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I ran across something interesting, while running some calculations on GDP
adjusted for inflation.
Do you remember people telling us that GDP
has been growing,
and that we can't be in recession without negative GDP
growth?
Look at
the graph below.
GDP in nominal (current dollars) has stagnated (and probably fallen),
but only recently.
But look at the down-turn of the GDP in 2005 Dollars (blue
diamonds; near top of graph).
And look at the down-turn of the GDP in 1950 Dollars (green
diamonds; near bottom of graph).
GDP, measured in BOTH 2005 and 1950 Dollars, has been FALLING sharply
since year 2006!
Significant inflation masks the down-turn, until it is viewed relative
to previous Dollar values:
Here's the same
graph of DEBT and GDP, but un-stretched.
Nominal GDP is the purple line with
round purple dots.
GDP in 2005 Dollars is the blue diamonds near
top of graph.
GDP in 1950 Dollars is the green diamonds
near bottom of graph.
Has this been reported anywhere on any news or financial channels ?
If so, I haven't heard it.
Also, while national debt as a percentage of GDP is less today than in year
1945.
This is a clever attempt to make you believe that debt has been much worse.
However, the population today is also different today than in year 1945 (or
year 1941).
Year 1941: Population = 133 Million
Year 1945: Population = 140 Million
Year 2008: Population = 310 Million
Therefore, the national debt per-capita ($37K) today (May 2009) is 69% higher than the
national debt per-capita ($22K in 2008 dollars) in year 1945 (after World
War II).
And the national debt per-capita ($37K) today is 685% higher than the
national debt per-capita ($5,400 in 2008 dollars) in year 1941 (near end of
the Great Depression).
How could
inflation really only currently be
0.03% as of JAN-2009, and almost ZERO as of MAR-2009 ?
Especially when the CPI calculations were modified in 1983 and 1998, the U.S. Dollar is
falling fast
against all major international currencies, and some other calculations place
the current inflation closer to
7.5% as of
JAN-2009 ?
I think inflation is really worse than only the 5.37% reported by the Federal Reserve.
Did you know that the Federal Reserve changed the inflation measurement method in year 1983 and again in 1998, to make inflation look less severe.
Therefore, based on the pre-1983 inflation measurement method, $1 Dollar has eroded to 42 cents since year 2000.
- _______ Pre-1983 __ Value
- _______ Inflation ___ of $1.00
- Year:___ Rate _____ _______
- 2000: ___ 10.0% _____ $1.00
- 2001: ___ 07.8% _____ $0.92
- 2002: ___ 09.0% _____ $0.84
- 2003: ___ 08.0% _____ $0.77
- 2004: ___ 09.5% _____ $0.70
- 2005: ___ 11.0% _____ $0.62
- 2006: ___ 10.0% _____ $0.56
- 2007: ___ 11.7% _____ $0.49
- 2008: ___ 15.6% _____ $0.42
- _______ Pre-1998 __ Value
- _______ Inflation ___ of $1.00
- Year:___ Rate _____ _______
- 2000: ___ 6.20% _____ $1.00
- 2001: ___ 3.95% _____ $0.96
- 2002: ___ 5.80% _____ $0.90
- 2003: ___ 4.15% _____ $0.87
- 2004: ___ 6.00% _____ $0.82
- 2005: ___ 6.40% _____ $0.76
- 2006: ___ 5.90% _____ $0.72
- 2007: ___ 7.70% _____ $0.66
- 2008: ___ 9.80% _____ $0.60
- _______ Post-1998 _ Value
- _______ Inflation ___ of $1.00
- Year:___ Rate _____ _______
- 2000: ___ 3.38% _____ $1.00
- 2001: ___ 2.83% _____ $0.97
- 2002: ___ 1.59% _____ $0.96
- 2003: ___ 2.27% _____ $0.94
- 2004: ___ 2.68% _____ $0.91
- 2005: ___ 2.39% _____ $0.88
- 2006: ___ 3.24% _____ $0.85
- 2007: ___ 2.85% _____ $0.83
- 2008: ___ 4.28% _____ $0.79
And there are probably more foreclosures on the way.
How could the U.S. Dollar be falling so fast against all major international currencies if inflation was really only 3%-to-5% ?
HHHHMMMmmmmmmm . . . what else are we being lied to about ?
Unemployment statistics ?
Income statistics ?
Taxes (which are actually regressive) ?
National Debt ?
Social Security ?
Bail-outs ?
The moral and mathematical problems of the current dishonest, usurious, inflationary monetary system (i.e. the Federal Reserve) ?
How can we go from a "mere economic slowdown" and a "fundamentally sound economy" to "economic crisis" in the span of a few weeks?
Not even the federal government and Federal Reserve can be that incompetent, can they?
How could the gods and wizards of the Federal Reserve, SEC, treasury, federal government, banks, and Wall Street not see this coming?
That means someone has been hiding the facts, fudging the data, and cooking the books.
It's only a matter of time before the debt pyramid becomes so large that we can't even keep up with the interest payments (that is, not without completely eroding the value of the U.S. currency).
Already, the federal government and Federal Reserve are borrowing and printing the money to merely pay the annual $429+ Billion interest on the $11.4 Trillion national debt.
Massive $57 Trillion in nation-wide debt, $11.4 Trillion of federal National Debt, and the probable inflation that will result from such crushing debt of nightmare proportions, as the federal government and the Federal Reserve struggle to keep the debt pyramid from its inevitable collapse, is the threat we face today, and the problem is HUGE, and the problem is not going to disappear anytime soon.
Remember those inverted yield curves in early 2006?
Almost every time that happened, a recession followed. Historically, inversions of the treasury yield curve have preceded many of the U.S. recessions. Due to this historical correlation, the yield curve is often seen as an accurate forecast of the turning points of the business cycle.
And when did the foreclosure problem really start to rise significantly (i.e. 2005/2006)?
The effects of all of this will last for decades.
After all, the problem was in the making for many decades (especially the last 30 years).
And doing more of the same, with massive bail-outs, more borrowing, more money-printing, more pork-barrel, and more rampant spending will only make the problem bigger and more painful later.
I think in 6-to-12 months from now, the problem will be back, but worse.
After all, since when was the solution for massive debt, borrowing, money-printing, pork-barrel, and spending become more of the same?
Since when did it become responsible to throw the principles of responsible fiscal policy out the window?
The debt pyramid is still there (only larger now).
I heard an economist that correctly predicted what we are seeing today say the same thing.
But you really don't have to be a rocket scientist to see that there will eventually be painful consequences for decades of fiscal and moral bankruptcy.
Oil prices are falling ($75 per barrel, down to prices one year ago on AUG-2007), and we could see some decrease in inflation in a few months, but how much will that help when most Americans are already tapped-out (i.e. deep in debt; $57 Trillion of nation-wide debt, and $11.4 Trillion of federal National Debt as of May-2009).
However, as I suspected, the federal government and Federal Reserve will attempt to shore up the debt pyramid, and try to delay its inevitable collapse with more massive borrowing, money-printing, spending, and pork-barrel.
So inflation is still a major threat.
If we crash the U.S. Dollar, we will have succeeded in turning a bad situation into a worse situation.
- How long before the debt is so large, and we are unable to borrow or print enough money to avoid the collapse of the debt pyramid ?
We've been crappin' in our own nest for a long time.
However, some people are getting crapped on more than others.
So, how long can we crap in our own nest before the bough it all rests upon finally snaps?
