Elon Musk is wrong about GDP

So, the government can "print money" (that's not how it works), which would cause inflation (aka, the currency loses value), so the effect on the real GDP is muted. There's another thing that happens when the government goes into a spending spree which is "crowding out", basically the government buys what households and business would have bought and therefore they don't buy anymore, so the effect of the GDP is muted. There are many other things that happen also due such actions that would actually make the GDP to contract!

Anyways, reckless fiscal policy alone doesn't "manipulate the GPD values". Economies do not work in a vacuum. There's tons of interactions that are not explained because it's too complex to do so without the previous knowledge, to do so in a short amount of hours would be very dangerous because you would think you understand things that you really don't understand. Take a course of macroeconomics, of about 100 hours, and it would only be the start. Then industrial economics, economic policy, taxation, international economics, monetary policy, monetary economics, you get it?

That's because food and accommodations are often less valuable in rural areas. Supply and demand, as they say. But that is outside of the scope of inflation. As before, inflation seeks to measure the value of the currency itself, which also fluctuates in value just like everything else.

> Unfortunately, collective wage agreements, UI benefits and pensions are federally the same across Germany

Theoretically the value of the dollar could differ from place to place like food and houses – value is just arbitrary human opinion, after all – but as currency moves freely, everyone tends to agree on its value across entire countries (and usually the entire world). In practice, you'd also find accommodations and food settling on the same value across entire countries if we had magical portals that could move them to and fro on a whim like we can with currency.

But it seems like what you are really thinking of is a cost of living index. Usually those are prepared on a regional basis for the reasons you have described. Inflation is decidedly not intended to be a cost of living index and there is no reason to turn it into a cost of living index. We already have that – not to mention that we also need to understand inflation.

You may be also implying that some people use the wrong tool for the job (i.e. trying to use inflation as a cost of living index), but in that case the problem isn't that the tool broken, the problem is that the people are broken. The question then is not "What will it take to modify this screwdriver so that it is better at driving nails?" The question is "Why the fuck aren't you using a hammer?"

Using a very debatable inflation metric (e.g. should deflationary technological advancements in electronics manufacturing boost the "real GDP" metric?), which is quite muted (even with the post-COVID spike!) on top of that because of the "exorbitant privilege".

>that's not how it works

Suuuure. The recent examples of collusion between banks, the government, and the central bank to quickly increase amount of base money is not outright "money printing", just benign "quantitative easing", nothing to see here.

>crowding out

This works only when government engages in "fair" and competitive debt issuance. But we see a different picture, government bonds are counted as bank reserves and even worse banks do not even have to apply the mark-to-market accounting rules for them in some cases. And everyone knows that the Fed immediately will ride to the rescue on the first sign of trouble in the bond market as was done during not-QE.

>reckless fiscal policy alone doesn't "manipulate the GPD values"

Alone? No. But it certainly boosts GDP (both real and nominal) in the near term and makes the economy look better than it really is. It's the same story as in China where they had massive "infrastructure investments" to artificially stimulate the economy and make GDP numbers look good. We can see in the real time how it unravels.

In the end the root problem is that both the EU and US suffer from having one currency for wildly different markets, which is causing a lot of issues.

> You may be also implying that some people use the wrong tool for the job (i.e. trying to use inflation as a cost of living index), but in that case the problem isn't that the tool broken, the problem is that the people are broken. The question then is not "What will it take to modify this screwdriver so that it is better at driving nails?" The question is "Why the fuck aren't you using a hammer?"

Yup, that's the second problem. "Inflation" is the _only_ tool other than stonk market indices that's being used by politicians, media and central banks to judge "how is the economy?" and derive consequences, but as shown it's much too coarse of a hammer.