Loading ...
Sorry, an error occurred while loading the content.
 

RE: [LandCafe] Does anyone remember

Expand Messages
  • Edward Dodson
    Bill, you wrote: Folks, at some point I recall, Greenspan made a comment when testifying before Congress that, since oil was only 2% of the GDP, it couldn t
    Message 1 of 2 , Jan 25, 2008
      Bill, you wrote:

      Folks, at some point I recall, Greenspan made a comment when testifying
      before Congress that, since oil was only 2% of the GDP, it couldn't really
      affect economic vitality. Does anyone know where or when that was? I can't
      find it. B.

      Ed here:

      Bill, what needs to be conveyed to the public, in my view, is the fallacy of
      using GDP as a measure of economic health. GDP includes expenditures by
      government for everything but transfer payments. Thus, the more we spend on
      the military, on building prisons, on chasing down drug lords, etc. etc. the
      higher will be the reported GDP figure. The fact that our government is
      doing this by going into the global credit markets rather than collecting
      rents is an integral, if secondary, part of the problem we need to highlight
      in our commentaries.

      As for the Greenspan comment, I think this might be what you are
      remembering, which came from testimony before the House Committee on
      Financial Services (20 July 2005):

      "Since the mid-1990s, a significant increase in the share of world gross
      domestic product (GDP) produced by economies with persistently above-average
      saving--prominently the emerging economies of Asia--has put upward pressure
      on world saving. These pressures have been supplemented by shifts in income
      toward the oil-exporting countries, which more recently have built surpluses
      because of steep increases in oil prices. The changes in shares of world
      GDP, however, have had little effect on actual world capital investment as a
      percentage of GDP. The fact that investment as a percentage of GDP
      apparently changed little when real interest rates were falling, even
      adjusting for the shift in the shares of world GDP, suggests that, on
      average, countries' investment propensities had been declining."
    Your message has been successfully submitted and would be delivered to recipients shortly.