Sunday, May 5, 2013

A New Way To Massage The Results...L&C

Got to give it up for those bureaucrats at the Bureau of Economic Analysis(BEA), they found a new way to make the economy look better than it is. The massaging of facts is a specialty of governments everywhere. In fact, I can't wait to read what the Spanish government or the ECM will say is a new positive for that nation which has youth unemployment at over 56%. Anyway, back in the good ol' USA, the BEA says that "intangible assets" have been overlooked for too long. What, you ask is an intangible assets? It is money that is used under R&D to produce a new product. The BEA is looking at the movie/TV industry. They say when a company invests to develop a new show like Seinfeld and it becomes a big hit, well that R&D money is a intangible assets. Here is the lie in this report. The government is counting all the investment, however many more shows fail than succeed and thus, there are more real losses than gains. The loses will never be added to this figure only the gains. It gets worse. Let's say you are a people driver to a location from the studio. Now, the studio changes your job description to move props instead of people with the same pay. The government now says this salary is part of R&D and therefore it gets counted twice. Once under general wages for GDP and a second time because this driver is helping under R&D. I bet the Labor Department will like this aspect. Maybe they can say we grew at twice the expected labor rate.
Big Mac Index
ever hear of it? The Economic Magazine started this back in 1986. They follow the price of a Big Mac through the years because they too felt that the CPI figures were being massaged. From 1986 to present the index has risen 173%, while the government says inflation has risen only 110% since that time. My calculations work out to 6.4% average over that span by the magazine and using the CPI results, inflation averages a fraction over 4%. I went to the government site to double check the results and of course, the governments lower figures.
Don't Add Up
In the 27 years the government only shows that inflation was over 4% three times=1989,1990,and 1991. So, how could they get a 4% average when their yearly figures do not match their final conclusions? Bureaucratic Lies!...just like the new BEA addition to the GDP just like the new, but still not adopted chained social security index.
Liars and Crooks: must be a dynasty because central banks win again! It has been confirmed that central banks are buying equities from a survey by Central Banking Publication and Royal Bank of Scotland Group PLC to which 60 central banks responded. It found that 23% bought equities or plan to purchase them. From the Bank of Switzerland to Japan to Israel to Czech National bank, they all have at least 10% holdings of reserves. Do you know the difference between them printing paper to buy a piece of someones company and you? JAIL! You are a counterfeiter, and they by law, are legal.
Ben Bernanke once said gold was not money and although miners accumulate costs of up to $1100 per ounce of gold to find a mine, buy the equipment, gets permits, hire workers, mill the rock to actually get an ounce of gold. Compare that to Ben, who can legally buy by printing paper, but then again, he won't buy gold, it is not money. End the Fed!