As a boy, George Washington is famed for chopping down his father’s cherry tree, then confessing the crime, saying, “I cannot tell a lie.”
Decades later, after a lifetime
of service to his country, the name “Washington” became the very
synonym for honesty and integrity.
But these days, the exact opposite is true: It is clear that Washington cannot tell the truth.
We see evidence of this every
day as members of both major political parties lie, fib, hedge, evade,
mislead, dissemble, deceive, equivocate and prevaricate in hundreds of
ways.
The process is visible to all who would observe:
- Politician or bureaucrat lies with a straight face.
- Accomplices in the media swear to the lie.
- Gullible taxpayers, voters and investors accept the lie at face value.
- Guilty politician gets re-elected, tells more lies; the cycle continues.
The list of lies our leaders
have told us in the 21st Century would simply be too long to include
even in ... well ... even in the massive Library of Congress.
Members of both political
parties lie about the things the other side is doing ... about the
things each new piece of legislation they pass will do and will not do
... and even about life-and-death issues like war and peace.
But many of the most callous lies Congress people and presidents tell are about their management of the economy.
You see, Washington has become
populated by people who are too simple, too corrupt and too incompetent
to balance the national checkbook ...
But who, in their arrogance, think they are perfectly qualified — and indeed, duty-bound — to manage the U.S. economy.
And as they tinker with our debt, money supply and interest rates, they determine how — and how well — your family will live.
In a blatant attempt to hide its
own incompetence from voters’ eyes — to perpetuate the myth that it is
qualified to manage what was intended to be a free-market economy —
the government of the United States shamelessly lies to each and every
one of us every day.
Fortunately, one famous
economist, Mr. John Williams continues to report on the economy the way
Washington USED to — before it began cooking the books to make itself
look better to voters.
And what he has found is alarming, to say the least.
The first lie is that the U.S. economy is growing. In truth, it is shrinking.
Consider this chart tracking the growth of the U.S. economy.
Using its new way of calculating GDP growth (red line), the economy is growing — if somewhat slowly — at nearly 2% per year.
But when you use the same
equations Washington USED to tell us we could count on, the blue line
shows that the U.S. economy is actually SHRINKING at the rate of more
than 2% per year.
The second deadly economic lie is that unemployment is far lower than it actually is.
Next, let’s take a look at employment. The red line on this chart represents the official unemployment rate that the government reports and that the media dutifully reports as being accurate.
According to these official figures, unemployment is now running about 7.7%.
But once again, you can see the lie Washington’s telling us right on the chart.
The blue line represents
unemployment the way Washington used to measure it — the way Washington
USED to say was 100% accurate. And as you can see, by that measure,
the true unemployment rate is really 23%.
The third deadly lie is that inflation is low.
Washington swears on a stack of Bibles that the inflation rate is around 2%. That’s the red line on this graph.
Our leaders want you to believe that the price you pay for everything you by is rising at the average rate of 2% per year.
But here’s what they won’t tell
you: Back in the 1970s, voters got so angry at Washington for
destroying the buying power of our money, our leaders changed the way
they measure inflation ...
NOT to more accurately report changes in the Consumer Price Index ... but to make themselves look more competent to voters!
So as you can see from the blue
line on the chart, when measured the way it was before the Washington
cooked the books, inflation is now running at 9.7% — nearly five times
higher than Washington claims.
At that rate, everything you buy today will cost you two and one-half times more within ten years.
Unfortunately, given today’s endless money-printing at the Fed, chances are the true inflation rate will soar even higher:
After
the Fed printed money in the 1970s, inflation hit 14% ... and in the
past six years, it has printed 25 times more money than that!
Quantitative Easing and Inflation
On November 25, 2008, the Federal
Reserve announced that it would purchase
up to $600 billion in agency
mortgage-backed securities (MBS) and
agency debt.
In December the FED cut interest
rates to near Zero.
In March 2009, the FED announced that
it would purchase another $750 Billion
in junk mortgages (Mortgage Backed
Securities) and $300 Billion in Treasury
Securities primarily because the
rate of inflation was
still heading down.
Often there is a lag in the effects
of money creation but as QE1 ends the
inflation rate once again begins
dropping, spending much of 2010 at just
over 1%.
So the FED decides QE2 is
necessary and it purchases another $600
Billion of Longer Term Treasury Notes.
This increases the inflation rate to
almost 4% but when it stops the
inflation rate begins falling again.
Personally, I would love to see the
inflation rate stay between 1 and 2% or
better yet between 0% and 1%. In the
long run low inflation rates benefit
everyone as people can accurately judge
their future costs and make sound
business decisions. But the government
prefers a higher inflation rate so it
can repay its debts with "cheaper
dollars." Inflation also erodes savings
and causes consumers to act imprudently
and spend more than they would if they
had sound (unchanging) money.
On September 21, 2011 the Federal
Open Market Committee announced
Operation Twist.
On September 13, 2012 the FED
announced QE3 which was $40 Billion a
month in purchases and on December 12,
2012 they announced an additional $45
Billion per month with no definite end
in sight.
We've added QE1, QE2, Operation Twist
and QE infinity to
the chart so that you can see the
effects in the inflation rate. These
"Quantitative Easings" were not your
typical FED money printing schemes. In
QE1, which lasted from November 25th
2008 - March 31, 2010 the FED started by
purchasing $500 Billion in Mortgage
backed securities. Most of these
securities were virtually worthless at
this point. But just a few months
earlier they were considered part of the
larger money supply. So in effect the
FED bailed out the owners of this junk
debt and pumped up the money supply at
the same time by converting worthless
junk into "valuable" greenbacks.
The economy: Why an increase in inflation is coming
Consumer Price Index
by that title says it's the only way to free America from corporate
rule. It transformed America from "we the people" to what CEOs say goes.
