Grossly Deceptive Product

GDP growth is 4.9%... Really? Okay, fine, but what are the caveats? [The Rude Awakening] October 27, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Grossly Deceptive Product [Sean Ring] SEAN RING Tall tales from short men in suits - that’s what this is. I don’t think most of the hoi polloi mind a little white lie occasionally for the common good. After all, smoothing things out makes the world a bit more bearable. Unvarnished truth can lead to needless trouble. Once, I tried to tell Pam what I thought of her dress. Never again! But if you think GDP growth was 4.9%, I’ve got a bridge over the East River I’d like to sell you. But first, let’s do the basics with GDP. It’s been a while, so let’s refresh our knowledge. Grossly Deceptive Product (GDP) GDP, of course, stands for Gross Domestic Product. GDP is one of those terms that gets thrown around like confetti at a New Year's Eve party, especially by politicians and mainstream economists who seem to worship it as the ultimate indicator of a country's economic health. But let's cut through the noise and get down to what GDP is and, more importantly, what it isn't. At its core, GDP is the total value of all goods and services produced within a country's borders over a specific period, usually a year or a quarter. The formula is simple enough: GDP = Consumption + Investment + Government Spending + (Exports - Imports). It's a way to put a dollar figure on a nation's economic output. It's often used to compare countries' economic performance or track a single country's economic growth over time. Now, let's talk about why GDP is a flawed metric. First off, it measures quantity, not quality. If you spend billions on healthcare because your population is sick, that boosts GDP. If you spend billions on warfare, that also boosts GDP. But are either of these things signs of a healthy, prosperous society? I'd argue not. GDP doesn't distinguish between productive and unproductive activities or sustainable and unsustainable ones. Another issue is that GDP doesn't account for the income distribution among a country's residents. A country could have an astronomical GDP, but if all that wealth is concentrated in the hands of a few, then the average person isn't necessarily better off. Economic inequality is inherent in a capitalistic system. But a yawning chasm between the rich and the poor is undesirable and a glaring blind spot in the GDP equation. And let's not forget about the informal economy. From babysitting and bartering to under-the-table jobs, these transactions often aren't reported and, thus, aren't included in GDP calculations. In some countries, the informal economy is a sizable portion of economic activity, and ignoring it gives us an incomplete picture. How a Government Can Finagle the Numbers Let's dive into the nitty-gritty of GDP's components, abbreviated with the snappy equation: GDP = C + I + G + (X - M). It sounds like something from an algebra textbook, but each letter represents a crucial part of the economic puzzle. Understanding these components is like having a decoder ring for interpreting the daily economic headlines that bombard us. Consumption (C) First up is Consumption, the "C" in our equation. This is the total value of all goods and services consumed by households. We're talking about everything from your morning latte to your Netflix subscription. Consumption is usually the largest GDP component, making up about 60-70% of the total in advanced countries like Western Europe, Australia, and Japan. In the US, it’s closer to 70%. It's the bread and butter of the economy. However, let's remember that consumption isn't an unalloyed good. In a debt-fueled economy, elevated consumption levels often mean people are living beyond their means, racking up credit card debt, and borrowing from the future. Low interest rates and easy credit usually egg on this unsustainable artificial boost. Investment (I) Next, we have Investment, the "I" in our equation. This includes business investments in equipment and structures, residential construction, and changes in business inventories. Investment is what allows an economy to grow over the long term. Businesses invest in new machinery to increase productivity, and people invest in homes, contributing to the housing market. However, not all investment is created equal. Government policies can distort investment decisions, leading to malinvestment—resources being allocated to projects that aren't the most beneficial for the economy. Think about the housing bubble of the mid-2000s. Much investment went into real estate, driven by artificially low interest rates and lax lending standards. We all know how that ended. Government Spending (G) Government Spending is the "G" in our equation. This includes all government consumption and investment but not transfer payments like pensions and unemployment benefits. While government spending contributes to GDP, it's essential to remember that these funds come from taxation or debt, which have economic costs. Government spending often involves a redistribution of resources, taking from one group to give to another, or worse, to fund projects that may not have any real economic benefit but serve political ends. You know, the “Bridges to Nowhere.” The more the government spends, the more it infringes upon the private sector, crowding out genuine, market-driven activity. This quarter, [defense spending was up a whopping 8.0%.]