What actually is Gross Domestic Product

woof woof wrote on Apr 4^th, 2013 at 5:35pm:

What actually is Gross Domestic Product

Total value of all goods and services produced in country. About 1.4 Trillion (1,400 Billion) at the moment.

Its the thing we pretend doesn't exist if we're Libbos and in Opposition  ;D

MOTR wrote on Apr 4^th, 2013 at 5:56pm:

woof woof wrote on Apr 4th, 2013 at 5:35pm: What actually is Gross Domestic Product Total value of all goods and services produced in country. About 1.4 Trillion (1,400 Billion) at the moment.

................. and it's the monetary value, measured in dollars or whatever currency the country has. It's not a scientific and objective measurement of the value of goods produced. Oh wouldn't it be great if there was such a thing.

To compare GDPs of different countries you convert it into a common currency, say U.S. dollars. They are also two ways of calculating GDP: current-currency exchange rate and purchasing power parity. The latter takes into account the average person's ability to purchase the same good or service in that country.

If you add up everyone's salary, it should give you the same answer as if you add up the value of everything that is sold (retail or export), as well as everything we buy, give or take some changes to savings. It is a measure of the 'official' economy. It excludes a lot of things, such as the value of volunteer work, unpaid work (babysitting) and marijuana sales.

A favourite way to compare GDP without the vagaries of exchange rates is to convert it to something else that is universal - how many big macs you can buy.

OK so our debt to GDP is 10% yeah??

Gov says our debt is equiv to someone on 100K having a 10K mortgage yeah??


OK,

So GDP is not government income??

whats our debt to government income ratio??

Sure as hell a lot higher than a 100K wage earner having a 10K mortgage.

More like a $500 a year wage earner with a 10K mortgage.

I think the government takes about 40% of GDP. Google tax freedom day for a nice simple measure of this.

If you want to compare government income, make sure you compare it against government debt, and over the same tiers of government.

freediver wrote on Apr 4^th, 2013 at 9:00pm:

I think the government takes about 40% of GDP. Google tax freedom day for a nice simple measure of this. If you want to compare government income, make sure you compare it against government debt, and over the same tiers of government.

Isn't it closer to 20%

Quote:

Isn't it closer to 20%

We might have to put this down to one of those eternal mysteries that will never be solved.

woof woof wrote on Apr 4^th, 2013 at 8:31pm:

OK so our debt to GDP is 10% yeah?? Gov says our debt is equiv to someone on 100K having a 10K mortgage yeah?? OK, So GDP is not government income?? whats our debt to government income ratio?? Sure as hell a lot higher than a 100K wage earner having a 10K mortgage. More like a $500 a year wage earner with a 10K mortgage.

The ratio is actually about 7% Australian Government net debt. that is 100K wage with a 7K loan.

http://2.bp.blogspot.com/-jZ9YgQio4C0/TaT9dLtz_LI/AAAAAAAAA54/KnpQGaFu2kw/s1600/Chart2_Australian+government+debt+timeseries.jpg

woof woof wrote on Apr 4^th, 2013 at 8:31pm:

so our debt to GDP is 10% yeah?? That depends on whether you are looking at the net or gross Debt to GDP? Gov says our debt is equiv to someone on 100K having a 10K mortgage yeah?? I've heard that said here before, but non one has provided a link to the government statement. That said, the comparison would not be correct! OK, So GDP is not government income?? No, GDP is not equivalent to government income! whats our debt to government income ratio?? The net figure includes government assets & is about 10%, whereas the gross figure doesn't include government assets & is about 23%. Sure as hell a lot higher than a 100K wage earner having a 10K mortgage. More like a $500 a year wage earner with a 10K mortgage. Whilst the accepted method of comparison is Debt to GDP, I would suggest that is inappropriate and the more correct method should be gross government Debt to Total government Revenue. On that basis, in comparison to a more standard mortgage Debt to income ratio of say around 4/1, a similar government gross Debt to income arrangement, with government Revenue at around $370 Billion, would see government Debt at around $1.5 Trillion? Obviously, with gross government Debt running at around $270 Billion gross & Revenue running around $370 Billion, that would equate to a Debt to income ratio of only 70% or so, which is quite a bit under the standard mortgage equivalent, but it is also quite a bit higher than the 100K wage earner having a 10K mortgage.

MOTR wrote on Apr 4^th, 2013 at 5:56pm:

woof woof wrote on Apr 4th, 2013 at 5:35pm: What actually is Gross Domestic Product Total value of all goods and services produced in country. About 1.4 Trillion (1,400 Billion) at the moment.

That's close enough, supposedly!

But, the standard method doesn't take into consideration, the over shoot applications, where governments &/or CB's push large amounts of "stimulus &/or excess monetary actions, such as quantitative easing" into an Economy, which may "artificially" increase GDP, but only on a temporary basis.

In the cases of Japan & the USA, they have both pushed massive amounts into both Q/E & stimulus programs and that has "artificially" increased their GDP's.

BUT, in doing so, they have also massively increased their Debt to GDP ratio's and their current & future costs.

What I'm saying here, is that the effect/s of any "stimulus & Q/E programs" should be calculated & that figure should then applied to reduce the GDP figure back to a more correct net GDP figure! 

If this were applied to Japan & the US, then their artificially inflated GDP figures, which may otherwise appear half reasonable, would suddenly come crashing back down!  

There's a good chance the U.S. is going to end up like Japan.

freediver wrote on Apr 11^th, 2013 at 5:05pm:

Quote: Isn't it closer to 20% We might have to put this down to one of those eternal mysteries that will never be solved.

Might have something to do with whether you include the tax receipts from state governments.

http://www.budget.gov.au/2012-13/content/bp1/html/bp1_bst10-04.htm

Dnarever wrote on Apr 11^th, 2013 at 10:38pm:

woof woof wrote on Apr 4th, 2013 at 8:31pm: OK so our debt to GDP is 10% yeah?? Gov says our debt is equiv to someone on 100K having a 10K mortgage yeah?? OK, So GDP is not government income?? whats our debt to government income ratio?? Sure as hell a lot higher than a 100K wage earner having a 10K mortgage. More like a $500 a year wage earner with a 10K mortgage. The ratio is actually about 7% Australian Government net debt. that is 100K wage with a 7K loan. http://2.bp.blogspot.com/-jZ9YgQio4C0/TaT9dLtz_LI/AAAAAAAAA54/KnpQGaFu2kw/s1600/Chart2_Australian+government+debt+timeseries.jpg

Interesting that this is about the same level of debt that the Fraser Government left with Howard as treasurer and no GFC to cause it.

Like all recessions, the recession of the early 80s put significant strains on the budget. Irrespective of discretionary spending, you are heading towards a deficit. Indeed treasury has estimated that without the stimulus package that Abbott twice voted against, the Australan government would be $20 billion further in debt.

http://www.youtube.com/watch?v=yARnFBMMPRg&sns=em

woof woof wrote on Apr 4^th, 2013 at 8:31pm:

So GDP is not government income??

I don't mean to be rude, but I'm surprised that you would say GDP was government revenue. Yes, they're related but they are far from the same thing.

The government draws its revenue from taxes like GST and income tax. Every time you buy something, you are paying tax. Every time you get paid for a job, you are paying tax (provided your income is above a certain threshold). GDP represents the monetary value of the entire economy and it affects how much revenue the government can get from taxes. The higher the GDP, the higher the taxes the government could potentially draw from economic activity (buying, working).

GDP = income of the economy

GDP is not tax revenue therefore the $100K income and $7K lend is stupid

Tax = income of the government = $376B (2012)

Labor debt = $300B