Mrs F returned from a trip to Target yesterday, full of vim and vigor regarding the prices of everything she had to purchase. I explained to her that the U.S. government deliberately understates the true rate of inflation and then proceeded to explain why they do it. It then dawned on me that many of you could use a refresher, as well.
It's quite simple, actually, but first you need some background. You've likely heard me mention the economist, John Williams, before. If not me, then you've certainly seen Santa make reference to him. John's site is:
On his site and through his subscription service, John goes through the painstaking process of re-calculating "official" U.S. government statistics based upon the methodology used when the statistics were originally created. John was interviewed by Glenn Beck back on Tuesday and here is s link. The interview is brief but, if you're unfamiliar with John's work, this will help get you up to speed. (And please don't fill this thread with comments about Glenn Beck. I like Glenn but it's the message, not the messenger. Got it?)
Now that you know how government statistics have been reformulated and manipulated over time, you need to know why. The answer is quite simple, really. MOPE. Perceptions must be "managed" in order to keep the entire Ponzi afloat.
Think of how many times you hear total U.S. debt expressed as a percentage of GDP. How many times have you heard pinheads like LIESman tell you that "overall U.S. debt, when expressed as a percantage of GDP, is not that big of a deal. In fact, it's quite low. No problem here!"
Think of how many times you've seen our esteemed chief executive or one of his minions come out to trumpet the "outstanding jobs growth and unemployment rate". "Yes, 9% is a high number but, historically, it's not too high to be overcome".
Most importantly, think of how many times you've heard it declared that "inflation remains relatively tame". "The CPI was this but ex food and energy it was that" and all is well. But yet you head off to the market like Mrs F and you see that milk, which a few months ago was $3.19/gallon going for $3.69/gallon, and you wonder how this can be true.
Of course the answer is, it's not true! It's all BS! Think about the inflation numbers specifically. If the true rate of inflation was allowed to be published, would the 10-year note be trading at a yield of 2%? Would the 30-year bond be trading at 3%? Of course not! If inflation is really 10%, the real (inflation-adjusted) annual return on the 10-year note is -8%. Over the life of the note, the holder sees their purchasing power guaranteed to diminish by about 2/3. What kind of mindless fool would buy this? NO ONE! If the actual rate of inflation was accurately disseminated, the yield on the 10-year note would have to soar to 12%, maybe even 15% just to attract buyers. Double-digit interest rates would make servicing the current debt virtually impossible. The overall debt and deficit would immediately soar to truly unsustainable heights and the Great Government/Financial/Military Ponzi would unravel almost overnight.
So, the statistics must be distorted and spun in the government's favor. There is no other option.
However for you, my dear reader, there are options. Understand that what you've just read is true and plan accordingly. This system of lies and deceit will, eventually, fail. In the meantime, you will have accumulated extra hard assets. Everything from land to rice to gold and silver. You should accumulate these things now before they become too expensive to be purchased in bulk.
Shakespeare once wrote: "Truth is truth. To the end of reckoning." And so it shall always be. Prepare accordingly. TF