( Net Exports (X - M) Finally, Net Exports is represented by (X - M) or Exports minus iMports. If a country exports more than it imports, it has a trade surplus. If it imports more than it exports, it has a trade deficit. Despite the bad rap trade deficits often get, they're not inherently bad. If a country is a desirable destination for foreign investment, it might run a trade deficit while enjoying economic growth. However, persistent trade imbalances may be a sign of economic problems. They might indicate that a country lives beyond its means, borrowing to finance its consumption. Or they might reflect a lack of competitiveness in global markets, which could be due to a host of issues ranging from poor infrastructure to burdensome regulations. [[Revealed!] New AI Opportunity Bigger Than The PC?]( [Click here to learn more]( Exactly 2,935 miles away from Wall Street lies [the biggest profit opportunity]( of your lifetime. A little-known opportunity which is creating an average of $32.8 BILLION in new wealth EVERY SINGLE DAY… That’s $1.2 trillion per year… And if you act fast, you have the chance to get in on the action starting right away. [Click here now for details](. [Click Here To Learn More]( What’s Your Point? My point is this. Maybe the economy did grow by 4.9% annualized… but at what cost? From [The Wall Street Journal]( But there are warning signs underlying the eye-popping numbers. Americans saved less and their incomes, adjusted for inflation, fell over the summer. That could mean the pace of spending will ease in the coming months. Business investment also stalled. Meanwhile, rising long-term interest rates, wars in Ukraine and the Middle East, and the possibility of a partial government shutdown could cause economic cracks to emerge. The Journal continued: Americans’ after-tax, inflation-adjusted income decreased 1.0% in July through September, after a sizeable increase during the first half of the year. Their savings as a share of income fell to 3.8% in the third quarter, from 5.2% in the second. Consumers will have less of a buffer for purchases if they continue to draw down their savings stockpiles. A slowdown in consumer spending would weigh on overall growth because it accounts for most of U.S. economic output. Higher long-term interest rates could cause a cooling in several parts of the economy. Residential investment, which was weak earlier in the year, advanced 3.9% in the third quarter. But a climb in mortgage rates to near 8%, the highest since mid-2000, could weigh on that category as demand for homes slides. The number of small firms reporting that it was harder to access credit edged higher in a September survey from the National Federation of Independent Business. That could portend a pullback in business investment and hiring. Business investment in items such as buildings and equipment was essentially flat over the summer, Thursday’s report showed. In short, Americans dropped the last of their savings, Biden takes credit for “Bidenomics” working, and we now await a “cooling” rather than a “recession.” Doubtful. Income and savings are decreasing as the Fed slows down its moneyprinting. Rate hikes are on hold because the market is tightening, as evidenced by higher long-term rates. Needless to say, this doesn’t look so good. Wrap Up GDP is a flawed metric, a blunt instrument that misses many nuances and can be manipulated for political ends. The defense spending is up 8%, which shows this is really a spending indicator. As someone who writes about markets, finance, and economics, I can't stress enough the importance of understanding these components, not as gospel truth, but as part of a broader toolkit for making sense of the complex, messy reality that is the global economy. Keep questioning, keep digging, and don't take any economic indicator at face value. After all, in the world of economics, the only constant is change. Have a wonderful weekend! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( In Case You Missed It… Let Them Eat… Bugs? [Sean Ring] SEAN RING I must disclose this immediately: I utterly loathe the World Economic Forum. To quote Obi-Wan Kenobi, “You’ll never find a more wretched hive of scum and villainy.” From Jacinda Ardern, the Woman Who Would Be Queen (of New Zealand), to Chrystia Freeland, granddaughter of one Nazi and chief cheerleader for another, to Justin Trudeau, the chip off the old block, all who associate with the World Economic Forum have proven themselves to be authoritarian nightmares. But the buck must stop somewhere, and that’s with Klaus Schwab, the co-founder and head of the WEF. A student of Kissinger (of course), Schwab has taken public-private partnerships to