Why is the calculation of “real GDP”, which subtracts inflation, even more misleading?

In today’s climate of increasing economic stagnation, politicians and central bankers continue to talk obsessively about “growth.” This narrative, as Trust Economics points out, is not based on real economic data but on a profound misunderstanding of what GDP measures. In fact, the concept of economic growth, as it is currently presented, is a statistical construct that has little to do with real production and is almost entirely dependent on credit. The consequence of this macroeconomic “blindness” is a major reality crisis. Western governments have led their economies into a prolonged illness: ballooning debt, distorted statistics, and ultimately the inevitable depreciation of their currencies. GDP measures credit, not output At the heart of the analysis is the revelation that GDP is not a measure of output but of the total credit circulating in an economy. In an ideal theoretical situation, some of this credit would be channeled into productive investment. In reality, however, the US figures reveal that industrial production is now lower than it was in 2008, while industrial investment has grown little in almost two decades. Trust Economics notes that GDP in the US has doubled since 2008 not because of an economic boom but because of a credit boom. Consumption has ballooned thanks to a doubling of consumer debt, savings are collapsing, and the state has turned overspending into a key lever for “growth.” Today, about 40% of American GDP comes from government spending, much of which is economically useless but politically convenient. The Deflator’s Deception The calculation of “real GDP,” which subtracts inflation, is even more misleading. The official CPI shows inflation of about 3%, while Shadowstats, using the 1980 methodology, estimates real inflation at 12%. If this inflation is applied to the calculation of real GDP, then the American economy shrinks by about 7.5%. Trust Economics emphasizes that this difference proves that the deflator is a subjective tool, allowing governments to present any picture of economic progress they want, while the real economy shrinks. The Debt Trap GDP can only be useful as a measure of comparison with government debt. When debt grows faster than the economic base that supports it, a country enters a debt trap. It is worth noting that most G7 countries are already in this trap. Markets have not yet priced it in, because 40 years of macroeconomic myths have created a false sense of security. The historical example of Britain in 1976 shows what can happen when a debt trap emerges: the pound collapsed, inflation soared, and the IMF imposed harsh austerity. Today, central banks are turning en masse to physical gold, moving away from government bonds that lose value as inflationary realities erode currencies. The protection offered by gold Modern macroeconomics has built its image on quicksand. GDP is now a measure of credit, not output. When reality returns, economies will face a credit crunch, a debt crisis, and a currency collapse.