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Inflationary Tuesday: If Economics is a Science, Why Are the GDP Numbers a Total Fiction?
Back in
early 2010, I published an article announcing that we were entering a new
market in accounting BS. The primary premise behind this article was that as
things deteriorated in the US, the Government would resort to greater and
greater accounting gimmicks and other BS in order to generate positive GDP and
other economic data points.
At that time
I wrote…
…we’re
going to see economic data become even more divorced from reality, assertions
that the economy is back on track, and that at worst there is the specter of a
“double-dip” recession looming. Heck, even these fears are sugar-coated…
literally (making an economic nightmare sound like an ice-cream sundae is a genius
marketing move).
However,
this latest GDP numbers from the US have exceeded even my worst expectations of
economic fudging.
For one thing, the Feds lowered the GDP
implicit price deflator from 2.0% to 0.3%. In simple terms, they are claiming
that prices for goods and services in the US FELL this quarter… at a time when
oil went from $70 to $90 per barrel, and food prices hit record highs.
Why would
they do this? Because understating inflation makes GDP look bigger. If you
don’t account for prices rising, you can claim that you’ve seen REAL growth as
opposed to simple price increases.
As an aside,
remember than even the Fed’s ridiculous CPI measure was 2+% during the period
that the GDP report claims prices FELL from 2% to 0.3%.
I wish this
was the only lie in the Q4GDP number… but it’s not. The Feds also claim
personal consumption expenditures ROSE in Q410.
That’s not a
typo.
According to the BEA, consumer spending
rose 4.4% last quarter… despite crap retail sales, record food prices, AND a
drop in imports. And if 4.4% doesn’t sound like HUGE jump to you, consider
it’s a 3-YEAR HIGH. That’s right, according to the BEA the last time consumers
spent this much was 2007, BEFORE the Depression/ Financial Crisis began.
Simply
incredible.
Honestly, at
this point why do the Feds even bother
trying to make GDP sound credible. If you’re going to just make stuff up, why
not shoot for the moon? We could be posting
GDP growth of 500% per quarter and employment at 200%. Why not simply REMOVE
inflation from economic data? Just claim the Dollar hasn’t moved EVER.
That way the
numbers would be just as bogus, but at least we’d get a laugh. And laughter’s
about the only medicine we’ve got to deal with the disaster that is the US
economy today.
Good
Investing!
Graham Summers
PS. If you’re getting worried about the future of the stock market and have yet
to take steps to prepare for the Second Round of the Financial Crisis… I highly
suggest you download my FREE Special Report specifying exactly how to prepare
for what’s to come.
I call it The Financial Crisis “Round Two” Survival
Kit. And its 17 pages contain a wealth of information about portfolio
protection, which investments to own and how to take out Catastrophe Insurance
on the stock market (this “insurance” paid out triple digit gains in the Autumn
of 2008).
Again, this
is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com
and click on FREE REPORTS.
PPS. We ALSO
publish a FREE Special Report on Inflation detailing three investments that
have all already SOARED as a result of the Fed’s monetary policy.
You can
access this Report at the link above.
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"If Economics is a Science, Why Are the GDP Numbers a Total Fiction?"
First of all, economics is a science.
Second of all, GDP is not scientific and is not an element of economic science. GDP is clearly flawed as it does not take into account a scarce and valued economic good: leisure.
GDP is a meaningless calculation. Per Ludwig von Mises:
"it is nonsensical to reckon national income or national wealth. As soon as we embark upon considerations foreign to the reasoning of a man operating within the pale of a market society, we are no longer helped by monetary calculation methods. The attempts to determine in money the wealth of a nation or of the whole of mankind are as childish as the mystic efforts to solve the riddles of the universe by worrying about the dimensions of the pyramid of Cheops....Is it correct or not to enclose the “value” of the country’s climate and the people’s innate abilities and acquired skill? The businessman can convert his property into money, but a nation cannot."
The only chart you need to understand:
http://www.kitco.com/ind/scottgibson/images/feb012011_1.jpg
Who says you can't borrow your way to prosperity?
LOL that graph is a hockey stick, and that little hook over in GDP, that's us the puck.
Cooking the books and other numbered symphonies in accounting statistics are the chef d'oeuvres of great chefs; grand orchestrators of phony baloney.
Lysenko did it genetics and Madoff in his Ponzi scheme. So there's no end to the potential.
Maybe we should all bet long on the gold mine generated by the Houdinied GDP.
I dare anyone to stop the average person at your local mall and try to explain this to them. The ordinary citizen doesn't even have the basic knowledge to make sense of the information if it were handed to them on a platter -- or in a comic book format.
America or China's government reported economic numbers, which are more bogus? Hard call, both are just PR. Look to the UK for honesty; answer: negative Q42010 GDP.
Mustapha Mond begets his own avatar!
"If Economics is a Science, Why Are the GDP Numbers a Total Fiction?"
Thomas Jefferson was wrong. Sorry Tom! It is irrational to expect that governments will not abuse their reporting and investigative authority to pursue agendized outcomes that stoke the black hole of regime command and control. Everything becomes a crisis and no crisis should go unexploited (tip o'the chapeau to Rahm!). Governments simply cannot be trusted with such authority to influence political debates in their favor. Merely witness the anthropogenic global warming (AGW) cum climate change segue corruption of science for an outstanding example. Their arrogance is as extensive as the great outdoors. Nothing is sacred. Even the Temple of Scientific Inquiry is profaned to control the dumbed-down sheeple. It is the best junk science that still-drying money can buy. No, Virginia, AGW is hardly the only example. Don't go there.
Because our Fed has its policy written by Jaja Binks
WB that gave me the willies--viva la revolution-appreciate your work.
How about a work on the US ambass iders meeting in DC--possible scene from south park-there taking our jobs sex scene- that image would make me give up cottage cheese forever.
Peace out
SPORTS GUY CHEST BUMP ))((( !!!
This is the giant pig that consumes everything--here is your government and everything is a bond...
http://www.fms.treas.gov/mts/mts0910.pdf
WTF, Never heard of, "Science Fiction"?
I just read on the Telegraph, that blogs are there for conspiracy theories, wonder if thats true...
If the MSM did their fxxxing job and reported the news, there would be no reason for blogs to become popular.
Never let the facts get in the way of a good story. The party is on bitchezz.
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the numbers do not make logical sense; they are machine code inputs, read by algos to drive the Dow higher; the deception is called "fool the monkey";
central planning is the real game; the official numbers are massaged to fit the plan, stan;
ergo, BTFD and DOW36000
..."Did you know that the first Matrix was designed to be a perfect human world? Where none suffered, where everyone would be happy. It was a disaster. No one would accept the program. Entire crops were lost. Some believed we lacked the programming language to describe your perfect world. But I believe that, as a species, human beings define their reality through suffering and misery. The perfect world was a dream that your primitive cerebrum kept trying to wake up from"...
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Aaahh, the words of a desperate and brutally beaten bear
First positive january in the stock market in four years.
All the world is their rigged data point.
Amen brother