My Version Of Band-Aid Economics

I am not an economist but more of analytical thinker when it comes to our economy. For many years now we hear the spin doctors and politicians boasting about how our economy is growing, which is correct if that is all one considers. The question is why would this be happening when unemployment is high, a huge deficit, and those working are drowning in debt? The answer for me is what I call Band-Aid economics, here is how it works.

Instead of focusing on the real problem which is inflation, we emphasise how our country's economy is on an upward swing. Our bank of Canada describes economic growth like this online, "The most common way to measure the economy is real gross domestic product, or real GDP. GDP is the total value of everything - goods and services - produced in our economy. The word "real" means that the total has been adjusted to remove the effects of inflation." The idea from what I see is that if you paid last week $2.00 for lettuce, the next week it is $2.50, the following one $3.00, it makes the economy look good because as they have said inflation has been removed. The current politicians pitch is vote for me, since elected our economy has grown. Now let's examine the next factor in Band-Aid economics...

Let's face it most lower-income and working poor cannot afford higher ticket items upfront like $30,000 for a car. How about for almost nothing down with good credit, anyone could be behind the wheel of a new vehicle right! It helps our countries economic growth, even if the same type of car 20 years ago was less, but now jazzed-up with more technology, and of course insurance rates on a new cars is higher too. Decades ago people saved up, bought their cars for cash, and it was more of a positive economy. The financial killer for people is inflation, if everything costs too much constantly going up, but wages stay the same, deductions at source are unreasonable, consumer taxation is 13 cents/dollar spent, then not many people can save enough in their lifetime to buy a high ticket item like a car. However the GDP is the total value of everything. You buy a car on credit it goes into goods and services produced in our economy.

The reality is if a person is not earning enough they will always be ten cents or more short on the dollar. Families supplement their below standard income through credit cards, lines of credit, and over drafts. The reason is simple inflation doesn't match incomes. The great news for our government is even if they need to purchase food on credit it boosts the economy. The next time you hear our economy is doing well, maybe look at your own financial affairs, in product costs, and then decide for yourself if our countries economy is really in good place. Welcome to my version of Band-Aid economics 101, where a good economy doesn't mean citizens are living better, and over many years now even below par levels. By Arnold Nadler