Power of Story
Send a Tweet        
- Advertisement -

Share on Google Plus 1 Share on Twitter 1 Share on Facebook 8 Share on LinkedIn Share on PInterest 1 Share on Fark! Share on Reddit Share on StumbleUpon 1 Tell A Friend 4 (16 Shares)  

Printer Friendly Page Save As Favorite View Favorites (# of views)
OpEdNews Op Eds

How Long Can Economic Reality Be Ignored?

By       Message Paul Craig Roberts     Permalink
      (Page 1 of 2 pages)
Related Topic(s): ; ; , Add Tags Add to My Group(s)

Must Read 8   Well Said 5   Supported 5  
View Ratings | Rate It

opednews.com Headlined to H2 8/10/16

Author 12495
Become a Fan
  (400 fans)
- Advertisement -

Reprinted from Paul Craig Roberts Website

Inflation Crisis
Inflation Crisis
(Image by dreamstime.com)
  Permission   Details   DMCA
- Advertisement -

Trump and Hitlery have come out with the obligatory "economic plans." Neither them nor their advisers, have any idea about what really needs to be done, but this is of no concern to the media.

The presstitutes operate according to "pay and say." They say what they are paid to say, and that is whatever serves the corporations and the government. This means that the presstitutes like Hitlery's economic plan and do not like Trump's.

Yesterday I listened to the NPR presstitutes say how Trump pretends to be in favor of free trade but really is against it, because he is against all the free trade agreements such as NAFTA, the Trans-Pacific and Trans-Atlantic partnerships. The presstitutes don't know that these are not trade agreements. NAFTA is a "give away American jobs" agreement, and the so-called partnerships give away the sovereignty of countries in order to award global corporations immunity from laws.

- Advertisement -

As I have reported on many occasions, the Oligarchs' government lies to us about everything, including economic statistics. For example, we are told that we have been enjoying an economic recovery since June 2009, that we are more or less at full employment with an unemployment rate of 5% or less, and that there is no inflation. We are told this despite the facts that the "recovery" is based on the under-reporting of the inflation rate, the unemployment rate is 23%, and inflation is high.

GDP is measured in current prices. If GDP rises 3% this year over last year, the output of real goods and services might have risen 3%, prices might have gone up by 3% or real output might have dropped but is masked by price increases. To know what really happened the nominal GDP number has to be deflated by the amount of inflation.

In times past we could get a reasonable idea of how the economy was doing, because the measure of inflation was reasonable. That is no longer the case. Various "reforms" have taken inflation out of the measures of inflation. For example, if the price of an item in the inflation index goes up, the item is taken out and a cheaper item put in its place. Alternatively, the price rise is called a "quality improvement" and not counted as a price rise.

In other words, by defining inflation away, price increases are transformed into an increase in real output.

The same thing happens to the measure of unemployment. Unemployment simply isn't counted by the reported unemployment rate. No matter how long and hard an unemployed person has looked for a job, if that person hasn't job hunted in the past four weeks the person is not considered to be unemployed. This is how the unemployment rate is said to be 5% when the labor-force participation rate has collapsed, half of American 25-year-olds live with their parents, and more Americans age 24-34 live with parents than independently.

Financial reporters never inquire why government statistics are designed to provide an incorrect picture of the economy. Anyone who purchases food, clothing, visits a hardware store, and pays repair bills and utility bills knows that there is a lot of inflation. Consider prescription drugs. AARP reports that the annual cost of prescription drugs used by retirees has risen from $5,571 in 2006 to $11,341 in 2013, but their incomes have not kept up. Indeed, the main reason for "reforming" the measurement of inflation was to eliminate COLA adjustments to Social Security benefits.

Charles Hugh Smith has come up with a clever way of estimating the real rate of inflation -- the Burrito Index. From 2001 to 2016 the cost of a burrito has risen 160 percent from $2.50 to $6.50. During these 15 years the officially measured rate of inflation is 35 percent.

- Advertisement -

And it is not only burritos. The cost of higher education has risen 137% since 2000. The Milliman Medical Index shows medical costs to have risen far above official inflation from 2005 to 2016. The costs of medical insurance, trash collection, you name it, are dramatically higher than the official rate of inflation.

Food, tuiton and medical costs are major outlays for households. Add zero interest on savings to the problem of coping with major cost increases when real incomes are stagnant and falling. For example, grandparents cannot help grandchildren with their student loan debt when zero interest rates force grandparents to draw down their savings in order to supplement essentially frozen Social Security benefits during a time of high inflation. Savings are being taken out of the economy. Many families exist by paying only the minimum payment on their credit card balance, which means that their debt grows monthly.

Real economists, if there were any, looking at the real economic picture would see an economy collapsing into widespread debt deflation and impoverishment. Debt deflation is when consumers after they service their debts have no discretionary income left with which to drive the economy with purchases.

The reason that Americans have no income from their savings is that public authorities put the welfare of a handful of "banks too big to fail" above the welfare of the American people. The enormous liquidity created by the Federal Reserve has gone into the financial system where it has driven up the prices of financial instruments. There has been a stock market recovery but not an economic recovery.

Next Page  1  |  2

 

- Advertisement -

Must Read 8   Well Said 5   Supported 5  
View Ratings | Rate It

http://www.paulcraigroberts.org/

Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His books, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon



Go To Commenting
/* The Petition Site */
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Related Topic(s): ; ; , Add Tags
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Libya - The DC/NATO Agenda And The Next Great War

A Story...The Last Whistleblower

The Road to Armageddon

American Job Loss Is Permanent

Pakistan TV Report Contradicts US Claim of Bin Laden's Death