The New New Great Game: Geography, Energy, The Dollar And Gold

Tyler Durden's picture

Submitted by Paul Mylchreest of Monument Securities

The New New Great Game: Geography, Energy, The Dollar and Gold (pdf link)

Sir Halford Mackinder’s 1904 speach in which he outlined his “Heartland Theory” was a founding moment for geo-politics. He argued that control of the Eurasian landmass (Europe, Asia and the Middle East), which contained the bulk of the world’s population and natural resources, was the major geo-political prize.

As time passed, energy (first crude oil then natural gas), became increasingly integral to this concept and its strategic significance cannot be overstated.

Remarkably, Mackinder’s theory has remained equally valid, if not more so, in the modern era - although key “pivot areas” for exercising control have evolved. In addition to Central Asia and Trans-Caucasus in Mackinder’s day, the oil producing nations of the Middle East took on increasing importance in the “New Great Game”.

The geo-political confrontation between the US on one hand and China (in increasingly close cooperation with Russia) on the other, is evolving rapidly. We see a “New New Great Game” (NNGG) emerging and have “tweaked” the Heartland Theory to include.

An additional geographic “pivot”, the South and East China Seas, due to their importance in terms of world trade, oil and gas reserves and numerous territorial claims.

A monetary “pivot”, the dollar-based system of world trade and its reserve status. China is taking the lead role in pushing ahead with its strategy of dismantling the dollar’s supremacy.

Geo-political tension in each of the pivot areas is escalating. For example Central Asia and Trans-Caucasus (Ukraine), Middle East (Iran) and South and East China Seas (Senkaku Islands). The rising powers, China and Russia, are adopting more aggressive geo-political tactics towards US/EU/NATO/Japanese interests. The more “dovish” US policy towards Iran, following the recent nuclear deal, is threatening to destabilise the decades-long status quo in diplomatic relations with Israel and Saudi Arabia.

Just about every aspect of the escalating geo-political tension has an energy element, either directly or indirectly. Viewed from a “Mackinderian” perspective, the strategic value of the energy sector is immense. It begs the question whether, after five years of underperformance, the equity market is under-pricing energy assets, including those deeply out-of-favour integrated oil and gas stocks? Probably, in our view.

We believe that the significance of the monetary pivot in the NNGG is under-estimated as China accelerates preparations to undermine the dollar’s role in world trade. The other aspect of China’s strategy is its diversification into “hard assets” and, as far as we can tell, China is attempting to “corner” the market for physical gold. Its strategic significance is lost on most Western investors. We present some insights into today’s gold market which might shock Western investors - similarities with the run-up to the major lows in the gold price more than a decade ago - and China’s understanding of modern gold market mechanics.

The threats to the existing US-centric order are substantial and the geo-political sands are shifting. The US will respond and has the largest economy and military (with vast ocean-going naval advantage), most powerful investment banks and deepest financial markets and significant (albeit declining) political/diplomatic influence. In terms of boxing metaphors, we wonder whether the Ali versus Foreman fight in Kinshasa in 1974 (knockout in the eighth) or the Leonard versus Hagler fight at Caesar’s Palace in 1987 (points victory where the argument as to who actually won continues) will be the parallel.

* * *

From an anonymous source prior to the major lows in the gold price more than a decade ago.

“Someone once said, ‘no one wants gold, that’s why the US$ price keeps falling.’ Many thinking ones laugh at such foolish chatter. They know that the price of gold is dropping precisely because ‘too many people are buying it’! Think now, if you are a person of ‘great worth’ is it not better for you to acquire gold over years, at better prices? If you are one of ‘small worth’, can you not follow in the footsteps of giants? The real money is selling ALL FORMS of paper gold and buying physical! Why? Because any form of paper gold is losing value much, much faster than metal. Some paper will disappear all together in a fire of epic proportions! The massive trading continues at LBMA, but something is now missing...We have reached production costs...The great mistake by the BIS was in underestimating the Asians. Some big traders said they would buy it all below $365+/- and they did. That’s what forced LBMA to go on a spree of paper selling! Now, it’s a mess.”


The gold price is approaching production cost again.

We have the physical versus paper demarcation again (most commentators are clueless on this - the paper market is still determining the screen price, but it will probably die once and for all this time around – the question is at what level?).

The Asians are being underestimated again when the price is declining (although not by the BIS - China is buying physical gold in unprecedented volumes – at least 70-75% of world mining production this year).

