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John T. McCracken
 
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Default An apology


"Ed Huntress" wrote in message
.net...

"Uncle_Phil" wrote in message
...
((Snip))


The health of any economy is primarily a function of the velocity
of money. The more rapidly it changes hands, and the more hands
through which it passes, the more robust the economy. It doesn't
really matter what jobs people do to make the velocity of money
high. The notion that wealth is only measured in tangible goods
output is primitive, and a fundamentally flawed way of measuring
the health of a modern economy.

Gary


Hmmmm.... The ghost of Carlo Ponzi is alive and well???


Gary's statement is essentially correct, or at least a lot more correct

than
the idea that an economy's health and wealth is based on extraction
(mining), agriculture, and manufacturing. Those are the things we often
hear, but they're the result of some misunderstandings.

Two things to consider he Since the time of Adam Smith (late 18th
century), the basis of modern economics has been the understanding that a
country's wealth is the sum of its outputs -- goods and services

combined --
in a given period of time. Thus, we see GDP and GNP as the most common
measures of wealth in the field of economics. GDP should be in approximate
balance with the product of the money supply and its turnover rate, which

is
also known as the velocity of money.


The great given, and I am an absolute expert here so pay attention, is that
the velocity of money is increased approx. tenfold when a teenage girl is
present in the household!

JTMcC.



The second thing to consider is that manufactured goods are really

"packaged
services." You don't buy a car to display as sculpture in your library.

You
buy it to get you from place to place, to provide the service of
transportation. Manufactured goods tend to be very efficient packages of
services, but the thing you're buying when you purchase them is the

services
they provide.

So the distinction between goods and services as measures of "wealth" is

an
artificial one, which has led to many misunderstandings. Most services
interact in some way with goods -- you need hamburgers to flip if you're
going to provide the service of flipping and cooking hamburgers. But, in
economic terms, it doesn't matter where those goods come from. And it
requires fewer goods to stimulate demand for more services all of the

time.

That's why the US economy continues to grow even as the portion of GDP
represented by manufactured goods continues to decline. It's now down to
just over 10% of our economy.

Ed Huntress