Jump to content
House Price Crash Forum
Sign in to follow this  
ma1lsort

Bogus Us Statistics And The Doomsday Scenario

Recommended Posts

Hi all,

Here is a very interesting article written about an economist who de-spins government statistics reports on the likes of outputs like GDP and inputs like CPI.

He is a real bear <you know you love him already ;)>

Check out the attached article. Here are some hilights:

- There are two types of manipulation of the data. You have the systemic manipulations, where methodologies are changed. Again, the methodologies almost always have an upward bias in growth and a downward bias in inflation—and that’s not coincidental. The other type of manipulation is when someone does something to the numbers to make them come out a certain way at a certain time.

- During the Clinton Administration, the Bureau of Labor Statistics, on its own, changed the weighting method for the CPI. It had been constructed using arithmetic weightings, which meant doing things the way most people would add and subtract and divide. The BLS changed it to a geometric weighting, which has the “benefit” that if something goes up in price, it automatically gets a lower weight, and if it goes down in price, it automatically gets a higher weight. That change was implemented over a period of several years.

- All in all, if you were to peel back changes that were made in the CPI going back to the Carter years, you’d see that the CPI would now be 3.5%-4% higher. The difference that it makes is significant: if the same CPI were used today as was used when Jimmy Carter was President, Social Security checks would be 70% higher.

- There was a period during the Clinton Administration when month after month, 250,000 jobs were being created, exactly 250,000 jobs... They basically reduced the number of people being surveyed in the inner cities, and then claimed they had replaced them statistically. But the effect was immediate: You saw a drop in all the unemployment measures that would normally be influenced by inner-city surveying.

- If you look at 2005, the official deficit was reported at around $319 billion. Using generally accepted accounting principles, the 2005 Financial Report of the U.S. Government published by the U.S. Treasury, showed a deficit of $760 billion. That’s without considering Social Security and Medicare

- But you can see that if you back out that one-time charge, that on a GAAP basis, accounting for Social Security and Medicare, in 2003 the deficit was around $3.7 trillion; in 2004 it was $3.4 trillion; and in 2005 it was $3.5 trillion.... In fact, the fiscal 2005 statement shows that total federal obligations at the end September were $51 trillion; over four times the level of GDP. It is unprecedented for a major country to have its actual obligations so far out of whack.

- What I’ve found is that if you adjust the real GDP numbers that the government releases for the myriad revisions and redefinitions that have been applied to the measure with increasing frequency since the mid-1980s, you find that there’s a happy overstatement of growth of about 3% on a year-over-year basis.

- Under normal circumstances, the inflation that is coming into the system through higher oil prices would be spiking long-term interest rates, but it is not. However, the reason that you’re not seeing long-term interest rates rising is not because bond investors are anticipating a weakening in the economy, it’s because of the strong demand for Treasury securities by foreign investors. The catch is that demand like that can turn overnight. If I were looking for one factor here to signal the onset of some really serious problems, I would

watch the dollar. If you start to see a sharp sell off, or if selling starts to pick up a little steam and begins to look a little bit like a panic, or if you start to hear talk of maybe an Asian country dumping a little extra in the way of dollars, it will be a sign of some really bad times to come. Because what will happen in the process is that the liquidity in our system will tend to dry up. There suddenly will be an excess supply of Treasuries on the market and you’ll see a sharp spike in interest rates, along with a sharp spike in inflation—despite the weakness in the economy.

Enjoy...

M

us_economy.pdf

us_economy.pdf

Share this post


Link to post
Share on other sites

the reason that you’re not seeing long-term interest rates rising is not because bond investors are anticipating a weakening in the economy, it’s because of the strong demand for Treasury securities by foreign investors. The catch is that demand like that can turn overnight. If I were looking for one factor here to signal the onset of some really serious problems, I would

watch the dollar. If you start to see a sharp sell off, or if selling starts to pick up a little steam and begins to look a little bit like a panic, or if you start to hear talk of maybe an Asian country dumping a little extra in the way of dollars, it will be a sign of some really bad times to come. Because what will happen in the process is that the liquidity in our system will tend to dry up. There suddenly will be an excess supply of Treasuries on the market and you’ll see a sharp spike in interest rates, along with a sharp spike in inflation—despite the weakness in the economy.

The United States of America will do everything and anything within its power to protect the dollar, including trying to take the rest of the world out militarily or economically. They know that a major slide in the dollar will have so many knock on effects that it would leave them in a huge depression that they would find very difficult to get out of.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.