But accelerating developments in the monetary sphere is only one element of...

The “New New Great Game”

Mackinder’s “Heartland Theory”

The traditional “Great Game” obviously dates back to the geo-political rivalry between Great Britain and Russia for supremacy in the central Asian region during the nineteenth and early part of the last century. In his famous speech, “The Geographical Pivot of History”, to the Royal Geographical Society in 1904, Sir Halford Mackinder outlined his “Heartland Theory. ” According to Wikipedia.

“This is often considered a, if not the, founding moment of geo-politics...”

Briefly, this posited that the major geo-political prize is Eurasia (the “World Island”), i.e. the European, Asian and Middle Eastern land mass, which contained the bulk of the world’s population and its natural resources. Mackinder argued that control of the “pivot area“ of central Asia was the key to controlling Eurasia.

This is taken from his paper published in the April 1904 edition of the “The Geographical Journal.”

He also emphasised the important difference between sea power and land power. From Zurich-based ISN’s 2009 “Geopolitics and US Middle Eastern Policy: Mackinder and Brzezinski.”

“Mackinder’s theory was a counter-argument to notions that maritime supremacy was sufficient for a power such as Great Britain to safeguard its hegemony. He claimed that, with the emergence of new transportation routes [e.g. Trans-Siberian railway] and technology, a power that could control the centre (and the abundant resources) of the Eurasian landmass...would ultimately be able to attack the colonies of a sea power everywhere on the continent. “

The Trans-Siberian Railway.

In the wake of World War One, Mackinder argued the case for preventing a convergence of interests between Russia and new “pivot” states of Eastern Europe (Austria, Hungary, Czechoslovakia and Poland). This led to his famous dictum.

“Who rules East Europe commands the Heartland;
Who rules the Heartland commands the World Island;
Who rules the World Island commands the World.”

It’s important to emphasise that the pivot area does evolve/fluctuate with changes in geo-political reality. Indeed, Mackinder included the Baltic states in one of his revisions.

As the world industrialised and became increasingly dependent on crude oil (and later, natural gas), energy resources became ever more integral to the Great Game. With such a large proportion of the world’s oil and gas reserves found on the Eurasian land mass, this was easily accommodated within Mackinder’s theory.

The period just before World War One, with the British Navy’s switch from coal to oil and the adoption of the automobile, set the stage for this. Indeed, in 1913, the British government acquired a 51% controlling interest in the Anglo-Persian Oil Company, the forerunner of BP.

Remarkably, the validity of Mackinder’s theory has stood the test of time, even though most people are unfamiliar with it. The following quote is from the Reagan Administration’s “National Security Strategy of the United States” published in January 1988.

“The first historical dimension of our strategy is relatively simple, clear-cut, and immensely sensible. It is the conviction that the United States’ most basic national security interests would be endangered if a hostile state or group of states were to dominate the Eurasian land mass – that area of the globe often referred to as the world’s heartland.”

Right now, it’s obvious that US national security interests are threatened by a combination of China and Russia.

This was the influential globalist (and former National Security Advisor), Zbigniew Brzezinski, writing in his famous 1997 book, “The Grand Chessboard.”

“Ever since the continents started interacting politically some 500 years ago, Eurasia has been the centre of world power… For America, the chief geopolitical prize is Eurasia – and America’s global primacy is directly dependent on how long and how effectively its preponderance on the Eurasian continent is sustained.”

In the “New Great Game”, (NGG) of the modern era, the major rivalry is between US/NATO on one side and China, Russia, other members of the Shanghai Cooperation Organisation and the likes of Iran, on the other.

The “pivot states” in the NGG are.

  • The key nations in Central Asia and the Trans-Caucasus: especially those with substantial energy resources and/or pipelines (e.g. Azerbaijan, Ukraine, Turkmenistan, Uzbekistan etc). Here is a chart showing the major gas pipelines

And the major oil pipelines:

  • The major OPEC nations of the Middle East: here we borrow part of US geo-strategist, Nicholas Spykman’s, “Rimland” theory. Spykman, the “godfather of containment” was both a disciple and critic of Mackinder. He believed that the “Rimland”, European coast, Arabian-Middle Eastern desert and Asiatic Monsoon region was more important for controlling the Heartland.

This was Brzezinksi on the Central Asian Republics, or “Eurasian Balkans” as he terms them in his book. This was in 1997, when China’s economic and military might was still a distant prospect.

