Comment by Supermancho
13 hours ago
> What is your definition of depression, exactly?
A real GDP decline of over 10% year over year for more than 1 year is the biggest signal. Ofc, I noticed the US Federal Government has been cooking the books since at least H. W. Bush (maybe longer) by including tech stock potential gains as part of GDP. Take out tech stocks, the US economy looks like it will to historians.
Even in the modern day, an economic depression is associated with massive unemployment, deflation, reductions in the trifecta of industrial output + consumer spending + international trade, with the final kicker being reduced credit availability. Currently, interest rates are relatively high (historically middling) which has effectively restricted consumer credit, while the national credit rating has fallen.
You can't just randomly exclude entire sectors of an economy.
The model is as useful as the predictions. The factor by which the GDP is boosted based on tech stocks valuations is the random factor. Including tech speculation has distorted the published GDP. Granted, tech speculation is cause for increased velocity, without commensurate production.
Modeling that the GDP goes up because people are buying bitcoin would be the equivalent of the AI investment effect. A key difference being that the AI companies are currently included in the calculation and bitcoin is not. I don't mean to imply that the AI companies are transparently ponzi schemes, but they are all massively overvalued. The net GDP effect should be very very small if not negative, while the valuations are being used to justify a growing GDP that would otherwise have obviously fallen.