Last Friday (January 27) the US Bureau of Economic Analysis announced its advance estimate that in the last quarter of 2011 the economy grew at an annual rate of 2.8% in real inflation-adjusted terms, an increase from the annual rate of growth in the third quarter.
Good news, right?
Wrong. If you want to know what is really happening, you must turn to John Williams at shadowstats.com.
What the presstitute media did not tell us is that almost the entire gain in GDP growth was due to “involuntary inventory build-up,” that is, more goods were produced than were sold.
Net of the unsold goods, the annualized real growth rate was eight-tenths of one percent.
And even that tiny growth rate is an exaggeration, because it is deflated with a measure of inflation that understates inflation. The US government’s measure of inflation no longer measures a constant standard of living. Instead, the government’s inflation measure relies on substitution of cheaper goods for those that rise in price. In other words, the government holds the measure of inflation down by measuring a declining standard of living. This permits our rulers to divert cost-of-living-adjustments that should be paid to Social Security recipients to wars of aggression, police state, and banker bailouts.
When the methodology that measures a constant standard of living is used to deflate nominal GDP, the result is a shrinking US economy. It becomes clear that the US economy has had no recovery and has now been in deep recession for four years despite the proclamation by the National Bureau of Economic Research of a recovery based on the rigged official numbers.
A government can always produce the illusion of economic growth by underestimating the rate of inflation. There is no question that a substitution-based measure of inflation understates the inflation that people experience. More proof that there has been no economic recovery is available from those data series that are unaffected by inflation. If the economy were in fact recovering, these date series would be picking up. Instead, they are flat or declining, as John Williams demonstrates.
For example, according to the government’s own data, payroll employment in December 2011 is less than in 2001. Meanwhile, there has been a decade of population growth. The presstitute media calls the alleged economic recovery a “jobless recovery,” which is a contradiction in terms. There can be no recovery without a growth in employment and consumer income.
Real average weekly earnings (deflated by the government’s CPI-W) have never recovered their 1973 peak. Real median household income (deflated by the government’s CPI-U) has not recovered its 2001 peak and is below the 1969 level. If earnings were deflated by the original methodology instead of by the new substitution-based methodology, the picture would be bleaker.
Consumer confidence shows no recovery and is far below the level of a decade ago.
How does an economy recover without a recovery in consumer confidence?
Housing starts have remained flat since 2009 and are below their previous peak.
Retail sales are below the index level of January 2000.
Industrial production remains below the index level of January 2000.
To repeat, the only indicator of economic recovery is the GDP deflated with an understated measure of inflation.
The US economy cannot recover, because the US economy depends on consumer expenditures for more than 70% of its activity. The offshoring of middle class jobs has stopped the rise in middle class income and caused a drop in consumer spending power.
The Federal Reserve under Alan Greenspan compensated for the absence of US consumer income growth with a policy of easy credit and a policy of driving up home prices with low interest rates. This policy allowed people to refinance their homes and to spend the inflated equity in their homes that Greenspan’s policy created.
In other words, an increase in consumer indebtedness and dissavings drove the economy in the place of the missing growth in consumer incomes.
Today, consumers are too indebted to borrow, and banks are too insolvent to lend. Therefore, there is no possibility of further debt expansion as a substitute for real income growth. An offshored economy is a dead and exhausted economy.
The consequences of a dead economy when the government is wasting trillions of dollars in wars of naked aggression and in bailouts of fraudulent financial institutions is a government budget that can only be financed by printing money.
The consequence of printing money when jobs have been moved offshore is an inflationary depression. This catastrophe could begin to unfold this year or in 2013. If Europe’s problems worsen, flight into dollars could delay sharp rises in US inflation until 2014.
The emperor has no clothes, and sooner or later this will be recognized.
This article was originally published at PaulCraigRoberts.org and has been used here with permission.
I think that the Euro Zone problem cannot be solved until the real reasons for why and how it began are understood, and I must say that I have no proof for what I say, but it is my opinion.
Every Country or Race has their own Characteristics, and France and Germany have a long History of Colonialism, and as they are the two largest Economies in the Euro Zone.
What this means, is that they must take most of the responsibility for the Euro Zone and European Union today, and for the future of the Euro Zone and the European Union, with Germany being more to blame than France.
It is regrettable that some of us know that Germany has been and will continue to tell lies, and we know that Germany will deny it, and these lies that Germany speaks are of such a nature that we cannot prove them, because Germany uses Euphemisms to lie, and Germany will not admit to it.
I need to say that I would like to be wrong on the negative things that I say in this comment, but that does not change the reality.
Germany and France like to dominate other Countries, and we only have to look at the long History of French Colonialism to know that, and we should all know that Germany wants to Dominate Continental Europe.
Germany created the European Union, and NATO was already there, and Germany can only occupy Continental Europe as part of NATO, and only if Continental European Countries are having Austerity to create riots to justify Franco-German Military presence in those Countries that is Euphemistically called common security.
Germany and France have teamed up for their common objectives in Continental Europe which is for France to make Money, and for Germany to occupy Continental Europe.
