the real economics

8/9/2019 THE REAL ECONOMICS

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THE "REAL" ECONOMICS"The System Isn’t Broken. It is Built This Way"

True but Secret policyFalse but Open policy

We are told soet!in but #!ic! are $alse % #!at is true are not told to us %

Ho# uc! #e are to belie&e % Most o$ t!e so called e'poses are to

islead us % Most o$ t!e so called e'posers are aents %

The below is just to tell you , what we are told is not true . what is the real truthis hidden , very well . we can come to some conclusions on whats happeninaround us .They cook up data so as to brin in the predetermined result theywanted . !ll the oicial data is alse , raud , intentionally brouht in to brin intheir aendas .

Consuer (rice Inde' C(I

! measure that e#amines the weihted averae o prices o a basket oconsumer oods and services, such as transportation, ood and medical care.The oods are weihted accordin to their importance. $hanes in $%I are usedto assess price chanes associated with the cost o livin.

Core in$lation ) Consuer (rice Inde' E' Food * Enery

The $onsumer %rice Inde# &$%I' (# )ood * (nery is a measure o price

movements by the comparison between the retail prices o a representativeshoppin basket o oods and services. %roducts such as ood and enery aree#cluded .

The preerred measure by the )ederal +eserve o core inlation in the nitedStates is the chane in the core %ersonal consumption e#penditures priceinde# &%$('. This inde# is based on a dynamic consumption basket. (conomicvariables adjusted by this price delator are e#pressed in c!ained & replacin an

e#pensive item with a cheap similar item or calculations , the inde# should becalled $onsumer Survival Inde# and -T $%I ' dollars, rather than thealternative constant/dollar measure based on a i#ed oods0 basket.

http://en.wikipedia.org/wiki/Federal_Reservehttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_indexhttp://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_indexhttp://en.wikipedia.org/wiki/Chained_dollarshttp://en.wikipedia.org/wiki/Chained_dollarshttp://en.wikipedia.org/wiki/Chained_dollarshttp://en.wikipedia.org/wiki/Chained_dollarshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_indexhttp://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_indexhttp://en.wikipedia.org/wiki/Chained_dollarshttp://en.wikipedia.org/wiki/Chained_dollarshttp://en.wikipedia.org/wiki/Chained_dollarshttp://en.wikipedia.org/wiki/Federal_Reserve


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In$lation is a sustained increase in the eneral price level o oods and services

in an economy over a period o time. When the eneral price level rises, each

unit o currency buys ewer oods and services. Inlation relects a reduction in

the purchasin power per unit o currency. Take "" (11S" as a case in point .

what was the price o one natural unadulterated e , 23 years ao , and what isthe price o an e illed with hih amounts o antibiotics , steroids and other

harsh chemicals , which come rom a totally unhealthy chicken , which cannot

even walk , and which is not allowed to move around .

+,( is a total !oa'

14%, 1ross 4omestic %roduct, is e#plained by overnments to be the measure by which the success and ailure o an economy can be measured. It is rouhlye#plained to be the monetary value o all the oods and services produced oralternatively all the waes earned and proits made in a speciied period o time&enerally in one year'.

5et us consider briely the computation o the 14% measure. There are threemain ways to calculate 14%6

7' The e#penditure method

8' The income method and9' The value/added method.

:athematically, the 14% can be deined with the ollowin e;uation.

14% < $ = I = 1 = &> ? :' where, $ < %rivate $onsumption , I < %rivate

Business Investment , 1 < %ublic or 1overnment (#penditure , > <

(#ports , : < Imports

$onsumer Spendin or $

$onsumer spendin is deined as the total amount o money consumer spends

on everyday oods and services. Increased consumer spendin indicates not

only hiher disposable income but also better e#pectation and conidence in the

economy. Increased spendin by consumers help drivin up the 14% value.

1overnment spendin records the total spendin o )ederal, State and

:unicipal on oods and services. It covers the areas o education, deense,


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judiciary and other thins . 1oin to war and throwin money to undeservin

politicians seem to increase 14%.

The ain in the consumer sector is mainly due to the current housin and

consumer credit bubble which led to the boom in the construction, commercial

bankin and real estate sector. !ll o which are consumer related.

To inance our consumption we can either borrow or inance it throuh savins

or retained earnins. The problem is when we borrow to inance our private and

public e#penditure. !s a result we are ettin deeper and deeper into debt.

To maintain the 14% rowth rate , spendin in $onsumer, %rivate Investment

or 1overnment will have to increase. Since our 14% rowth is uelled by debt

we will have to borrow more in the uture. This is where the problem comes in.

@Why did people appear so anry and unhappy when the stock market was atrecord levels, the unemployment rate is down sharply, inlation is subdued andthe number o jobs is increasinA

T!e econoy isn-t really doin #!at t!e statistics say it is doin% Our

statistics are #ron and Main Street $ol.s .no# it%

Wall Street hede und moul, %aul Siner, head o (lliott :anaement $orpsaid.@-obody can predict how lon overnments can et away with ake rowth,ake money, ake jobs, ake inancial stability, ake inlation numbers and akeincome rowth, @When conidence is lost, that loss can be severe, sudden andsimultaneous across a number o markets and sectors.

Fa.e /obs0 The 5abor 4epartment adds hundreds o thousands o jobs a year toits count or positions it thinks, but can’t prove, are bein created by newcompanies. This practice, which has one on or decades, needs to beinvestiated.

Ho# to Fa.e Econoic +ro#t!

14% is part o what’s called the C-ational Income !ccounts’. 14% measuresthe value o oods and services produced in the economyD the other side o the

accountin leder is 14I, or ross domestic income, which measures thecorrespondin income enerated rom that production. That means that the


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When there is a lare sure in public spendin, with the torrent o stimulus packaes rom overnments around the world, the 14% @rowth reistersmost prominently in the e#penditure method.

T!e +reat C(I Sca11and We Lose Aain

The $entral Bank in conjunction with the overnment manipulates the$onsumer %rice Inde# so that it will always understate the real inlation rate.

Then the $entral Bank can arue that they have to print money because

inlation is too low. $entral Bank %residents then claim the we have to achieve

8/9G inlation to comply with their mandate o price stability and ull

employment. I, or some reason, the $%I ever ticks hiher than 8/9G, the )ed

will simply inore it and claim that core in$lation2 which e#cludes ood and

enery &where inlation is most evident' is the real measure o inlation. Thisway they can keep interest rates low and credit easy.

!nother part o the inlation inde# hoa# is the down/siLin o consumer ood

products.

W!at is coin

3% +old Standard

1old , 4iamond and other so called precious substances are actually worthlessscraps , pushed on to us , throuh propaanda , promotin them as precious Mvaluable substances . )or a substance to be precious , it should be lie savin or at least increase the comort M lu#ury , it should have intrinsic value .

4%+ross National Happiness

The assessment o ross national happiness &1-K' was desined in an attemptto deine an indicator and concept that measures ;uality o lie or social

proress in more holistic and psycholoical terms than only the economicindicator o ross domestic product &14%'.

Hu'ley brot!ers2 5ertrand Russell 2 and +eore Or#ell 1#!ose real nae

#as Eric 5lair 2 cousin to Tony 5lair 2 all aents o$ t!e lobal rulers 2 !a&e

#ritten e'tensi&ely on t!is 2 and are pus!ed on to us as sc!ool te't boo.s %

5ike the (nland o his day, Ku#ley0s topia possesses a riid class structure,

one even stroner than (nland0s because it is bioloically and chemically

enineered and psycholoically conditioned. !nd the members o Brave -ew

World0s rulin class certainly believe they possess the riht to make everyonehappy by denyin them love and reedom.

http://blackswaninsights.blogspot.in/2010/11/more-inflation-propaganda-it-is-too-low.htmlhttp://en.wikipedia.org/wiki/Quality_of_lifehttp://en.wikipedia.org/wiki/Holistichttp://blackswaninsights.blogspot.in/2010/11/more-inflation-propaganda-it-is-too-low.htmlhttp://en.wikipedia.org/wiki/Quality_of_lifehttp://en.wikipedia.org/wiki/Holistic


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Most o$ ser&ice sector /obs are to .eep people enaed and to .eep t!e

a#ay $ro politics ) po#er ae %Stoc. Mar.ets ) deri&ati&es play a

a/or role in a.in +,( appear ood2 #!ereas 2 t!ese are all

anipulated boo. entries 2 #!ic! do not contribute anyt!in positi&e to

t!e society %

The Nin commissioned !dam Smith to write a book about how the Nin could

increase the amount o old in the royal treasury. Because that0s all the Nin

cared about. The Wealth o -ations was written at about the time o the

!merican +evolution. Smith scratched the surace o the mechanisms o a ree

enterprise economy, and he inlated his meaer indins into one o the most

ponderous tomes o all time, until it was inally surpassed by War * %eace.

