The Numbers Lie

“And then, something that once was, once altered has now become something else.”  

The tablature of musical arrangements animates a distinct set of tones strategically arranged to orchestrate a melody one that when played, produces a predictable tune.  Anyone with a talent for music expects that when they play this arrangement, they will reproduce the same tune. However, change one note, one phrase or meter and the piece and the effort becomes something entirely different. 

From this simple anecdotal reference we can assign the same ontological process to any aspect of economy; whether the business of banking, industry or government, we quickly learn that with a subtle touch of a mystical-like impulse, an entirely different arrangement can be constructed from what once was. 

A noted economist, John K. Galbraith, understood the risks of mystic-like talents quite well; here’s what he had to say on the subject of finance and banking: 

“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The processes by which banks create money is so simple that the mind is repelled.” 

An so as money is the pitch that resonates the melody of economy it becomes the very note, phrase or meter that quickly becomes something else or in the present context, is used to convey a different tune.  The tuning fork is a rather unique mechanism and we experience its pitch in the affect we know of as Inflation.  

Inflation is one of the mechanisms used to alter the appearance of economic activity but one must first understand what it is not.  Contrary to belief, inflation is not a direct cause or function of supply and demand interplay; these are a function of native economic forces. In other words, you want more or less of a commodity and the price of which is affected by how much of that commodity is available and how much a buyer/seller agree to exchange (value/currency) for said commodity.  On the other hand, inflation is the direct cause of the change in purchasing power or more specifically, the change in the perceived value of a currency’s purchasing power all of which alters how much value (currency) is exchanged for a commodity. 

In the simplest of terms, inflation is more a function of how much of a nation’s currency is circulating throughout the economy, whether in literal or figurative forms. The more you print, loan or debt-create the less it’s worth.  The less it’s worth, the more it takes to purchase a commodity. The more money it takes to purchase a commodity, the greater the illusion of economic activity. Or, so it would seem! 

NOW, here is where and how the great mystical forces use the destructive mechanisms of inflation to their advantage and thus, make The Numbers Lie! 

  • U.S. Economy Show Signs of Recovery! – Well if you use inflated dollars to measure performance what else would you expect? In fact, adjusting for inflation, real economic performance for 2010 was actually –2.78%. 
  • Economist Predict Consumer Spending will be up 3.2% for 2011!  Also quite impressive however let us not forget that commodity prices have risen 30% since October 2010 and if we consider that consumer spending, adjusted for inflation, for all of 2010 stalled by -. 93% when compared to the stellar performances of 2009, then it’s quite reasonable to project a mystical form of improvement when using such dismal economic performance as a comparison. 

These points (above) are significant however there is one more area that Americans need to consider: The Federal Reserve Bank could care less about the effects inflation have on you! The single and sole purpose of the Fed is the health of their member banks and everything this entity does is dedicated to this single function and though this is not to say that the Fed is out to extinguish the productive-class (my phrase for “middle-class”), they simply don’t view the public as matter of concern.   And so… 

For many reasons, the Fed and their member banks actually love inflation and here are a few of the reasons why: 

  1. Inflation allows Banks to lend money on the same asset multiple times. The more a property/asset inflates, the more so-called value there is to extract from (to lend) said asset.  Be aware that the Fed/Banks don’t make a profit on lending, they make money on both the interest they charge and on controlling the asset/commodity that they lien. 
  2. Inflation allows for increasing prices of commodities. Instead of lending money to build economic productivity, Banks (and the Fed) have taken to the lucrative practices of speculative trading in all forms of financial instruments and in markets all over the world. They’ve taken a particular liking to commodities and the effects of their doing each of these can be seen in the collapsing economies all over Europe as well as the rising prices in the commodities markets. And, 
  3. Inflation allows the Fed to lure the U.S. Government in to the practice of Debt-Funded spending producing a U.S. National Debt of nearly $21 Trillion (actual) which is far more than the published total of $14.3 Trillion. The theory being is that inflation allows you to pay-off old debt with, as they would have you believe, cheaper (inflated) money. 

It is to point #3 (above) that The Numbers Lie most mystically! For the past several years the Government (Fed) has been expressing great levels of consternation over the Chinese not letting the yuan float with the international currency markets. Their explanation is that it gives the Chinese an unfair advantage in the Global Market. It’s true that a lower valued yuan makes their exports cheaper but isn’t that the explanation given to encourage support of the globalist agenda?  After all iPod’s are cheaper to build in China than in the U.S., right? Aren’t less expensive products a good thing? (One doesn’t have to look at the U.S. economy and unemployment figures to know the answer to this question.) Is the globalist banking regime as well as our own Politicians speaking from both sides of their mouth?  Yes and with a unique and mystical quality all their own. 

The fact of the matter is that the Fed wants the yuan to inflate in value because it will then make the true value of the U.S. Debt, held by China, worth less.  (Read an earlier post entitled the Hu Doctrine for more on the China-factor.)  Equally interesting too is that inflating the yuan also gives the illusion, for reasons mentioned previously, of greater economic activity in the U.S. 

There is of course one huge problem with their model: Your personal income has to keep pace with the Inflation Model and this is and has never been possible to achieve. Here’s another fact: U.S. Individual Income, adjusted for inflation, is approximately the same as it was in 1978! 

And so, to conclude, my final point: 

The metrics of inflation, unchecked government spending and the allure of debt-funded wealth creation, as viable monetary policy, have created a debt-burden so far beyond this nations economic capacity too extinguish – any notion suggesting support for and durability of the globalist fabricated- wealth model is wholly irreconcilable with the facts.  By the way, as of this writing, the U.S. Debt-Load is 4.46 times this nation’s actual wealth-creation component of the true U.S. Economy: Greater than any country in the world! 

“Man must be Free for Independence to be at Liberty to be Expressed!’ 

Curtis C. Greco, Founder

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