The Fourth Reich’s only objective is to get as close to the Third Reich as possible given that it is a different World and a different Europe to that of Hitler’s time, and those that do not believe that will discover it the hard way.
While Germany and Vichy France will speak of Human Rights, Democracy, and the Rule of Law, it will be as they define it, and not as it is, because they identical to Britain and America in this regard.
We have seen how some of the Balkans Maps look very similar to that of Hitler’s Balkan Maps and the Germany supported the same groups that Hitler did.
We see that even the Media Lies, and one News Article said that Europe’s Leaders should not Sacrifice the European Union to Save Common Currency.
The Fact of the matter is the European Union was sacrificed with the Lisbon Treaty, and it was done to impoverish the European Union to keep Germany and France dictating to the rest of Europe, by using the Common Euro Currency as their Weapon that keeps them looking as if they Democratic; whereas, they are the Modern Day Nazis of Europe.
Any additional changes to the European Union Treaty that is Euphemistically called a closer Union, will only make it worse, because it is closer to the Third Reich, and the Lisbon Treaty removed too much of what could have been defined as a Union.
The Lisbon Treaty should be replaced with the Old Treaties, like the Treaty of Rome, and the Maastricht Treaty and it should allow for any number of Member States.
The Lisbon Treaty made it possible for Germany and France to scheme to impoverish the European Union, in order to dominate it militarily and economically.
What made even more possible was that whenever the European Union Elites wanted something that was planned decades ago, they knew that would get if they just kept nagging, and bribing, with taxpayers Money, and the Lisbon Treaty is a perfect example of that.
The new Treaties will only entrench Germany’s Hegemony on Continental Europe, and it will entrench Europe’s poverty just like it was in the early days of the Third Reich.
I cannot offer any advice on Economics, because I do not know anything about it, but my opinion is that the plan was long established, and there is be no digression, regardless of how many Experts give their advice.
This is because Expert Economists do not realize that the plan is the Fourth Reich, and People can try to argue against in vain, just like they did with the Third Reich.
Germany and France want a fiscal union without the rest that goes along with it, like a Central Bank and Euro Bonds, and the reason is to bring Continental Europe as close as possible to the Third Reich.
Even if we assume that Germany and Vichy France have pure motives, then it does not matter, because the end result will be the same, and that is a Continental Europe as close as possible to the Third Reich.
If Europe wanted common security, then each Country would have their own Central Bank and their own Currency.
A fiscal union will cause the poorer Countries to say that they did not receive their fair share, and it is not fair; and it will cause the richer Countries to say that they are subsidizing the poorer Countries too much, and that it is not fair.
It would have been better if there were no common Euro Currency, and some Countries should be allowed to leave the Common Currency, and as with dealing with any German Reich, it will cost the People of Europe, and there is no way to avoid it.
At one end of the spectrum, Perhaps Germany should voluntarily leave the Euro Zone, and at the other end of the spectrum Greece should be made to leave the Euro Zone, and this be done at the same time.
Perhaps Greece should be judged to be 50 % of the Euro Zone, and what that means is that Greece can start printing Drachmas and holding them at the Banks, and the Greek Bank Accounts will be doubled, but they will be Drachmas and not Euros on a certain day.
The Greeks will have two weeks change their Euros to Drachmas, as it will be illegal to use Euros in Greek shops, but Euros can be exchanged at the Foreign Exchange Currency Greek Banks, or other authorized places, and the Greek Stock Exchange will be closed for those two weeks that the Greek People are allowed to change their Euros to Drachmas.
Germany can print German Marks, and they can have the same value as the Euro, and same two weeks applies for Germany to change its currency, and to close the German Stock Market just like has been suggested with Greece.
After that France can leave the Euro, and the second poorest Euro Zone Country can follow the Greek and German examples if it is successful, until every European Country has its own Central Bank and its own Currency.
This transformation needs to be paid for equally by all the People of the Europe Union, that that equality refers to ability to pay, and a proposed Goods and Services tax, and a one off 1 % property tax be used to finance this process.
There is no escaping the Fact that every German Reich comes with a cost to all the People of Europe, including and Historically even more so for the People of the German Reich itself, but the Germans will recover faster than the others.
The People of Europe must ensure that they do not allow themselves to come under another German Reich, or even the Current one, because it will come at great expense to the People of Europe.
If we look at the European Union Flag, we will see a circle with twelves stars, and if we connect 3 stars in a semicircle line, we will made the four outer lines of the Nazi Swastika, and if the 4 semicircle lines drawn to the middle of the circle, then you will see the Nazi Swastika in the European Union Flag.
The approximate starting examples that Experts should examine are: There will be twenty Drachmas to make ten Euros; ten German Marks to make ten Euros, 11 French Francs to make 10 Euros, and 16 Irish Punts to make 10 Euros, etc, etc, and after the two weeks that the Stock Exchanges and Currency exchanges are closed, then the Market will decide the exchange rates for the different Currencies.