(conomists still work by Smith0s premise today. That is, the purpose o bein

an economist is to pander to the ruler or the sake o enrichin the treasury, with

no reard or the eect on the workers who actually earn the old that is bein

hoarded by the kin.

Smith0s work was based on the very thinkin that led to the birth o the S! by

revoltin aainst it.

Kuman wants are unlimited. :eans to satisy those wants are limited. Those

limited means have alternative uses. Thus, there are three aspects, i.e. 7'

%rioritisation o human wants, 8' discoverin the alternative uses to which

every resource could be put and lastly 9' (icient tiliLation o every resource.

@I we keep doin this policy o stimulus and rowin overnment, it’s just

oin to et worse or the averae man. ur standard o livin is oin to all . .

. %eople who are e#pectin Social Security can’t et all that money. %eople

e#pectin overnment pensions can’t et all their money . . . We simply can’t

aord to pay them.

In a recent interview to talk about his -ew Oork Times best/seller !tershock,


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Wiedemer says, @The data is clear, 23 percent unemployment, a P3 percent

stock market drop, and 733 percent annual inlationJ startin in 8379.

Beore you dismiss Wiedemer’s claims as impossible or unrealistic, consider

this6 In 833Q, Wiedemer and a team o economists accurately predicted thecollapse o the .S. housin market, e;uity markets, and consumer spendin

that almost sank the nited States. They published their research in the book

!merica’s Bubble (conomy.

When the interview host ;uestioned Wiedemer’s latest data, the author

unapoloetically displayed shockin charts backin up his alleations, and then

ended his arument with, @Oou see, the medicine will become the poison.

T K( T(++IB5( environmental problems that conront us today, and those thatthreaten the very survival o our species on this planet, are the inevitableconse;uence o economic development, which is ironically identiied with

proress, an overridin concern o almost every overnment throuhout theworld today.

This is not enerally realised, partly because neither the nature nor theimplications o this atal process are clearly understood. To do so re;uires thatwe irst realise the act that economic development has become the overridinoal o overnments throuhout the world only in the last ity years. %residentKarry Truman o S! is supposed to have irst suested that it should becomeso. %reviously, economic development was the priority in but a very small areao our planet, mainly in parts o western (urope and -orth !merica. !nd that

too or a period that is insiniicant in comparison to man’s total e#istence onthis planet.

(conomic development consists o the continuous year/to/year increase in the production, distribution, sale and consumption &throuhput' o ood, arteactsand services. This is taken to be the only means o increasin wealth, andthereby, human welare.

This notion would have been totally incomprehensible to the traditional man,or whom material oods were not seen as desirable in themselves, but only in


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so ar as their ac;uisition served his social interests, which were paramount or him. Wealth, or him, was basically social wealth and also ecoloical wealth.Ke saw his welare as bein predominantly determined by his ability tomaintain the interity and stability o the social and ecoloical systems o which he was a part. )or it was only by maintainin the balance o the systems

that they could be counted upon to dispense their inestimable beneitsD which hewas not willin to oro merely in order to ac;uire material oods, that playedlittle part in the stratey o his lie.

The economic systems o traditional society, as the economic historian Narl%olanyi puts it, @was submered in social relations. So was its science andtechnoloy.

The oal o continuously increasin the throuhput o oods and services isincompatible with the survival o social and ecoloical systems, which have anoptimum structure, and whose preservation re;uires an optimum amount o these commodities. It is or this reason alone that economic development&whether it be @appropriate development, @eco/development or the nowashionable @sustainable development' can only lead to social and ecoloicaldisruption.

Why, we miht ask, is economic activity out o control in this wayA The answer is that instead o bein conducted at the level o the amily and the community&the oriinal units o economic activity' they are now bein ulilled byspecialised, purely economic, surroate social roupins, i.e. corporations&private or overnment/owned' that by their very nature can have no social,ecoloical, reliious or moral preoccupations o any kind. In the traditionalsocieties the amily and community were at once the units o all other activities,such as education, the care o the old and the inirm, the ulillment o the

overnment itsel.

nortunately, in terms o the worldview o modernism &in which acorporation/based society necessarily supplants the traditional worldview',social and ecoloical disruption is o no account, since the very concept o social and ecoloical wealth is incomprehensible. The society is seen to be nomore than the total number o individual producers and consumers who areoverned by the same institutions. -ature is but a source o raw/materials or

the economic process and a sink or disposin o its evermore voluminous andto#ic wastes. In such conditions, the ate o both society and nature are virtually


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sealed. It is but a ;uestion o time beore they are both cashed/in, and, in thisway, transormed into economic wealth.

It is in this way that with the economic development o -ew Realand, at the endo the eihteenth century, the vast whale population o the surroundin seas was

rapidly cashed/in. Then it was the turn o the seals. nce they were one it wasthat o the reat Nauri orests o the -orth Island. nce they had beendestroyed, the bulk o the remainin orests were burnt to make way or millions o sheep that turned the soil o the mountain areas into dust. Thisrunaway process is still under way today. I anythin, it has accelerated, as ithas done throuhout the Third World since it has been brouht within the orbito the Western industrial system.

The recyclin o materials, as economic development proceeds, becomesimpossible, in any case, because an increasinly deraded biosphere becomesincapable o copin with the ever more massive throuhput o materials.

In addition he now produces massive amounts o synthetic oranic chemicalssuch as %$Bs, $)$s and nearly all modern pesticides which, bein totallyorein to the natural world enobiotic', cannot be recycled within it and canonly accumulateor break down into decayed products that are oten e;ually

un/recyclableand that more oten than not must interere particularlydrastically with its normal unctionin.

The international aencies, such as the )ood and !ricultural ranisation o the nited -ations &)!', are part o the problem and not o the solution.)!s Tropical )orestry !ction %lan &T)!%' is an eiht billion dollar economicdevelopment project that involves plantin vast plantations o ast rowine#otics or the beneit o the papermills and the rayon actories.

I we are to survive on this planet we shall have to create a very dierent sort o societyD one in which economic activities can once aain be brouht under social control.

Aerica6s 5ubble Econoy0 (ro$it W!en It (ops 1 October 72 4887

by ,a&id Wiedeer 2 Robert Wiedeer 2 Cindy Spit9er

Aerica6s 5ubble Econoy Is +oin To 5ecoe An Econoic 5lac. Hole

http://www.amazon.com/David-Wiedemer/e/B002K8XNQI/ref=dp_byline_cont_book_1http://www.amazon.com/s/ref=dp_byline_sr_book_2?ie=UTF8&field-author=Robert+Wiedemer&search-alias=books&text=Robert+Wiedemer&sort=relevancerankhttp://www.amazon.com/Cindy-Spitzer/e/B008PF4I14/ref=dp_byline_cont_book_3http://www.amazon.com/David-Wiedemer/e/B002K8XNQI/ref=dp_byline_cont_book_1http://www.amazon.com/s/ref=dp_byline_sr_book_2?ie=UTF8&field-author=Robert+Wiedemer&search-alias=books&text=Robert+Wiedemer&sort=relevancerankhttp://www.amazon.com/Cindy-Spitzer/e/B008PF4I14/ref=dp_byline_cont_book_3


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What is oin to happen when the reatest economic bubble in the history othe world popsA The mainstream media never talks about that. They are muchtoo busy coverin the latest doihts in Washinton and what ustin Bieber has

been up to. !nd most !mericans seem to think that i the 4ow keeps settinnew all/time hihs that everythin must be okay. Sadly, that is not the case atall.

+iht now, the .S. economy is e#hibitin all o the classic symptoms o a bubble economy.

:eanwhile, Wall Street has been transormed into the biest casino on the planet, and much o the new money that the )ederal +eserve has beenrecklessly printin up has one into stocks. But the 4ow does not keep settinnew records because the underlyin economic undamentals are ood. +ather,the reckless euphoria that we are seein in the inancial markets riht nowreminds me very much o 7P8P. :arin debt is absolutely soarin, and everytime that happens a crash rapidly ollows.

But this time when a crash happens it could very well be unlike anythin thatwe have ever seen beore. The top 82 .S. banks have more than 878 trilliondollars o e#posure to derivatives combined, and when that house o cards

comes crashin down there is no way that anyone will be able to prop it backup. !ter all, .S. 14% or an entire year is only a bit more than 72 trilliondollars.