a new level. His goal has been to “infiltrate cabinets” to alter government policy. New Zealand and Canada are unrecognizable, thanks to his acolytes. I don’t mind the climate nuts so much. Due to our current economic woes and inevitable banking crisis, idiotic policies like net zero and ESG are being rolled back. Al Gore, John Kerry, and Mark Carney look like used car salesmen who’ve tried to stay relevant by shouting the loudest. But when it comes to my food intake, the “Eat Ze Bugs” crowd goes beyond the pale. And they must be stopped. I don’t usually write about health because, well, I’m a plump, beer- and wine-drinking, meat-eating machine. And while I try to take care of myself better these days, I won’t apologize for going for what Joe Rogan calls “mouth pleasure.” While I can regulate my booze and desserts, regarding meat, I simply won’t compromise. In Piedmont, the land of “Slow Food,” the meat is delectable. It’s so good; steak tartare is on every restaurant menu. Yup, we all eat raw meat here. No one gets sick. In fact, everyone is much healthier here than you’d find in other parts of the world. In this edition of the Morning Reckoning, I’ll explain why it’s a matter of life and death that we must eviscerate Schwab’s buggy plan. [Nvidia’s CEO Leaves Crowd Speechless…]( Behind closed doors… He took center stage… And left the crowd utterly speechless. What happened? This tech billionaire revealed a breakthrough technology [that will change everything you know about making money](. (Experts are predicting a $150 trillion megatrend!) [See for yourself right here]( [Click here to learn more]( Could this be “The Steve Jobs iPhone Moment” for Nvidia’s CEO? [See the full story for yourself here](. [Click Here To Learn More]( Meat and Health I’ve always associated meat with strength. As a high school football player, I needed to eat meat to keep up. Even when my mother made linguine, it’d be with a heaping portion of rock lobster and clams. When I moved to London and met vegetarians for the first time, they, to a person, were physically weak. Guys and girls, I never saw a strong vegetarian. I still never have. I’m not even sure I’ve ever met a vegan. Chalk that up to good networking skills. It was self-evident that meat was not only healthy, but also the best way to get protein into my muscles. I may have assumed this because none of the vegetarians I knew had any muscles. Even when claims came out about how vegetables had the same protein as meat, and that you could be healthy — no, healthier — if you cut out meat entirely, I never bought the arguments. But protein was protein, right? My logic circuit agreed, but my gut instinct didn’t. So, you can imagine my joy as I sat on the couch watching[a YouTube video]( that explained exactly why meat is so important for protein intake. Please note that the video wasn’t a rant against the WEF. It was an informative video about how the body can or can’t ingest protein. Protein is Not Protein Look, protein isn't just protein. Not all sources are created equal. Your body needs a variety of amino acids—both essential and non-essential—to function optimally. The so-called "essential" amino acids are those your body can't synthesize on its own. You have to get them from your diet. Now, certain sources of protein, like those found in animal products, offer a more balanced and bioavailable set of amino acids compared to plant-based sources. But how do you quantitatively measure this difference? That's where DIAAS comes in. DIAAS: They Kept This Quiet, Didn’t They? Let’s dig into something you probably haven't heard of but should absolutely know about: The Digestible Indispensable Amino Acid Score (DIAAS). In a world where junk science often trumps logic, and Big Pharma is ready to prescribe you the next “miracle cure” for all your ailments, understanding something as basic yet critical as the quality of protein you ingest can be a revolutionary act. Before DIAAS, the Protein Digestibility-Corrected Amino Acid Score (PDCAAS) was the darling of nutritionists. However, the PDCAAS has a glaring flaw: it truncates the scores at 1.0, meaning it fails to distinguish between high-quality protein sources that exceed the reference pattern for human needs. The DIAAS is a more accurate measure because it doesn't cap the score and considers the actual digestibility of amino acids in the small intestine. In layman's terms, DIAAS tells you not just what's entering your system, but also what your body is actually able to use. It's the free-market approach to assessing protein quality; it tells it like it is, with no governmental or Big Pharma interference. Here's a table of some of the highest-scoring DIAAS food sources. This is raw data without the cloak of governmental bias or corporate interest. It’s nutrition in numbers, plain and simple: [MR] [MR] And here are some of the lowest: [MR] Some Key Takeaways - Animal Kingdom Rules: It’s hard to ignore the facts. Animal-based proteins overwhelmingly score higher on the DIAAS metric. They offer a more balanced array of essential amino acids and