“They are of importance from the standpoint of security and historical ambitions to at least three of their most important and more powerful neighbours, namely Russia, Turkey and Iran, with China also signalling an increasing political interest in the region. But the Eurasian Balkans are infinitely more important as a potential economic prize; an enormous concentration of natural gas and oil reserves is located in the region, in addition to important minerals including gold.”

It’s a reminder of the strategic importance of energy and gold and puts the US-supported “Color revolutions” into sharper focus - Ukraine (Orange, 2004), Georgia (Rose, 2003) and Kyrgyzstan (Tulip, 2005).

Tweaking the Heartland Theory

We agree with the modern interpretation of the NGG, but we see TWO additional elements which make the current situation a “New New Great Game.”

... continue reading below (pdf link)

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DoChenRollingBearing's picture

This New New Great Game...  Can we sit this one out?



If we can sit this one out, then Russia and China will eventually duke it out among themselves, maybe with India, Pakistan, Iran, Indonesia, etc. all thrown into that toxic stew...

IridiumRebel's picture

No. We are losing. It just depends now on whether we are sore losers and try nuking the other kids who won.

Deo vindice's picture

DoChen - once we were born, all options of sitting anything out were off the table.

Skateboarder's picture

That is prime realization number one. Once you have realized this, the only option is to participate or not participate. Either option is respectable and has its merits. To war these factions is species sucide. That is all I will say.

0b1knob's picture

Recycled Nazi propaganda.  

Muppet Pimp's picture

Any foreign entity willing to simultaneously destroy the oppressive criminal syndicate that operates out of NYC, DC, and Hollywood, will be greeted by the oppressed masses of the US as liberators.  Have at em, they do not represent the people of this once great nation.

strannick's picture

No VietCong ever called me Nigger

GetZeeGold's picture



As long as your gold is gold.......they don't care what you are over there.

Arius's picture

People shuffling more paper ... thinking how important they are .... Really? 

and these guys with their geopolitics will decide the fate of the world ... right on.  just more shuffling of paper and some people got good paying jobs, thats all this is about ...

geopolitics - yeah, right, go talk to Krugman, you get a better sense of the world


Moe Howard's picture

Nope, but they turned your Claymore around...

AvoidingTaxation's picture

I tought that only Niggers call other Niggers, Niggers.
Sorry for the out of topic

Zadok's picture

Your a little dated, now it's 'Nigga', but yeah it's for bros to call other bros, no Cracka is welcome in that club.

fxrxexexdxoxmx's picture

Do not listen to any RAP music, they say that bad word over and over and it would hurt your feelings. Or are you one of those bigots who believe that some words can be said all the time if your skin color is the right one?

Muppet Pimp's picture
IN CONGRESS, JULY 4, 1776 The unanimous Declaration of the thirteen united States of America

hen in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. — Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their Public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected, whereby the Legislative Powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice by refusing his Assent to Laws for establishing Judiciary Powers.

He has made Judges dependent on his Will alone for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil Power.

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For quartering large bodies of armed troops among us:

For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us in many cases, of the benefit of Trial by Jury:

For transporting us beyond Seas to be tried for pretended offences:

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies

For taking away our Charters, abolishing our most valuable Laws and altering fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince, whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these united Colonies are, and of Right ought to be Free and Independent States, that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. — And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.


Barack Hussein Obama is acting as a tyrant and not within the confines of his legal authority.  Yea, he is a usurper of our liberty and his authority shall not stand.


Kirk2NCC1701's picture

Who's the scumbag troll who down-voted you for that!?

GetZeeGold's picture



I've heard Debbie Wasserman Schultz and Nancy Cutter are big ZH fans.


They're both they fit in pretty good over here.

Zadok's picture

Sorry (NOT), when it comes to that document and those from whence it was derived, I would suggest moving far away rather than defacing or otherwise denying its truth and by direct inference, my Liberty. Anonymous down votes are safe I guess, yella, cowards!

However, truth, in reality is so beautiful that it needs no assistance from me. It stands alone in its all it's Truthful Glory, it is up to me to participate and make what is within my sphere better. I do what I can where I can to leave it better than I found it.

Overfed's picture

My guess is that the junks are for the length of the post, and not its content. Or, it's .gov shills.

eddiebe's picture

Blah blahblah, yes we know, now what are you going to do about it?