But most !mericans are only ocused on the short/term because the mainstreammedia is only ocused on the short/term. Thins are ood this week and thinswere ood last week, so there is nothin to worry about, rihtA

nortunately, economic reality is not oin to chane even i all o us try to

inore it. Those that are willin to take an honest look at what is comin downthe road are very troubled. )or e#ample, Bill 1ross o %I:$ says that hisirm sees "bubbles everywhere"...

The ollowin statistics are rom one o the articles entitled "Why Is The World(conomy 4oomedA The 1lobal )inancial %yramid Scheme By The -umbers"...

/EF3,333,333,333,333 / The appro#imate siLe o total world 14%.

/E7P3,333,333,333,333 / The appro#imate siLe o the total amount o debt in

the entire world. It has nearly doubled in siLe over the past decade.

http://theeconomiccollapseblog.com/archives/7-things-about-the-mainstream-media-that-they-do-not-want-you-to-knowhttp://www.businessinsider.com/chart-margin-debt-bearish-signal-2013-5http://theeconomiccollapseblog.com/archives/why-is-the-world-economy-doomed-the-global-financial-pyramid-scheme-by-the-numbershttp://theeconomiccollapseblog.com/archives/why-is-the-world-economy-doomed-the-global-financial-pyramid-scheme-by-the-numbershttp://www.zerohedge.com/news/2013-05-16/bill-gross-we-see-bubbles-everywherehttp://theeconomiccollapseblog.com/archives/why-is-the-world-economy-doomed-the-global-financial-pyramid-scheme-by-the-numbershttp://theeconomiccollapseblog.com/archives/why-is-the-world-economy-doomed-the-global-financial-pyramid-scheme-by-the-numbershttp://en.wikipedia.org/wiki/World_economyhttp://www.mybudget360.com/wp-content/uploads/2012/04/total-global-debt.jpghttp://theeconomiccollapseblog.com/archives/7-things-about-the-mainstream-media-that-they-do-not-want-you-to-knowhttp://www.businessinsider.com/chart-margin-debt-bearish-signal-2013-5http://theeconomiccollapseblog.com/archives/why-is-the-world-economy-doomed-the-global-financial-pyramid-scheme-by-the-numbershttp://theeconomiccollapseblog.com/archives/why-is-the-world-economy-doomed-the-global-financial-pyramid-scheme-by-the-numbershttp://www.zerohedge.com/news/2013-05-16/bill-gross-we-see-bubbles-everywherehttp://theeconomiccollapseblog.com/archives/why-is-the-world-economy-doomed-the-global-financial-pyramid-scheme-by-the-numbershttp://theeconomiccollapseblog.com/archives/why-is-the-world-economy-doomed-the-global-financial-pyramid-scheme-by-the-numbershttp://en.wikipedia.org/wiki/World_economyhttp://www.mybudget360.com/wp-content/uploads/2012/04/total-global-debt.jpg


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/E878,282,2F,333,333 / !ccordin to the .S. overnment, this is the notionalvalue o the derivatives that are bein held by the top 82 banks in the nitedStates. But those banks only have total assets o about .P trillion dollarscombined. In other words, the e#posure o our larest banks to derivativesoutweihs their total assets by a ratio o about 8H to 7.

/EQ33,333,333,333,333 to E7,233,333,333,333,333 / The estimates o the totalnotional value o all lobal derivatives enerally all within this rane. !t thehih end o the rane, the ratio o derivatives to lobal 14% is more than 87 to7.

Special drawin rihts &S4+'

International inancin instrument created in 7PF3 by the International

:onetary )und &I:)' to coincide with the disavor o the S dollar asthe principal currency o the world trade. !lso called paper old, an S4+ is

neither paper nor old but an accountin entry.

IT is said that when 5ord +andolph $hurchill made his e#tensive tour throuh

South !rica in 7P7 he was actin as aent to obtain inormation or the

+othschilds, who, o course, knew o the diamonds and old which were bein

worked there. Ke took with him on these travels a minin enineer and does notseem to have himsel ollowed up the avourable reports that this proessional

made to him.

Kowever that may be, it was 9 years beore this when $ecil +hodes applied tothe 5ondon +othschilds to buy out the )rench interests in the Nimberley minesand so obtain control o the 4iamond industry in South !rica. )or this

purpose, +hodes was inanced by the +othschilds to the e#tent o U7,H33,333,and soon aterwards &with Barnato, to whom U2,99,333 was paid', the 4eBeers $onsolidated :ines was ormed, and the +othschilds put in the ew Sir$arl :eyer as their watchdo director. ut o the irst deal, +othschilds madeU733,333 in 9 months by the rise in value o the $ompany’s sharesD they ot aurther U733,333 commission or the purchase o the 4e Beers mine. The$hairman o the 4e Beers $onsolidated :ines is now the ew Sir (rnestppenheimer. Sir !lred Beit &ew' is a 5ie 1overnor. The 4iamond mininindustry is a complete monopoly, and the price o these beautiul stones is keptup by artiicial means .

Beore that, the +othschilds @had lon been interested behind the scenes,toether with the :osenthals, in 5ondon and South !rican (#ploration $o. .

http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq312.pdfhttp://theeconomiccollapseblog.com/archives/the-coming-derivatives-panic-that-will-destroy-global-financial-marketshttp://www.businessdictionary.com/definition/financing-instrument.htmlhttp://www.businessdictionary.com/definition/International-Monetary-Fund-IMF.htmlhttp://www.businessdictionary.com/definition/International-Monetary-Fund-IMF.htmlhttp://www.businessdictionary.com/definition/dollar.htmlhttp://www.businessdictionary.com/definition/principal.htmlhttp://www.businessdictionary.com/definition/trade.htmlhttp://www.businessdictionary.com/definition/call.htmlhttp://www.businessdictionary.com/definition/paper.htmlhttp://www.businessdictionary.com/definition/gold.htmlhttp://www.businessdictionary.com/definition/entry.htmlhttp://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq312.pdfhttp://theeconomiccollapseblog.com/archives/the-coming-derivatives-panic-that-will-destroy-global-financial-marketshttp://www.businessdictionary.com/definition/financing-instrument.htmlhttp://www.businessdictionary.com/definition/International-Monetary-Fund-IMF.htmlhttp://www.businessdictionary.com/definition/International-Monetary-Fund-IMF.htmlhttp://www.businessdictionary.com/definition/dollar.htmlhttp://www.businessdictionary.com/definition/principal.htmlhttp://www.businessdictionary.com/definition/trade.htmlhttp://www.businessdictionary.com/definition/call.htmlhttp://www.businessdictionary.com/definition/paper.htmlhttp://www.businessdictionary.com/definition/gold.htmlhttp://www.businessdictionary.com/definition/entry.html


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They took a inancial interest also in the enormously powerul irm o WernherBeit and $o., which owned hue tracts o land and old mines in South !rica.@When Beit realised that it would be necessary to obtain the support ointernational inanciers and bankers in order to raise all the capital re;uired orthe old/minin industry, he decided to broaden the market by ivin

participations to the +othschilds o 1ermany, !ustria and )rance. So writes .B. Taylor, o Wernher Beit * $o. in his A Pioneer looks back , 7P9P, p. 73P.

:ost siniicant o all is the inormation iven by 4r. Kans Sauer in his book From Africa, 7P9FD 4r. Sauer was present in Westminster Kall when the%arliamentary $ommittee was e#aminin +hodes on his part in the amesonraid which omented the outbreak o the war, and says he noticed @that theevidence was taken in a curious way and always went to round like a hard/

pressed o# whenever it bean to point too stronly at certain persons. Sauer

asked +hodes the reason or thisD +hodes replied @ne o the bi men knew allabout it.

In discussin Sauer’s book, the Cape Times, 8nd -ov., 7P9F, identiies the @biman as &the late' 5ord +oseberyV +hodes told Sauer that he had discussed the

possibility o the raid with 5ord +osebery when the latter was %rime :inisterVThe dates o +osebery’s :inistry were 7PH/2, at which time he was awidower, his wie havin been a +othschild, and his children hal/caste+othschildsV

)our @leaders o the raid, includin 5ionel %hillips, were sentenced to death bya British $ourt, but the black cap meant nothin where +othschilds wereconcerned, so the prisoners were able to buy their lives by a ine o U82,333 per headV Soon ater this, there was a perect epidemic o baronetcies amon thoseintimately concerned with the dastardly business o the +aid. $ecil +hodes wasrewarded by becomin a 4irector o 4e Beers in 7P33.

