> it would be like keeping all your money in an index fund whenever you're not actively spending it
But without even the pretense of funding businesses and actually participating in the economy. Your money can grow on hot air and wishes alone! Why don't we give all people some bitcoin, so everyone can grow richer and richer without doing anything.
There's plenty of hot air and wishes behind regular currency as well.
I have a plan to double the US GDP in one year:
1. I'll pay you $1 million to sing a song for me.
2. You pay somebody else $1 million to sing a song for you.
3. Continue doing this for n turns.
4. The last person pays me $1 million to sing them a song.
The US GDP is around $20 trillion. That means we only need to set n to 20 million and we now have a $40 trillion economy.
The premise itself is fiction. The P in GDP doesn't stand for exchange or transaction. It stands for "Product." It measures the net amount of new wealth, not how many times existing wealth is transferred among parties. If I sing you a song and you pay me $1 million dollars and this process continues back and forth, the net amount of value when we stop is still $1 million and the net change to GDP is zero.
People indulge a lot of strange and wrong ideas about economics and, not surprisingly, those bad ideas are typically well aligned with their preferred world views.
...with no more veracity than your hypothetical. You don't understand what GDP measures. You've allowed yourself to believe that the economists involved are naive. You are correct, however, that this sort of bad thinking is common. Very common.
If I find a shiny rock and sell it to you for $100 and you find a fossil and sell it to me for $100, that's $200 added to the GDP. If we trade rather than pay each other, then it's $0 added to GDP. The same goes for services. If I mow your lawn, paint your house, hypnotize you to quit smoking, or sing you a song - all of those things (are included in GDP.
When you pay for entertainment it's 100% included in GDP the same way as when you pay for somebody to inspect your car.
But without even the pretense of funding businesses and actually participating in the economy. Your money can grow on hot air and wishes alone! Why don't we give all people some bitcoin, so everyone can grow richer and richer without doing anything.