|
-- Posted Monday, 14 April 2008 | Digg This Article | Source: GoldSeek.com
In yet another sign that the end is near, Harper’s Magazine, that venerable fount of left wing culture, has become a source of clear-eyed financial journalism. In February it ran a cover story by iTuilip’s Eric Janszen explaining America’s devolution from goods-production to paper shuffling. Janszen calls this the FIRE economy (for Finance, Insurance, and Real Estate) and concludes that it can only survive by blowing ever-bigger bubbles (read the article here for Eric’s prediction on where the next bubble will appear).
And the May Harper’s just hit the newsstands with a cover story by veteran political analyst Kevin Phillips on how the U.S. government has been systematically distorting the economic numbers it reports. Here’s his opening:
"Almost four decades have passed since the United States scrapped its last currency ties to precious metals. Our copper and nickel coinage still retains some metallic value, but not nearly enough for the purpose of currency tampering--the historic temptation of inflation-plagued or otherwise wayward governments, including, at times, our own. Instead, since the 1960s, Washington has been forced to gull its citizens and creditors by debasing official statistics: the vital instruments with which the vigor and muscle of the American economy are measured. The effect, over the past twenty-five years, has been to create a false sense of economic achievement and rectitude, allowing us to maintain artificially low interest rates, massive government borrowing, and a dangerous reliance on mortgage and financial debt even as real economic growth has been slower than claimed. If Washington’s harping on weapons of mass destruction was essential to buoy public support for the invasion of Iraq, the use of deceptive statistics has played its own vital role in convincing many Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it actually is."
|
According to Phillips, this misinformation campaign began under LBJ, continued under Reagan, took off under Clinton, and was refined by Bush. So the enterprise is bi-partisan. And it’s not just one statistic. Our leaders lie about unemployment, inflation, growth and the deficit. Because Social Security payments are indexed to inflation, government statisticians suppress reported inflation, and thus their need to increase monthly SS checks, by arbitrarily eliminating from their calculations products that are rising too quickly in price. If they were adjusted for the true cost of living, today’s Social Security checks would be 70% higher and the Federal deficit would be exploding. (Questions for seniors: Why haven’t you burned down the White House? Are you waiting for the Baby Boomers to do it?)
Since the true level of unemployment would upset voters in crucial swing states, the government simply eliminates whole categories of people from the statistical workforce so they don’t show up as unemployed. To make GDP look better Washington “imputes” (i.e. makes up) new income sources and credits them to homeowners and others. When the money supply starts growing to fast to effectively hide, the Fed just stops reporting measures like M3. And the lies, like our accumulated debts, keep getting bigger. If Washington suddenly decided to tell the truth, America's vital statistics would look like this:
| Inflation | 12% | | Unemployment | 12% | | Economic Growth | Negative | | National Debt | $60 Trillion |
The really cool thing about Phillips’ article is that he cites as his main source none other than John Williams of Shadow Government statistics. Williams is already a folk hero in sound money circles, where his numbers are seen as far more trustworthy than anything coming out of the Fed or Treasury. To see him given this much respect in Harper’s means the idea that we’re being conned on a vast scale is no longer the paranoid fantasy of a few lonely gold bugs. Now it’s the conventional wisdom.
-- Posted Monday, 14 April 2008 | Digg This Article | Source: GoldSeek.com
Previous Articles by John Rubino
|