-ot only do the +othschilds control the minin o South !rican old, but they

control also its price. In 5ondon, all old bullion passes throuh the hands othree irms who overn the price o old rom day to dayD these are -. :.+othschild * Sons, :ocatta * 1oldsmid, and Samuel :ontau * $o.

The +othschilds, world kinpins, worth E233 trillionV They own +euters, !%,and i# the price o oldJ

)ormula H.7


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14% < $ = I = 1 = &> / :' +esource $ostMIncome !pproach To calculate

1ross 4omestic Income &14I', irst consider how revenues received or

products and services are used6 7. %ay or the labor used &waes = income o

sel/employed proprietors' 8. %ay or the use o i#ed resources, such as land

and buildins &rent'D 9. %ay a return to capital employed &interest'D H.%ay or thereplenishment o raw material used. +emainin revenues o to business owners

as a residual cash low, which is used to replenish capital &depreciation', or it

becomes a business proit. So with the resource costMincome approach, 14% &or

14I' is calculated as waes, rent, interest and cash low paid to business

owners or oraniLers o production. So 14% by resource costMincome approach

< waes = sel/employment income = +ent = Interest = proits = indirect

business ta#es = depreciation = net income o oreiners.

)ormula H.8

14I < waes = sel/employment income = +ent = Interest = proits = indirect

business ta#es = depreciation = net income o oreiners The above ormula is

probably hard to memoriLe, so at least try to remember this relationship / 14I

< waes = rent = interest = business cash low .Total 14% iures should be thesame by either method o calculation. But in real lie, thins don0t always work

out this way. icial iures usually have a cateory called "statistical

discrepancy", which is needed to balance out the two approaches.

14% )+!4

It’s happenin riht now&837H' in !merica. ! massive criminal conspiracy is bein carried out to beneit the political class and bi business elitesall to thedetriment o the reat !merican middle class.

There is no better evidence or the conspiracy than the just released second/;uarter 14% number6 HG rowth in 14%. This is pure raud. This is aovernment/run scam. The news on every ronteconomic, orein,overnment scandalscould not et any worse. !nd then suddenly on the heels

o the worst 14% ;uarter in QF years &/8.PG'Jriht ater we ind out that theaverae household has lost one third o its net assets since 8339 and almost hal


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since 833FJriht ater we ind out that 9QG o !mericans &FF million people'are in debt collectionJsuddenly we ind out the economy is lyinA +eallyA

What i the number is pure raud, just like the jobs numbers the month beorethe 8378 electionA Whistleblowers now say that the iure o 33,333 jobs in

one month was made up based on @estimates by pro/bama employees o the5abor 4epartment. Some o us doubted the statistic at the time. The number

just seemedin a wordrancid.

This new 14% number in one word6 rancid. It does not relect the reality @onthe round. !sk any $(. Somethin is wron. This 14% turnaround oalmost FG month to month has never been seen in history. &By the waythat33,333 jobs increase or one month had also never been seen beore, either.'

-ot that even a rowth rate o HG a month would solve the problems i it werereal. !ny consumer in !merica will tell you that inlation is runnin wild. :eat

prices are at all/time hihs. So are rocery prices. So are cable T bills. Kealthinsurance premiums are up dramatically more than in the si# years beorebamacare combined. The price o the as we put into our cars has doubledsince bama became president. The cost o electricity is at an all/time hih.

But there’s very ood reason to believe that the supposed HG 14% spike is not

real. 5ike the ctober 8378 jobs report based on pure raud, this new 14%report has holes the siLe o Te#as.

In the overnment’s own words, this statistic is based on incomplete data andestimates.

It’s also based in lare part on @inventory accumulation. In other words, the@rowth o 14% is based on businesses pilin up inventory in the hopessomeone miht buy it. !s ReroKede.com points out, 28G o 14% rowth in

the past year is simply inventory hoardin, not actual sales.

5astly, the raud o X8 14% is also based on the new way the overnment isnow measurin 14%. They came up with a new way to count 14% that justhappens to revise all 14% numbers since 7PPP upwards. The second ;uarter o837H was the irst real/lie ;uarter since the new revision took eect. Soassume a lare portion o the bump is due to this sudden upward revision. Inother words thins just ot better on paperbut not in the real world.


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Look At The GDP Fraud!

!lleedly rational beins continue to base their entire conception o how theeconomy is doin on a sinle raudulent numberthe 1ross 4omestic %roduct&14%'.

$onsider the Washington Post's (conomy shrinks as ederal spendin cutstrump private sector’s rowth. The raud is in the headline.

)ourth/;uarter economic activity was ar below the 7.7 percent annual rowthrate economists had predicted. (#ports ell at a rate o 2.F percent in the ourth;uarter, relectin the slowdown in (urope. usinesses also dre don their

in"entories after unusuall# high stockpiling in the pre"ious period$ Thatreduced economic groth b# %$& percentage points.

(nusuall# high stockpiling in the pre"ious period .AA

But perhaps the biggest surprise Y A Z was the siLe o the drop in ederalspendin6 72 percent at an annual rate durin the ourth ;uarter. Defense

spending suered an even bier decline, drain down rowth by 7.9 percentae points. :any aencies bean adoptin continency plans, institutedhirin reeLes and delayed projects in anticipation o widespread budet cuts all o which depress spendin.

Still, economists said the decline looks especially dramatic because overnmentspendin had jumped more than usual in the previous ;uarter.

Go"ernment spending had )umped more than usual in the pre"ious *uarter .VV

Kere0s the spin.

That may have been a reflection of go"ernment agencies and pri"atecontractors shifting spending earlier in the #ear in anticipation of budget cuts+

boosting third,*uarter groth at the e-pense of the fourth.

14% is hihly dependent on overnment spendin, especially defense spendin.!nd that spendin is deficit spendin loatin atop a cesspool o endless

http://www.washingtonpost.com/business/economy/economy-shrinks-as-federal-spending-cuts-trump-private-sectors-growth/2013/01/30/5a11e0ea-6afc-11e2-95b3-272d604a10a3_story.htmlhttp://www.washingtonpost.com/business/economy/economy-shrinks-as-federal-spending-cuts-trump-private-sectors-growth/2013/01/30/5a11e0ea-6afc-11e2-95b3-272d604a10a3_story.htmlhttp://www.washingtonpost.com/business/economy/general-dynamics-blames-2-million-loss-on-defense-cuts/2013/01/23/b748e57a-658d-11e2-85f5-a8a9228e55e7_story.htmlhttp://www.washingtonpost.com/politics/deep-spending-cuts-are-likely-lawmakers-say-with-no-deal-on-sequester-in-sight/2013/01/29/286d4f94-6a1f-11e2-ada3-d86a4806d5ee_story.htmlhttp://www.washingtonpost.com/business/economy/economy-shrinks-as-federal-spending-cuts-trump-private-sectors-growth/2013/01/30/5a11e0ea-6afc-11e2-95b3-272d604a10a3_story.htmlhttp://www.washingtonpost.com/business/economy/economy-shrinks-as-federal-spending-cuts-trump-private-sectors-growth/2013/01/30/5a11e0ea-6afc-11e2-95b3-272d604a10a3_story.htmlhttp://www.washingtonpost.com/business/economy/general-dynamics-blames-2-million-loss-on-defense-cuts/2013/01/23/b748e57a-658d-11e2-85f5-a8a9228e55e7_story.htmlhttp://www.washingtonpost.com/politics/deep-spending-cuts-are-likely-lawmakers-say-with-no-deal-on-sequester-in-sight/2013/01/29/286d4f94-6a1f-11e2-ada3-d86a4806d5ee_story.html


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borrowin and, lately, enthusiastic money printin by the )ed. In eect, thenited States borrows or prints money to keep the GDP number abo"e .ero.

"the idea that economic rowth relies on overnment spendin YisZ a Neynesian

pipe dream." !nd then there is the choice o the 14% delator. The delator is used toconvert nominal 14% into real &inlation/adjusted' 14%. The lower the delator,the hiher the 14%. B(!0s choice o a particular delator appears to bearbitrary, it is a total mystery why the B(! didn0t simply choose a lowerdelator to put 8378 XH 14% into positive territory.

The /A used a deflator 0inflation rate1 "alue of 2$34$ 5f the# had used theCP5+ GDP ould ha"e contracted %$634+ not 2$%74$

! jump in pay may have helped consumers. @ After,ta-8 income rose at a 3$9 percent annual rate from :ctober through December+ the biggest increase since

the second *uarter of &229, today’s report showed.

