in the world, it will still have a smaller nominal GDP than the US. And why is that? Because the US can basically create GDP out of thin air from printing USD.

As long as US can force others to trade USD numbers for physical objects and labor, then China can't catch US in nominal GDP no matter what. It doesn't matter if China controls literally every single high tech product market in the world. EUV lithography doesn't matter, real estate reform doesn't matter, none of that shit matters for overtaking US nominal GDP as long as the USD has purchasing power.

These corporations bring capital flows into the country which is used to purchase goods.
Or maybe the Chinese - among others - are just idiots; selling their produce for monopoly money?

that is indeed the case, but this is the problem:

if you can force a large portion of the world to use USD, those you can't force directly will still need USD to trade with them, effectively also forcing them to use USD. You have to create an entire alternative economic system, and have the means to defend its members.

 

[Index]

I am sure that the editors at Pravda believed much of what they wrote too.


The new refrigerator is statistically Made in China, replacing a statistically Made in USA old model. Even if made in the US, the IP is likely to be Chinese since many US appliance companies are owned by Chinese companies or simply rebrand Chinese IP models, such as GE appliances owned by Haier and almost every company using Midea as their microwave supplier.

Funny thing - if you add the entire US manufacturing sector to China, US GDP is still bigger than China's. Throw in Japan's, and its still bigger.

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That means that even if China competes in literally every single high value industry in the world, it will still have a smaller nominal GDP than the US. And why is that? Because the US can basically create GDP out of thin air from printing USD.

As long as US can force others to trade USD numbers for physical objects and labor, then China can't catch US in nominal GDP no matter what. It doesn't matter if China controls literally every single high tech product market in the world. EUV lithography doesn't matter, real estate reform doesn't matter, none of that shit matters for overtaking US nominal GDP as long as the USD has purchasing power.

That is just... not true, by 2024 numbers, China still has a substantially larger GDP than US.

I don't know what you mean by "catch in nominal GDP", China's nominal economic activity is in RMB while US' is in USD.

National economies are rather closed off systems, especially between 2 enemy nations. So even if for individuals like yourself, you can convert tiny (from a national perspective) amounts of USD to RMB or vice versa, on a state level, the vast majority of RMB/USD is stuck unconvertable in the Chinese/American economy respectively.

These corporations bring capital flows into the country which is used to purchase goods.
Or maybe the Chinese - among others - are just idiots; selling their produce for monopoly money?

It is the vast majority of nations beside China that are idiots (relatively speaking). There's a reason China displaced all of them economically.

Idiots in other countries either place value on "goods" or "money" or both, when the real value is the knowhow behind the goods.

Most goods last 1-2 years and then is thrown away, value reduced to 0 in some landfill. Money is likewise also just completely variable in value. 20 years ago, something with the calculating power of a bottom end phone, it would cost you millions. Now it'd cost you hundreds. Does that mean that the phone has become 10 000s times worse because it's cost decreased 10 000s times?

What is the real driver of growth is that in the process of making, people learn and improve technology, marketing, efficiency and so on. These improvements then enhance both the life quality of people and the sophistication of the next product.

You're like a Qing noble obsessing over silver tributes, while the clever man across the sea is building out his factories, experimenting and creating new goods. You've entirely missed the point on what development means.

The ability to use silver tributes to purchase trinkets from the man across the sea did not grant the Qing overlordship over him, because national power is neither in the silver nor the trinkets.

 

[siegecrossbow]

Just like in other areas of the economy. Where do the increased profits (from the "ever-increasing GDP") from a bunch of mega-corporations and private equity firms cornering the markets successfully and gouging prices, all over the country, go (higher GDP)? They certainly don't go into building new hard assets, or infrastructure (communication networks, transportation systems, schools, hospitals, power supplies, water infrastructure), as that is too "cost-inefficient" in their turbo-capitalism, indeed they go right into new executive golden parachutes (as their rewards for successful capitalism), share buybacks, dividend payments, further buyouts, and cannibalization of smaller firms, further lobbying efforts, all in the efforts to do rent-seeking even more effortlessly in the future, etc, and the cycle continue until the collapse. Growing in reverse.

Stock buybacks, that’s what.