“The consequence of printing money when jobs have been moved offshore is an inflationary depression.” This is a good example of the fact that economics do not exist in a vacuum but economics depends on people.
Printing money to increase wages could solve the current crisis but the super-wealthy do not want this because their …gotten gains would lose value and therefore the richest wold lose the most. Instead what we now see is printing money to give it to the super-wealty under the pretence that they are owed this money by the general public who pay taxes. Along with this competition for scarce jobs also benefits the super-wealthy by reducing wages.
Bailouts benefit only the rich and powerful while creating economic slavery for the poor. So the rich are getting richer and the poor getting poorer (nothing new in this!).
That is our problem today – the super-wealthy have too much power while the working people are disorganised and demoralised weakened by a complete lack of moral principles.
It also seems to me that this economic picture appllies equally to America and the EU.
By the way on the comment above I do not think Germany was ever a colonial state.
I have been thinking more on the matter of how any Euro Zone Country, or even all the Countries of the Euro Zone could leave the Euro Zone, and I only thought of my opinions on this recently.
I think that all Euro Zone Countries should leave at the same time, and I will provide some of what I think are proper principles to follow, but that Experts will have to consider them as to their viability.
I think that the European Union should replace the Lisbon Treaty, for the Older Treaties, in order to make the European Union a Union, and not a place where the bigger Countries exploit the smaller Countries.
As I know nothing about Economics, Finance, and Banking, then I will just provide a suggestion for how all the Euro Zone Countries can have their own Currencies as quickly as possible and as painlessly as possible.
It would have been better if there were no common Euro Currency, and History tells us that whenever there is a German Reich, then it will cost the People of Europe, even Germans, and there is no way to avoid it.
If it is really true that the Common Euro Currency is a good thing, then I have no suggestions, because I know nothing about Economics, Finance, and Banking, and the Experts cannot agree, and the Euro Zone only has an Economic and Financial Mess, along with a Democratic Deficit to show for itself.
I think that the 17 Countries of the Euro Zone should be rated as to their Economic and Financial Health, with Germany being classed as the best, and therefore awarded 10 German Marks for 10 Euros as the value at which Germany will exist the Euro Zone.
That figure of 10 German Marks for ten Euros is fixed, and is the measure by which others will receive a lower rating than Germany’s.
I do not know if Greece is the lowest on the scale, but because it is the first cab off the rank for assistance, then I will use as an example, but Experts should decide which is the lowest and what its comparison is to Germany.
I will assume that Greece is at 50% of Germany’s Economic and Financial Health as compared to Germany, and the other 15 Euro Zone Countries would then be somewhere between 51% and 99% of Germany’s Economic and Financial Health.
There are 10 German Marks to make 10 Euros, and the approximate examples that Experts should examine before fixing are: 20 Drachmas to make 10 Euros 11 French Francs to make 10 Euros, and 15 Irish Punts to make 10 Euros, etc, etc.
This rate should be determined with a discouragement for a run on the Banks, because People might want to exchange the Money for a foreign Currency, and that is why the settings of the new Currencies has to be Scientifically calculated to ensure that People know that they cannot make any Money on this.
The Euro Zone Stock Exchanges and Currency Exchanges should be closed for a certain period of 2 weeks, and after that the Market will determine the exchange rates for the different Currencies.
The Governments will print up enough new Currencies and have it at the Banks for Customers, and People will have one month to change their Euros to the new currency of each Euro Zone Country.
The Germans will have it the easiest, because their Bank Account figures will remain the same, but they will not be Euros, but they will be German Marks, and the prices in the shop will be the same, except they will be in German Marks and not Euros.
The Greek Bank Accounts will just double the figure of the Euro Bank Account figures and call them Drachmas, but obviously figure will the set for the real ratio of Greece’s Economic and Financial Health in comparison to Germany’s.
The new Currencies should be 100 cents to the German Mark, and 100 cents to the Greek Drachma, and the same applies to all the other new Euro Zone Currencies.
The Euro Zone will have one month to change their Euros to their new Currencies, because Euros will have no value after that one Month.
Every Euro Zone Country and every European Country will have its own Central Bank and its own Currency, and all loans should be in the Country Currency, so that every Country in the World will have a Triple A rating, because if Germany borrows money in German Marks, then it can print German Marks to pay back the loan, thus having a Triple A rating.
This will ensure that lending in the future is done purely for sound Business and Commercial reasons, and if there are other motives like Political motives, then it could easily cost the lender.
This transformation needs to be paid for according to the ability of each Person in the European Union, with some debt forgiveness, some new loans, and some increase in taxes, and perhaps a little austerity for a little while, the principles of Fairness, Justice, and Equity must be applied in this Policy.
I have provided my opinions for a group of Experts to consider and to improve on, because those Experts who advocate Countries going back to their own Currencies, need to provide the best plan for any Euro Zone Country, or even all Euro Zone Countries to have their own Currencies.
Dude with the Moniker, “America” what gives? are you writing a book? Or did you want to publish your articals…….on someone else’s article? This is Dr Roberts article, not yours.