In addition to improvin waes and salaries, some companies also paid

di"idends and emplo#ee bonuses earlier than usual before ta- rates ent upthis #ear . The $ommerce 4epartment estimated that about E8Q.H billion o theincrease in incomes was attributable to early dividend payments and anotherE72 billion relected bonuses and other types o irreular pay.

The ain in consumer spendin may be diicult to sustain this ;uarter as a ta#increase takes a bier chunk rom earnins...

Thus we see that income going to the ealth# inlated areate income because overnment ta# policy aected the timin o di"idend andbonus payments.

What is interestin is that supposedly rational actors are so heavily invested inthis 14% raud, which urther validates every sinle thin about how humans

unction. This is especially true when humans have a "ested interest inmaintaining the fraud .


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It appears that humans will believe literally anythin that allows them to pretend that the comple# constructs they have created &like the .S. economy'are unctionin properly, even when it is larinly obvious that they are not.

eneLuela Shows The World Kow To %ractice 14% )raud

I have noted multiple times that the universal practice o countin overnment

spendin at 733 cents on the dollar in 14% turns raudulent when o&ernents

start to anipulate their spendin in order to manipulate the 14% numbers.

5atin !merica ,the last about 72 years o its history have been dominated by a

uy named Kuo $haveL. $haveL was irst elected %resident in 7PP, and re/

elected in 8333, 833Q and 8378. Ke spent his nearly 72 years in power

imposin what he called the "Bolivarian +evolution," alon with a personal

orm o socialismM authoritarianism. !t the time o his inal re/election in

ctober 8378 he was critically ill with late/stae cancer, and he died in :arch

8379, leavin eneLuela to his personally/selected successor -icolas :adura.

Kow has eneLuela been doin durin the last 2 or so years o $havista ruleA

I you believe the oicial economic statistics, just ine. Oes, eneLuela is

rather dependent on oil as its chie e#port, so that when oil prices took a bi

tumble rom mid 833 to early 833P rom about E7H3Mbbl to EQ2Mbbl,

eneLuela0s economy took a dip in 833P and into 8373, which they

admit. Kere is oicial eneLuela 14% data rom the $entral Bank. But puttin

aside the 833P/73 event, the oicial statistics show airly impressive 14%

rowth in 833 &Q=G', 8377 &H.8G', 8378 &2.2G', and into 8379 &3.2G in X7

and 8.QG in X8'. It would be reat i the .S. could match those kinds o

numbersV

)orein %olicy on :ay 73. Kere0s an e#cerpt6

;5


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18

blackouts continue to be #et another thorn in the go"ernment's side$

The#'"e been the norm folloing the complete state takeo"er of the

electricit# industr# in &22$

Well, how could 14% possibly be rowin at those impressive rates i

production o everythin that counts is oin downA %erhaps the price o oil isoin upA Turns out that the price o oil has been airly stable since the

beinnin o 8377, luctuatin between about E3 and E773Mbbl. That0s not the

answer. !lso, eneLuelan oil production has declined since the start o the

$haveL years, oin rom about 9.8 million barrels per day in 7PP to about 8.9

million in 8378, and the decline has mostly continued in recent years.

eneLuelan oil production declined in 833, 833P and 8373, had a sliht 9.G

increase in 8377, and was completely lat in 8378.

The answer can only be one thin // an e#plosion o overnment spendin,

dishonestly counted at 733 cents on the dollar in 14% as i it were real wealth/

eneration. !ccordin to Bloomber last September 79, eneLuela had a QFG

increase in overnment spendin in the run/up to the 8378 election. That0s one

way to et a 2G increase in 14%V The problem is, it0s not real. The Bloomber

article reports that the biest piece o the increased spendin was or

subsidiLed housin . But o course they count the spendin at 733 cents on the

dollar positive. !nd thus you can see how a country can report 2G 14%increase when in act its economy is in serious decline.

But o course, everybody who counts takes the raudulent numbers without the

slihtest skepticism. )or e#ample, the $I! in its 8378 World )actbook

reports the oicial overnment numbers o 2.2G 14% rowth in 8378 and

H.8G in 8377 &althouh it does say as to 8377 that "record overnment

spendin" helped to produce the result'. The World Bank also takes up the

oicial raudulent numbers and passes them on without comment .

The nited States is doin the same thin, just, so ar, on a smaller scale as a

percent o 14%. But with .S. 14% rowth runnin under 8G per year, could

overnment spendin increases result in positive 14% rowth iures when

honest accountin would show neativeA It is absolutely possible, and

becomin more likely all the time.

The @14% )raud

I 14% is tellin us that the S economy is steadily improvin, how come so

https://www.cia.gov/library/publications/the-world-factbook/geos/ve.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/ve.html


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many olks on :ain Street eel so badA 4on’t they read the papersA 4on’t theyknow the 14% is improvinA

The short answer to these ;uestions is that the 14% calculation is a raud.

To understand why the 14% numbers could be so ood when the economy allaround looks so bad, it is necessary to understand a ew pertinent details o the14% calculation. )or one thin, 14% includes overnment spendinJbut doesnot SBT+!$T any o the borrowin the overnment does to und itsspendin.

)rank Shostak, an adjunct scholar o the :ises Institute, observes, @The 14%ramework ives the impression that it is not the activities o individuals that

produce oods and services, but somethin else outside these activities calledthe Ceconomy.’ Kowever, at no stae does the so/called Ceconomy’ have a lie o its own, independent o individuals. The so/called economy is a metaphor ? itdoesn’t e#ist.

$onvention tells us that the 14% ramework is, more or less, a tool used tomeasure the siLe and health o this @metaphor, the @economy. :ost oten, wehear it e#pressed as a rate o rowth ? either positive or neative. !nd it is thiswidely ollowed number that determines when economic e#pansions end and

recessions bein &two consecutive ;uarters o @neative rowth.'. But 14% asa measurement is really just howash. It can no more calculate the health o aneconomy .

5et us consider briely the computation o the 14% measure. There are threemain ways to calculate 14%6

7' The e#penditure method

8' The income method and9' The value/added method.

Theoretically, all three methods should produce the same result althouh, in practice, this almost never happens. )or instance, when there is a lare sure in public spendin, as we have seen recently with the torrent o stimulus packaesrom overnments around the world, the 14% @rowth reisters most

prominently in the e#penditure method.


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+ouhly speakin, this method calculates the @siLeMactivities o an economy by totalin its e#penditures, minus imports. It is also the most common methodemployed to determine 14%. The e;uation looks like this6

14% < private consumption = ross investment = overnment spendin =

&e#ports [ imports'.

To understand just how misleadin the e#penditure method can be, let usconsider briely the case o the !ustralian economy. It is widely accepted thatthe !ussies, under the det stewardship o %rime :inister Nevin +udd, hadavoided enterin a technical recession durin the crisis rom which we are nowsaid to be @recoverin. It’s a nice storyJe#cept that it is a lie or, at best, a@one/third truth.

!ustralia 4I4 un;uestionably all into recession. It’s just a matter odeinitions.

The )raud o 14%

The number one myth that politicans want you to beieve is the ollowin6

7. .S. 14% Is 1rowin

.S. 14% has increased by H.8QG rom 833F to 8373, accordin to datacompiled by the .S. Bureau o (conomic !nalysis. In the same period o time, the .S. national debt has increased by Q7.QG, accordin to the .S.Treasury. 5ookin at these numbers, you don’t need to be an economist tosee that somethin is very, very wron.

$ontrast the point above with a amily whose income has increased by HG but

whose debt has increased by 72 times more. Is this improvement or merelyconspicuous consumptionA nless this amily used the debt to purchase aninvestment that has held its value or increased in value, all that has occurred isconspicuous consumption and a substantial drop in the amily’s net worth.

In the case o our economy that is primarily what has occurred. In the case o aamily, instead o ocusin on what they spend &the 14% approach' we ocus ontheir net worth. !re they becomin wealthier or poorer. Why don’t we ocus on

net worth to measure the state o our economyA Is there any surprise thatovernment encouraes you to spendA It may make you worse o but it makes14% look better.


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The raud is that 14% measures spendin, reardless o debt. ! country is like aamily. It is not better o because it spends more. It is better o when its wealthincreases. The proper measure o well/bein is -et Worth, which is otenneatively related to spendin.

14% )raud (#posed

! joke on the reality o 14% economics, published Sunday in $hina0s GlobalTimes6

Two economists are walkin down the street when they pass two piles odoshit.

