william the wie
Gold Member
- Nov 18, 2009
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First GDP = Savings + Consumption + (Government-Taxes) + (eXports-iMports) and Savings = Investment
The US is the only Trillion dollar GDP or more economy without a Value Added Tax either explicit or implicit. Since export revenues can be subtracted from a companies VAT bill but imports get a VAT bill tacked on.
So, when a company in another country wants to upgrade its capital equipment the most profitable move is to sell the old capital equipment in the US for whatever they can get net of shipping costs. This lowers the cost of production in the US either directly or indirectly and reduces tax revenues in the foreign country. At the margin this increases reported X and S while decreasing T in the 16 or so other countries with one trillion or more dollars of GDP. In other words US GDP is understated to some degree.
If the US goes into technical default the dollar will weaken and that means that a lot of GDP in other countries will be revealed as being fictitious. Given the roughly 40 trillion dollars of GDP in big countries that have some degree of overstatement due to their subsidy of US investment and acquisition of scrap.
So, simple question how much non-existent GDP will be revealed and how fast if a debt ceiling deal takes say two weeks beyond the limit date?
The US is the only Trillion dollar GDP or more economy without a Value Added Tax either explicit or implicit. Since export revenues can be subtracted from a companies VAT bill but imports get a VAT bill tacked on.
So, when a company in another country wants to upgrade its capital equipment the most profitable move is to sell the old capital equipment in the US for whatever they can get net of shipping costs. This lowers the cost of production in the US either directly or indirectly and reduces tax revenues in the foreign country. At the margin this increases reported X and S while decreasing T in the 16 or so other countries with one trillion or more dollars of GDP. In other words US GDP is understated to some degree.
If the US goes into technical default the dollar will weaken and that means that a lot of GDP in other countries will be revealed as being fictitious. Given the roughly 40 trillion dollars of GDP in big countries that have some degree of overstatement due to their subsidy of US investment and acquisition of scrap.
So, simple question how much non-existent GDP will be revealed and how fast if a debt ceiling deal takes say two weeks beyond the limit date?
