RISMEDIA, February 9, 2010—It looks amazingly real, but it’s as phony as a James Cameron movie set.

Its many moving parts exist only for the purpose of creating the illusion of positive economic activity.

But, when you go behind the scenes, it’s evident that those things that seem so real are merely props and propped up plywood.

Lashed together with synthetic credit default obligations, bankruptcy remote special purpose vehicles and leveraged beyond reason, the set appears massive and foreboding from the front. But, when you go behind the façade, it is apparent that the whole thing is on the very verge of collapse.

Never mind, it was engineered to collapse when the show is over. But, wait! This is a disaster movie, so the set is actually rigged to explode.

The economy is a fantasy woven of greed and collusion, and it is allowing a handful of already wealthy people to concentrate all wealth and power into their hands while destroying everyone and everything else.

Recently, I happened upon a rather esoteric online debate about whether or not the economy is real. One argument was that it exists; therefore, it must be real.

A movie is real, but its components are created, and the story line may be fiction. That is the case with the economy; it is real, but it isn’t at all what it appears to be.

What do we mean when we say “the economy”? What is it? What’s the difference between a good economy and a bad one? There is an old line that when your neighbor loses his job, it’s a recession but when you lose your job, it’s a depression.

The economy is not so much a thing but a reflection, more symptom than cause. It is a measure of how effectively we turn inputs into outputs. The best economy for all parties is generally thought to be one which distributes goods and services the most efficiently.

In theory, improving the efficiencies with which we distribute goods and services within a community should have a positive effect on everyone.

Americans’ wages have been steadily declining in the face of rising prices, unemployment is high, the average work week is 33 hours, millions are losing their homes, and Wall Street CEOs earn huge bonuses for deliberately stealing our prosperity. As more and more capital is concentrated into the hands of a few, it is unlikely we will see any improvement.

In a sense, there are two economies: the one described by economists, politicians, and a lap-dog media, and the one that more and more middle class Americans are living in the real world. One wonders, why the disconnect?

The standard measure of the economy is the (NIPAs), National Income and Product Accounts produced by the Bureau of Economic Analysis (BEA).

According to the BEA, “The NIPAs are a set of economic accounts that provide information on the value and composition of output produced in the United States during a given period and on the distribution and uses of the income generated by that production.”

We often hear references to the Gross Domestic Product or GDP, which is featured in the NIPAs. GDP is not the only component. GDP measures the value of the goods and services produced by the U.S. economy in a given time period.

Who uses the GDP? Well, Wall Street for one, and the Federal Reserve to formulate monetary policy. The White House and Congress use the GDP to prepare the federal budget.

The GDP is the measure of the total of all the money spent during a given period to determine the direction and pace of production. And, if this period shows an increase over the prior period, we are presumed to have a good economy.

But is it accurate? Heck no! These books are as cooked as our collective gooses.

It’s what they don’t tell you. They don’t tell you that the GDP counts liabilities as assets, just like Wall Street. They don’t tell you that a cancer patient in their last year of life boosts the GDP more than a family of four who stays home and has dinner together. Going out and eating fast food, wasting gas, and the associated health problems are all good for the GDP.

One thing it doesn’t do is measure waste; it only measures growth of selected outputs.

It wasn’t really developed as an economic tool but as a way of identifying, locating and enumerating what could be taxed. What began as a sort of property census has become the accepted measure of our economy.

People talk about the economy with the same sort of resolute helplessness they express toward the weather.

But, economies are man-made and despite the almost patriotic assertion otherwise, ours is not a free one. If we have learned anything over the last ten years, is that the entire system has been hi-jacked by counterfeiters.

Since economies apparently always function to the benefit of the major stakes holders, we can only assume that there is a great deal of cooperation among these entities in order to influence the performance of economies in ways that benefit them.

But, what if there were another economy that we knew nothing about? An economy that makes nothing, does nothing but simply gobbles up the output and feeds off the real economy,

Some have referred to a “shadow banking system.” These financial intermediaries avoid all of the regulation in the traditional banking system and are subject to no oversight.

“At their most basic level, innovations like the ones that triggered the global collapse—credit-default swaps and collateralized debt obligations—were employed for the primary purpose of synthesizing out of thin air those revenue flows that our dying industrial economy was no longer pumping into the financial blood stream.” Matt Taibbi, Wall Streets Naked Swindle, Rolling Stone.

I always thought the word “avatar” had some sort of mystical meaning, but the first time I recall someone actually using the word “avatar” was several years ago.

IBM ran a television commercial in which a character with chin whiskers creates an avatar of him authentic down to the Billy-goat beard, living on a virtual island on his IBM computer.

The other character asks the point of an avatar and when the bearded dude says, “To make money” the other character asks, “Are you making any money on your island?” Bearded dude, “Real money or virtual money?”

Virtual money?

Well, why not? Like a derivative? A thing whose value is not it’s own but based on something else. Like an avatar.

George W. Mantor is known as “The Real Estate Professor” for his consumer education efforts including a long-running radio program, monthly workshop series, public appearances, and frequent articles.

During a career dating back to 1978, he has amassed experience in new home and resale residential real estate, resort marketing and commercial and investment property.

Prior to starting his own real estate and mortgage brokerage in 1992, he had been Director of Training and Customer Service for Great Western Real Estate. In addition, he has served on virtually every real estate committee, including a term as a Director of the California Association of REALTORS.

George is a nationally respected authority on all areas of real estate and is frequently quoted in a wide range of publications. He is an oft invited guest of Fox Business Network and for many years, he was the host of “Keepin’ It Real…Real talk about the real thing, real estate” on KCEO radio.

The Real Estate Professional includes him in “a directory of the Nation’s outstanding authors, columnists, and speakers. His articles have also recently appeared in Real Estate Finance, The Real Estate Professional, National Real Estate Investor, Broker Agent News, and Realty Times. His blog is, http://www.realtown.com/gwmantor/blog.

RISMedia welcomes your comments and questions. Email realestatemagazinefeedback@rismedia.com.

Don’t miss these headlines on RISMedia.com:

• Mature-Market Home Buyers Look beyond Buildings, Desire Services
• Put Customers First by Managing Expectations