The irst economist tells the other, "I0ll pay you E83,333 to eat one o those piles." The second one ladly complies and collects his E83,333. Ke then said,"I0ll pay you E83,333 to eat the other pile." The irst one then ets his E83,333

back.

The second economist says, "Oou know, I don0t eel very ood. We both havethe same amount o money as when we started. The only dierence is we0ve

both eaten shit."

The irst snaps back, "But you orot that we have created EH3,333 worth o14%."

(conomic +ecovery by Statistical :anipulation

5nside The >umbers

)acin the prospect o a 8nd ;uarter &8379' 14% report showin economicrowth less than 7G &some proessional orecastin services predict as low as3.2G', and a year to year rowth o the S economy likely to come in at barely7G?compared to a 8377/78 already tepid 7.FG? bama administration willannounced a major revision o !o# it calculates 14% which will bump up 14%numbers by as much as 9G accordin to some estimates. That’s one way tomake it appear the S economy is inally recoverin aain, when all other

iscal/monetary policies since 833P have actually ailed to produce a sustainedrecovery.

http://www.counterpunch.org/2013/07/31/economic-recovery-by-statistical-manipulation/http://www.counterpunch.org/2013/07/31/economic-recovery-by-statistical-manipulation/


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Today’s 14% deinition revisions is not the irst time that politicians, ailin intheir policies, have simply rewritten the numbers to make the ailure Co away’.But this time, the 14% revisions will be made oin all the way back to 7P8P.So watch or the slowin S economy 14% numbers rom last ctober 8378onward to be siniicantly revised upward.

Instead o an actual, paltry 3.HG 14% rowth rate in the ourth ;uarter o 8378,a weak 7.QG in the irst ;uarter 8379, and the projected 3.2G/7G or the 8nd;uarter 8379all the numbers will be revised hiher in the comin 14%estimate or the 8nd ;uarter 8379. The true 14% rowth rate o the most recent!pril/une 8379 period, projected as low as 3.2G by some proessionalmacroeconmic orecasters, miht not thus et reported.

%resident Bill $linton played ast and loose with economic statistics as well atthe end o his term, redeinin who was uninsured in terms o health carecoverae. The total o 23 million uninsured at the end o the 7PP3s, wasreduced to H3 millionater havin risen by ten million durin his eiht yearsin oice. Today, they still claim there are only 23 million without healthinsurance coverae, despite the ten million more becomin unemployed sincethe 1reat +ecession bean in 833F, tens o millions o population increase inthe S, and millions more havin let the labor orce.

Similarly, under %resident +eaan in the 7P3s a rat o overnment statisticswere Crevised’. nemployment in particular was revised downward by variousmeans to make it appear ewer were jobless in the wake o the 7P7/8recession. $hanes were made to inlation data as well to make it appear lowerthan it was, and to how manuacturin was deined to make it appear that themass e#odus o manuacturin Coshorin’ o jobs was not as reat as it was inact.

There has been radical shit in 14% deinition since earlier this year, in a serieso analyses on S 14% numbers over the past year, uly 8378/une 8379, inwhich the warnin was raised , the S economy was slowin siniicantly rom its already weak historical 8377/8378 annual rowth rates o less than 8Gto around hal at 7G . The point was raised the bama administration appearsmay use the 2 year scheduled 14% revisions to boost the appearance o theslowin S economy.

ne e#planation is that 1ross 4omestic Income &14I' has been runnin well

ahead o 14% &1ross 4omestic %roduct'. 14% is supposed to measure thevalue o oods and services produced in the S, while 14I is a measure o the


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income enerated in the S. They are supposed to be about e;ual, with someadjustments or capital consumption and orein net income lows. The idea iswhatever is produced in terms o oods and services enerates a rouhlye;uivalent income. Kowever, it appears income &14I' is risin aster than 14%output. The B(! revisions thereore appear aimed at raisin 14% to the hiher

14I levels.

But income is risin aster because investors, wealthy households &8G', andtheir corporations are increasin their income at an acceleratin pace rominancial securities investmentsthat don’t show up in 14% calculations whichconsider only production o real oods and services and e#clude inancialsecurities income like stocks, bonds, and derivatives. So instead o adjustin14I downward, the B(! will raise 14%. It appears rom early press indications

it will do this by reducin deductions rom 14% due to research anddevelopment and by now countin some kinds o inancial investments as 14%.

When 14% was developed back in the 7P93s, economists purposely let outinancial assets’ price appreciation in the determination o 14%. Such assets didnot relect real production o oods and services, it was determined. But todayin the 87st century, massive ains in capital incomes increasinly come rominancial asset appreciation. (ven many non/inancial corporations nowaccumulate up to 82G o their total proits rom what are called Cportolio

investments’i.e. inancial asset speculation. 5ike proits rom real production,that ets distributed to shareholders in the orm o capital ains, dividends,stock buybacks, etc. That income also ends up in reported C1ross 4omesticIncome’, or 14I. So capital incomes surin to record hihs in recent years areshowin up in a risin 14I in relation to 14%. The overnment’s answer is toconveniently revise 14% upward to better track 14I. But that doesn’t representreal economic rowth and does represent a alse recovery when measured interms o new 14% revisions.

I 14% is revised upward, a host o other overnment data will have to reviseup as well. That will likely include employment numbers as well. Kow reliablewill be uture jobs numbers, not just 14% numbers, is thereore a reasonable;uestion.

!part rom makin it appear the S economy is doin better than it in act is,what are the motivations or the orthcomin redeinition o 14% A

)or one thin, it will make it appear that S ederal spendin as a share o 14%is less than it is and that S ederal debt as a share o 14% is less than it is.


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+evisin 14% also enables the )ederal +eserve to justiy its plans to slow itsE2 billion a month li;uidity injections &;uantitative easin, X(' into the banksand private investors. This Ctaperin’ was raised as a possibility last une, andset o a irestorm o inancial asset price declines in a matter o days, orcinthe )ed to ;uickly retreat. But the )ed and lobal bankers know X( is startin

to destabiliLe the lobal economy in serious ways. +edeinin 14% upward,alon with upward revisions to jobs in comin months, will allow the )ed torevisit Ctaperin’ ater September, when the budet/debt ceilin/corporate ta#cut deals are concluded .

The )ed has stated it will bein to reduce its X( when the economy showsmore rowth and unemployment numbers come down to Q.2G, rom the currentrouhly F.2G low/ball estimate. &ther overnment data show unemployment

at more than 7HG, but politicians and the press inore that number'. +evisin14% upward will thus provide the )ed with an arument to start Ctaperin’. )ed$hairman, Ben Bernanke, is ;uite aware o the useulness o the projectedrevisions, moreover. In his recent testimony to $onress he speciically notedthat the economy was rowin better than &old' 14% numbers indicate i thehiher 1ross 4omestic Income &14I' is considered.

It is ironic somewhat that what we are about to witness with the 14% revisionsis a reconition that the economic recovery since 833P has been a recovery or

corporate proits and capital incomes, stock and bond markets, derivatives andother orms o income rom inancial speculationall now at record levels while weekly earnins or the rest continue to decline or the past our years.What the 14% revisions relect is an attempt to adjust upward 14% to relect invarious ways the ains on inancial side o the economy, the ains in income or the ew and their corporations.

When you can’t et the economy oin otherwise, just chane the deinitions

and how you calculate it all. :anipulate the statistics.

.S. 1overnment :anipulated (conomic Statistics

I the overnment doesn0t like what people are sayin, they don0t bother just tochane the conversation, they chane the meanin o the words.

The latest e#ample o this was revealed earlier this week when the Bureau o

(conomic !nalysis &B(!' announced new methods o calculatin 1ross4omestic %roduct &14%' that will immediately make the economy "bier0than it used to be. The chanes ocus heavily on how money spent on research


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and development &+*4' and the production o "intanible" assets like movies,music, and television prorams will be accounted or. 4eclarin suche#penditures to be "investments" will immediately increase .S. 14% by aboutthree percent. Such an uprade would immediately increase the theoretic siLe o the .S economy and may well lead to the perception o aster rowth. In

reality these smoke and mirror alterations are no dierent rom chanes madeto the inlation and unemployment yardsticks that or years have convinced!mericans that the economy is better than it actually is.