Milestones's picture

Seens to me, that's a job that "we the people", the soverigns of this nation, should be taking care of now not outsiders; we the people let it happen without lifting a finger. If ya want someone else to do it, why not just let them take the country over. Say, by by a largely criminal element from Mexico?

This response ought to be full of little Ms. Goody two shoes wopping on my ass.                     Milestones

Deo vindice's picture

Choosing to NOT participate in something is at least a choice. Most people just drift into that perspective by default.

I take my life as a gift from the Creator, and choose to "participate" in the area where I can have influence. In my circumstances I cannot be a sun to shed light on the whole planet, but I can be a candle to light up the corner of darkness around me.

"Refuse to be Average".

N57Mike's picture

Deo V. ..... Edgar Cayce said similar words to the effect of "make your little corner of the world, no matter how small, a better place" ... This is the path of Soul progression.

Love and visions tonight, to all and thank you ZeroHedge.

SafelyGraze's picture

the article leaves out the most important and influential "pivot points" of all in the emerging geopolitical "new great game"

- twitter

- tesla

- myspace

- miley cyrus

- zerohedge

- youtube

- herbalife

- blackberry

spot the ringer in the list!


Arius's picture

yeah right, thats for another set of bureaucrats, it is another division who got to work on that one and update the whole thinking as a "holistic approach" ...there is the term ... there is the idea to employ another useless group of people and shuffle more paper around for people to read, anchors argue on tv (looking smart) and at the end have some kind of funny wars ... sounds like a plan

Anusocracy's picture

The one that is on the blackberry?

TBT or not TBT's picture

In the case of Miley, the point of interest in the optics of that actually doesn't pivot. The pelvis to which it is attached is fused and so all everything that moves mostly moves around it. Ie the tail actually does wag the dog.

Skateboarder's picture

Participating entails giving your best to the progress of whatever field of your choosing, on however many fronts... in commerce.

You can do whatever you want for yourself and your loved ones without having to continually participate in commerce to exist. That is the distingushing factor between my 'participation' and 'non-participation.'

So for me to have a piece of land off which I could live, sustain my family, and have the option of participation in commerce at my choosing, I am a free animal human thing. Anything else feels like some bastardazation of something else owning you.

Feel free to hate and stuff lololo.

p.s. giving yourself entirely toward an art or some sort, for the sake of doing so, is awesome as fuck, and in its purest forms has nothing do with commerce. Playing the guitar with the fellas and jamming the fuck out... shit you can't replace or recreate... that's what the passage of time is about.

Tijuana Donkey Show's picture

All that, and some weed to smoke my man, on your piece of earth. 

Skateboarder's picture

My homie, I downplay the role of helpin others on the regular, becase if I made a big deal out of it, there's nothing left to talk about. We stick together and make the best of what we have and what we to look forward to. As long as you appreciate the company of your best pals, there's nothing no one can take away from you except your most loved ones, and when they do, you go apeshit. That's how the world works, unfortunately. Keep your homies safe forevs, and I wish em the best from the bottom of my heart.

N57Mike's picture

Deo V. ..... Edgar Cayce said similar words to the effect of "make your lcorner of the world, no matter how small, a better place" ... This is the path of Soul progression.

Love and visions tonight, to all and thank you ZeroHedge.

Skateboarder's picture

Whoa man. Your post showed up cached exatcly ten minutes later than when you first posted. I was refreshing and your shit suddenly popped up. FREAKY!

Deo vindice's picture

It's gotta be the gremlins running up and down the pipes in the internet.

IridiumRebel's picture

I +1'd him and now it's not showing. No shit.

MontgomeryScott's picture



NO! The internet is a series of TUBES! Ted Stevens told me so!


cynicalskeptic's picture

Sadly, an all too real posibility.  The US is the 20th century version of Rome - transitioned from Republic to Empire and now collapsing in fast-forward, destined to complete its fall in the 21st century.  We have followed past historic patterns in overextending our military, vastly expanding our national debt, debasing our money to the verge of worthlessness and increasingly using paid mercenaries to do our military bidding while entertaining our increasingly 'useless' population with 'bread and circuses'.

This is not the first time this has happened  in history but the first time a collapsing Empire has the capacity to destroy the rest of the world militarily even as its economic power collapses.  

So, the question arises - how desperate will the US be to hold onto its position at the top?

kliguy38's picture

precisely.....rephrasing your final question.....and how badly will nature punish the population that grew fat on bread and circus.......while allowing their "leaders" to slaughter and torture as they remained silent....because.....and make no mistake nature will have her retribution......

