Economy contracts - stocks soar

GDP came out at 2.2 percent for the quarter.   The GDP deflator came in at 1.5 percent.

What does that mean?

GDP is the value of all goods and services produced by the economy.  2.2 percent means the economy expanded by that amount.  New goods and services were being offered and bought.  2.2 percent more than last year for the quarter.

The GDP deflator measures how much of the expansion is just due to INFLATION and then removes that amount.

According to the government inflation grew (on an annually adjusted basis) at 1.5 percent.

That means your rent, your gas, your heat, your food, your health care, your education costs, your movie tickets, your cable service, your stamps, your everything, barely went up at all over the last year.  Just 1.5 percent.

GREAT NEWS!

Only, the funny thing is, let's just say you live in an alternate world where the cost of living is rising at a much higher rate.  Let's just say at a 2.5 percent rate.

Then GDP was actually very close to ZERO.

But gosh, let's say you live in the world I live in.  Where the cost of living is soaring.

Let's say you live in that world.  Let's say real inflation as gauged by John Williams at Shadowstats as measured with the same metrics used in 1975 - That real inflation is running at 9 PERCENT a year.

Then the ECONOMY SHRUNK - YES GDP SHRUNK at an alarming rate.  At a depression rate.  Yes, then the economy is shrinking at a rate the explains all those unemployed, underemployed people out there.

Wow - but is that really possible?  Hey why is the stock market skyrocketing then?  Why are corporate profits soaring?

Could it be they use the same false metrics as the government.  Is Bernie Madoff right?  Is our entire economy a Ponzie scheme?

HMMM.  I wonder.