4ata released conirms that the economic "recovery" is weaker than e#pectedand remains heavily dependent on )ederal support. %ersonal spendin wasindeed up 9.8G, the biest jump in two years, but real earnins were down by2.9G, the biest all since 833P. -ot surprisinly the buyin was made

possible by a drop in the savins rate, which came in at just 8.QG, the lowestsince the Hth ;uarter o 833F. -o doubt, risin home prices and allinmortae rates &made possible by )ed stimulus' allowed !mericans toreinance their homes and to borrow and spend the money that they did notearn. With 14% continuin to disappoint, a statistical make/over couldn0t comeat a more convenient time.

In the simplest terms, 14% is calculated by combinin a nation0s private

spendin, overnment spendin, and investments &while addin trade surplus or subtractin trade deicits'. Business spendin on +*4, a portion o whichcomes in the orm o salaries, has traditionally been considered an e#pense thatdoes not e#plicitly add to 14%. But now, the nited States will lead the rest othe world in redeinin 14%. Washinton has now declared that the EH33

billion spent annually by .S. businesses on +*4 will count towards 14%.This e;uates to about 8.FG o our nearly E7Q Trillion 14%. The arument oesthat, or e#ample, the 14% enerated by i%hones has ar e#ceeded the cost

spent by !pple to develop the product. Thereore, !pple0s +*4 is not ane#pense but an investment.

The B(! also arues that the cost o producin television shows, movies, andmusic should count as investments that add to 14%. Supporters o the chaneoten hold up the blockbuster television comedy Seineld as an e#ample. 1iventhat the show0s billions in earnins ar e#ceeded its initial costs, they arue thatthe production e#penses should be considered "investments" &like +*4' and be

added into 14%.


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In essence, the new methodoloy is an e#ercise in double accountin. )orinstance, suppose a company employs an accountant who works in the salesdepartment, who is then transerred to the +*4 department at the same salary.Ke still counts beans but now his salary will be billed to the +*4 budet rather than sales. In the old methodoloy, the accountant0s impact on 14% would

come only rom the personal consumption that his salary allows. 1oinorward, he will add to 14% in two ways6 rom his personal consumption andhis salary0s addition to his company0s +*4 budet. The same ormula wouldapply to a trucker who switches rom a reiht company to a movie productioncompany &or the same salary'. I he moves rerierators, he only adds to 14%throuh his personal spendin, but i he hauls movie lihts, his contribution to14% is doubled. It makes no dierence i the movie bombs.

These double shots are dierent rom traditional investments, which injectsavins &or idle cash' back into the marketplace. ntil money rom personal orcorporate savins is invested, it is not addin to 14%.

!nother chane that will artiicially boost 14% concerns how overnmentsalaries will be counted. nlike most private sector compensation, waes,salaries, and pension contributions paid to overnment workers are addeddirectly to 14%. This distinction makes sense and eliminates potentially double

accountin. %roits enerated by private companies add to 14% when they areultimately spent or invested by the company. Waes reduce proits, andthereore reduce 14%. But that reduction is cancelled out by the consumptiono the employee receivin the waes. 1overnments do not enerate proits, sosalaries are the only way that public spendin adds back to 14%.

The new system maniies the 14% impact o overnment pensions, which area principal component o public sector compensation. 1oin orward, the

pensions will be calculated not rom actual contributions, but rom whatovernments have promised. nder the old system, i a state had a E73,333

pension obliation but only contributed E7,333, only the E7,333 would beadded to 14%. nder the new system the entire E73,333 would be counted. Sonow overnments can maically row the economy simply by makin promisesthey can0t keep.

The bottom line is that now certain private sector salaries &in +*4 and

entertainment' will be counted twice and public pension contributions will becounted even i they aren0t made. The economy will not actually be any lareror row any aster, but the statistics will claim otherwise. With the stroke o a


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pen, our debt to 14% ratio will come down. Will this soothe the ears o ourcreditorsA Will critics o bi overnment take comort that spendin as a shareo 14% may be lowerA 1overnment is conident that its trick will work, andthat distractin attention with a statistical illusion is the sole motivation or thechane.

! similar type o hocus pocus has been successully used to make inlationappear much smaller. $hanes in methods used to calculate the $onsumer %riceInde# &$%I' have resulted in a widenin ap between increases in real pricesand the $%I. The chanes, that incorporate such concepts as hedonicadjustments and substation bias, were made to make the $%I more "accurate,"

but have instead produced consistently lower results.

Since the late 7P30s, The (conomist :aaLine has compiled somethin calledthe "Bi :ac Inde#,"&B:I' a lobal survey o the cost o :c4onald0s sinaturehamburer. !lthouh the inde# is primarily used as a means to compare

purchasin power parity around the lobe, it also can be used to track the priceso Bi :acs in the .S. over many years.

)rom 7PQ to 8339 the .S. B:I rose rouhly in line with the $%I. !lthouhthe burer occasionally rose aster or slower, over that 7F year period both

inde#es increased by about QG &or about HG per year'. But rom !pril 8339 toanuary 8379 the $%I Inde# is up just 82G percent &rom 79. to 893.8 orabout 8.2G per year' while the B:I is up Q7G &rom E8.F7 to EH.9F or aboutQ.7G per year', or more than twice the rate o inlation.

What could possibly account or the dierenceA Kas the Bi :ac otten bier, better, tastier, or healthierA !s an iconic product, :c4onald0s has been reluctantto chane a proven ormula. I the Bi :ac hasn0t chaned, is it possible that

our inlation yardstick hasA

It has been estimated that i the overnment used the same methodoloy tomeasure inlation that it used durin the 7P30s, we would be currently dealinwith oicial inlation that would be many times hiher than today0s oicial7.2G rate. The Bi :ac appears to conirm this.

But now the overnment appears ready to distort the iures even urther. With

little resistance rom the media or the public, the bama !dministration and$onressional +epublicans seem ready to switch the inlation measurementsused or Social Security away rom the $%I in avor o the even more


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attenuated "$hain Weihted $%I." This inde#, which is consistently lower thanthe $%I, looks to incorporate chanes in spendin patterns when consumersswitch to more aordable products &in other words, it measures the cost osurvival, not the cost o livin'. !nd while many admit that this is amanipulation, no one really seems to care.

Similarly clumsy tricks have been used to make our unemployment problemappear less severe. ver the years new methods have been introduced to actorout those who have "dropped out" o the labor orce or to count part/time ortemporary workers as employed.

4on 4raper says, I you can0t chane the conversation, chane the words. Ithat doesn0t work, just chane the dictionaries.

14% revisionswhich will continue henceorth to boost uture 14% numbers ocus larely on boostin the contribution o business investment to 14%.The revisions have resulted in siniicant increases in the estimates or businessinvestment and will continue to do so in the uture . The boosts to investmenttotals have to do with chanes in how depreciation is calculated, pensionaccountin, and other items. The chanes in depreciation in particular haveresulted in 14% upward revision.

Since 14% is part o what’s called the C-ational Income !ccounts’. 5ike allaccountin, there are two sides to the leder. 14% measures the value o oodsand services produced in the economyD the other side o the accountin lederis 14I, or ross domestic income, which measures the correspondin incomeenerated rom that production. That means that the upward revision based ondepreciation/driven business investment translates into an upward revision o

business income in 14I.

!s economist 4ean Baker has noted in his commentary on the revisions today,@The new measure added E823 billion to depreciation in the corporate sector or 8378 and that @the proit share o net corporate output &as percent o 14%'rose to 82.2 percent in 8378, the ourth hihest share in the post/war era.

! closer inspection o the 7.FG S 8nd ;uarter 14% number shows almost allo the major ains in the economy came rom business investment. There areour major Careas’ o 14%6 overnment spendin, e#ports in e#cess o imports,consumer spendin, and business investment.

The +euters commentary on today’s 14% release indicated that consumerspendin &F3G o the S 14%' slowed in the second ;uarter siniicantly rom


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the irst. So it doesn’t e#plain the 7.FG une#pected 14% rise. Similarly,overnment spendin &typically 8HG o the economy' contracted or the thirdstraiht ;uarter. So nothin is there to justiy the 7.FG. (#ports rose, butimports rose aster, which translates to a neative contribution to 14%. It wasmostly @a turnaround in investment in nonresidential structures and ains in

outlays on e;uipment and intellectual products, accordin to +euters, whiche#plains the 7.FG.

-ot surprisinly, that’s the precise area in which the 14% upward revisionshave been ocused.

$hane the way depreciation is deined, addin to corporate proits in additionto the already record rowth or proits, throw in new cateories o whatconstitutes business investmentand now you have a 93G or more hiher

14%.I you can’t enerate a sustained real economic recovery or ive years with pastand current economic policiesthen just redeine the deinition o recoveryitsel.