Anusocracy's picture

"nature will have her retribution......"

She's been having it all along.

Success attracts failure.

Xibalba's picture

There is a Blood Moon Tetrad coming. Nature is flashing warning signs on its heavenly billboard. Let those who have eyes to see.... 

mickeyman's picture

Monsieur Le Capital creates an artificial nature, which is implied as even more natural than nature. By instituting credit, capital creates the illusion that there can be continual self-creation, instead of an interrupted, episodic self-creation, like nature. The crisis that besets capital is, in fact, cyclical. Madame La Terre reminds us of her existence, and tears to pieces the facade of artificial nature . . . 

                        - Roberto Calasso, The Ruin of Kasch

Monsieur Le Capital does not realize that the movie he is making with Madame La Terre is the remake of "I Spit on your Grave." He's had a good time so far, but we are about to start filming Act II.

reader2010's picture

“when a society is reaching its end, in the last couple of centuries you have… a misplacement of satisfactions. You find your emotional satisfaction in making a lot of money… or in proving to the poor, half-naked people in Southeast Asia that you can kill them in large numbers.”

-Carroll Quigley, Oscar Iden Lecture Series, Lecture 3: “The State of Individuals” (1976)

Anusocracy's picture

There can't be much satisfaction in stealing the willing dupes of the US blind.

overmedicatedundersexed's picture

mind fuk'd:

"So, the question arises - how desperate will the US be to hold onto its position at the top?"

the evidence from the last 40 years is clear, not to the above poster, the control of USA has been taken from the citizen..our country deversified, regulated and taxed, expanded debt, and endless war,not for the good of the USA, and done with snide humor: current potus is not of this land- diebold voting where you cannot get a record of what you just voted for and then to add the cherry on top; tallied in another country no less, (spain)..

At the top military, senate house doj nsa cia..they are ruled from off shore, we are no longer free and are under the control of the unk elite. see CFR and international banks as example.

chubbar's picture

Did anyone read the whole report? Go back and reread the last 25% of the report that discusses how Yellen and company are using different metrics to decide when to taper or increase QE. It's fucking hilarious.

Every other year the BLS implements changes to how Unemployment and Inflation are measured. Right now we have circa 23% U-6 unemployment. For those of you just joining us, U-6 is an approximation of how unemployment was measured back in the 30's in the last depression when unemployment hit a high of around 25%.

The Gov't is claiming unemployment of circa 7% or so, someone can jump in with the "real" claim if this number is off by a significant amount. Anyway, this report has the fucktards at the FED looking at this lower number as the metric to decide whether or not the economy is "healthy" enough to begin tapering or requiring additional QE. Well, if you torture a number enough it'll tell you whatever you want it to say and these asshats are torturing the shit out of Unemployment numbers.

Yesterday, another 1.3 million americans fell off the unemployment rolls. These folks will disappear from the unemployment numbers that the FED uses to set policy and the unemployment rate will fall again. Does anyone think that these unemployed shouldn't be counted or that they are no longer an important metric of economic health?

The other metric is Inflation. The Boskin commission of circa 1993 made damn sure we'd never have to worry about how  much BLS needs to torture that particular number in order for it to sing out the proper tune. Core inflation doesn't include the things we actually need to survive (energy/food, etc) nor does it compare apples to apples as was the initial purpose behind the measurement to begin with. Hedonic measurements, Substitution, along with other ridiculous adjustments ensure our complete befuddlement when it comes to what inflation is doing.

So, with the gov't constantly changing the yardstick which the FED utilizes to implement/change FED policy, what is the fucking point of even writing an article explaining the economic theory the FED uses to control the economy?

It is all one big facade and EVERYONE, including this author, should realize this fact! There ISN"T ANY ECONOMIC THEORY THAT HOLDS UP WHEN EVERY METRIC IT IS BASED UPON IS A LIE! I can make 2 + 2 = 100 if you spot me the definition of what each "2" represents and allow me to manipulate that number to fit the result I'm looking for.

eddiebe's picture


People that don't grasp that point and write articles or opinions only confuse and are either stupid or perpetrators of the fraud themselves.

Zadok's picture

I think your long and accurate story is that the tortured numbers are for consumption by ignorant (intentionally or otherwise) sheeple, not for the grounded and informed.

autofixer's picture

2nd time; the Soviet Union had that capability when they collapsed.