are more readily digestible. For anyone still clinging to the outdated food pyramid model, it’s time to wake up. - Plant-Based Can't Keep Up: Although plant-based proteins like soy protein isolate and quinoa offer a valuable source of nutrients, especially for vegetarians or those who prefer a plant-based diet, they generally score lower. This isn’t a judgment; it’s a quantitative observation. - Versatility Matters: Foods like milk and eggs are not just high scorers on the DIAAS but also incredibly versatile in a culinary sense. Freedom of choice in how we prepare our food is another form of self-expression; these foods offer that in spades. - Whole Grains Aren't Whole Nutrition: Let's get real. Just because something is hailed as a "whole grain" doesn't mean it's a comprehensive source of essential amino acids. Wheat and corn protein are glaring examples of this. - The Plant-Based Paradox: Some plant-based sources like spirulina and hemp seeds are often touted as "superfoods," but when it comes to delivering all essential amino acids in a digestible form, they fall short. Again, it’s not a judgment, just facts. OK, What About Ze Bugs? Various insects, such as crickets, mealworms, and silkworms, have been proposed as sustainable protein sources. While the idea of eating bugs may churn some stomachs, particularly in Western societies, let's set cultural taboos aside for a moment and talk numbers. The DIAAS scores for insect proteins like cricket flour or mealworm powder can range from 0.77 to 0.89. To put it in context, these scores are higher than most plant-based protein sources like rice, peanuts, and even certain legumes, but still lower than top-tier animal proteins like eggs or milk. Here's the Rundown: - Good but Not Great: Insects as a protein source can't compete with the top-tier DIAAS champions like whey protein or whole eggs. But they do outperform many plant-based options. - Eco-Friendly but Not Wallet-Friendly: While the sustainability angle is a selling point, the cost of insect-based proteins is significantly higher than traditional sources. The free market, left to its own devices, may eventually bring this down, but we're not there yet. - Nutrient-Dense but Context Matters: Insects contain micronutrients like B vitamins and minerals. However, your overall diet and how these insect proteins fit into it should be part of the equation. Protein and Amino Acids Protein quality is not just about the quantity of protein consumed, but also about the presence of all nine essential amino acids, which play important roles in muscle growth and hormone production. Eating a variety of proteins on the same day is important because different foods have different amino acid profiles, and combining them can improve the overall protein quality of the diet. In the video I linked above, the creator used this example. He compared a meal of a peanut butter and jelly sandwich with lentils and edamame beans to a meal of a 4.5-ounce skirt steak and three eggs. While each meal consisted of 54g of protein, the PB&J meal had 875 calories, compared to only 570 calories for the steak and eggs meal. Also of note was the low leucine content of the PB&J meal. Leucine is one of the nine essential amino acids, meaning your body can’t make it; you must get it from your diet. It’s great for muscle building and repair, insulin sensitivity, optimal brain function, and longevity. The PB&J meal had only 3.7 grams of leucine. The steak and eggs meal had 5.3 grams. You'd have to eat much larger portions to get the same amount of leucine from the PB&J meal, which would come to 1,175 calories. If a light went off in your head, remembering that time “fat vegetarian” was no longer an oxymoron, this is why. Wrap Up I hope this will help you when some purple-haired vegan literature major tries to tell you how healthy they are and how they’re helping the planet, and you’re not. Ask them about amino acids. Ask them about protein intake. Ask them what leucine is. They won’t have a clue. They would have been fed garbage science all their lives and will start attacking you with ad hominems and strawmen. But no, they aren’t better than you are. And if they’re forcing their kids onto a vegetarian diet, they’re flat-out abusive. It’s about time Klaus Schwab and his bug-eaters retire. The science says so. And our lives depend on it. Enjoy that well-marbled ribeye with some bone marrow on the side and a glass of vino rosso. Buon appetito! Before I sign off, I have a special announcement for you! We’ve just debuted our brand new Paradigm Press YouTube channel… Every week, I'll be sitting down for exclusive interviews with some of the brightest minds in finance. Trust me, you don’t want to miss this. You can view the existing videos we have on our channel now by[clicking here](. Also,[don’t forget to subscribe]( so you can be notified each week when a new video goes live! Expect our newest video this coming Tuesday afternoon. Have a good weekend! All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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