In the ae o ;uantitative easin and overt overnment intervention in theeconomy, it’s impossible to trust any o the economic statistics that we are

bein shown as indicators o the supposed health o our economy. Whether it is14% numbers, manuacturin data, inlation statistics or housin iures, all othe macroeconomic data that drives the inancial news aenda are manipulatedto suit the propaandistic purposes o the overnment and the central bankers.

! strikin case in point presented itsel late last year when Ben Bernanke andthe )ederal +eserve announced they were tyin the latest round o ;uantitativeeasin not to a set period o time or set amount o unds, but to an

unemployment rate taret. The move puLLled many analysts at the time, as theunemployment rate has never been within the mandate o the )ederal +eserve.In act, the privately owned central bank doesn’t even possess a directmechanism or inluencin the number.

The move was perectly understandable, however, to those analysts whounderstand that unemployment iures are one o the most larantlymanipulable overnment/issued statistic, subject to all sorts o arbitrarydeinitions in the meanin o the term @unemployment itsel.

!s larant as the manipulation in unemployment statistics has been, perhapseven more braLen in recent years has been manipulation o stocks and e;uity

http://www.telegraph.co.uk/finance/economics/9740740/Fed-boosts-QE-and-ties-rates-to-unemployment-level.htmlhttp://www.telegraph.co.uk/finance/economics/9740740/Fed-boosts-QE-and-ties-rates-to-unemployment-level.html


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markets. (conomic commentators are aain pointin to all/time record hihs onthe 4ow and other major stock indices as sure sins o economic recovery, andthe mainstream talkin heads are reportin the moves in these markets with allthe breathless hyperbole o e#cited children.

What many who are livin throuh this ae o @jobless recovery know all toowell, however, is that these markets, too are hopelessly manipulated, and thatthe tradin takin place in these markets is subject to the same parlor tricks thatdeine the unemployment statistics.

What many may be surprised to learn, however, is that overnmentmanipulation o these markets is on the record and openly admitted.

n ctober 7P, 7PF, stock markets around the world crashed, rom Kon

Non to (urope to the S. The 4ow ones plummeted over 88G in a matter ohours.

stensibly in response to this crisis, %resident +eaan sined intolaw (#ecutive rder 78Q97establishin a body ormally known as the@%resident’s Workin 1roup on )inancial :arkets. This body, amouslydubbed the @%lune %rotection Team by the Washinton %ost in 7PPF, ise#plicitly mandated to @maintain investor conidence in S markets throuhwhatever actions it deems necessary.

The roup and its actions are shrouded in oicial secrecy, but its actions havelon been identiied by independent market analysts.

In 8377 I had the opportunity to talk to the late Bob $hapman, the economicanalyst behind The International )orecaster , about the manipulations o this

plune protection team and the active collusion between overnment and the bi traders in these market interventions.

ust as in all other areas o lie, it is a truism that those thins which aresuppressed in one place tend to rise to the surace une#pectedly elsewhere.Such is the case with market manipulation. !lthouh it is relatively easy or theederal overnment and institutional investors to send prices up or downthrouh relatively straihtorward manipulation, it is more diicult to preventthose interventions rom becomin visible in other parts o the economy.

1old market analysts have lon pointed to the increasin amount o oldstocks, (T)s, and other orms o so/called @paper old in the market. In 8373,

!drian 4oulas estimated that there were about H2 paper claims or everyounce o physical old in e#istence, meanin that the true price o old wascloser to E2H,333 an ounce.

https://www.youtube.com/watch?v=4pjSlIkNxXg&list=UULQr0kucVc3cI4hBfUPeEFA&index=6http://www.archives.gov/federal-register/codification/executive-order/12631.htmlhttp://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htmhttp://www.youtube.com/watch?v=QKDVp9zSePIhttp://www.corbettreport.com/interview-370-bob-chapman/http://www.theinternationalforecaster.com/http://www.gata.org/files/AdrianDouglasProofOfGoldPriceSuppression-07-20-2010.pdfhttps://www.youtube.com/watch?v=4pjSlIkNxXg&list=UULQr0kucVc3cI4hBfUPeEFA&index=6http://www.archives.gov/federal-register/codification/executive-order/12631.htmlhttp://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htmhttp://www.youtube.com/watch?v=QKDVp9zSePIhttp://www.corbettreport.com/interview-370-bob-chapman/http://www.theinternationalforecaster.com/http://www.gata.org/files/AdrianDouglasProofOfGoldPriceSuppression-07-20-2010.pdf


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In startlin testimony beore the $ommodity )utures Tradin $ommission in8373, Bill :urphy o the 1old !nti/Trust !ction $ommittee laid out a

blisterin e#pose o the systemic manipulation o the precious metals marketswith the participation o some o the hihest rankin economic oicials in theS overnment6

@!s an e#ecutive at 1oldman Sachs in 5ondon, +obert +ubin developed anidea to borrow old rom central banks at minimal interest rates &around 7

percent', sell the bullion or cash, and use the cash to und 1oldman Sachs’operations. +ubin was conident that central banks would control the old pricewith ever/more leasin or outriht sales o their old reserves and thatconse;uently the borrowed old could be bouht back without diiculty. Thiswas the beinnin o the old carry trade.

@When +ubin became .S. treasury secretary, he made it overnment policy tosurreptitiously operate an identical old carry trade but on a much larer scale.This became the principal mechanism o what was called the @stron/dollar

policy. Subse;uent treasury secretaries have repeated a commitment to a@stron dollar .

The picture that is bein painted here is one o a thorouhoin raud. In act,even in this relatively short and necessarily incomplete e#pose, we have thesense o a raud so lare and ensconced in the marketplace that it would beimpossible to perpetrate without the active collusion o the overnmentreulators themselves. Sadly, as the e#istence o bodies like the %lune%rotection Team and the ailure o the $)T$ to prosecute demonstrable marketmanipulation shows, this type o thorouhoin collusion is precisely the case.

This leaves the averae workin man or woman in a seeminly intractable problem. They have been told all their lives to entrust their savins to theinancial e#perts, believin that a healthy portolio o stocks and bonds will

protect and even row their wealth so that there will be a nice nest e let over or their retirement. !s this economic house o cards beins to topple, however,

people will ind themselves in the same position as the +omans under4iocletian or the)rench o the +evolution or the 1ermans in the Weimar+epublic or the !rentinians under the collapsin peso6 havin their entire liesavins wiped out seeminly overniht.

There is a eelin in inancial and overnment circles that the worst is past andwe’re on the road to redemption.

The sna is that economic recovery is at best, limited to those near the top othe wealth, income pyramid and at worst, a abricated illusion boosted by a

http://banksterchronicles.com/?page_id=199https://mises.org/document/3041/Fiat-Money-Inflation-in-Francehttp://www.historylearningsite.co.uk/hyperinflation_weimar_germany.htmhttp://www.historylearningsite.co.uk/hyperinflation_weimar_germany.htmhttp://www.boilingfrogspost.com/2013/02/26/the-eyeopener-argentina-in-the-shadow-of-the-imf/http://banksterchronicles.com/?page_id=199https://mises.org/document/3041/Fiat-Money-Inflation-in-Francehttp://www.historylearningsite.co.uk/hyperinflation_weimar_germany.htmhttp://www.historylearningsite.co.uk/hyperinflation_weimar_germany.htmhttp://www.boilingfrogspost.com/2013/02/26/the-eyeopener-argentina-in-the-shadow-of-the-imf/


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media that is dominated and controlled by those with a vested interest in moneycreation drivin their wealth to ever hiher peaks.

The inal pararaph puts the icin on the cake6 @the economic recovery is astatistical illusion created by delatin nominal 14% with an understatedmeasure o inlation.

The commercial, private and overnment debt mountain continues to climb, asit must to sustain the economic system which continues to drive ine;uality,competition or resources and environmental destruction, while encouraincorruption and raud.

Monetary syste based on ,ebt by t!e central ban.ers is t!e proble%

E'cessi&e Ta'ation is t!e proble%

E'cessi&e +o&ernent is t!e proble%

:ntransparent policies are t!e proble%

La9y 2 inorant 2 sel$is! people are t!e proble%

Our Education Syste Isn6t 5ro.en2 It6s ,esined to Create Winners andLosers

)rancis oseph . email. rancisnjoe\mail.com

4ubai returned , one o the irst members o India enture $apital !ssociation .

)ormer $onsultant with www.crowehorwath.netMaeM

the real economics

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