In the 1980 campaign, Reagan would regularly say that a recession is when your neighbor loses his job. A depression is when you lose your job. It was a pithy line that got at something that was always missed by the politicians at the time. That is, the economy is not the same for everyone. You can have a good economy but there will be people who are not doing so good. The reverse is also true. Even in the Great Depression, there were people doing fabulously well.
That is the problem facing the political class this year. According to their court wizards, the economy is growing at a blistering pace. The fourth quarter of last year saw growth at over three percent and inflation falling down to two percent for what the wizards call personal items, while overall inflation was under two percent. The definition of “personal items” is one of those things that makes sense to the people doing the counting, but not to anyone who is doing the actual spending
Does it feel like the economy is growing at a blistering pace? Most people do not think the economy is great. In fact, most people think we are in difficult economic times, despite relatively high employment. This was one of the top reasons people voted for Trump in Iowa and New Hampshire. Under Trump, people perceived the economy as strong while under Biden it seems to be weak. The main reason is inflation. Every trip to the store sees prices higher than the last trip.
For the sake of comparison, the last time Americans experienced significant retail inflation was in the 1970’s. The court wizards back then used different rulers for measuring things like inflation, but everyone agrees retail inflation was higher than what we have experienced the last few years. The economy also grew at a faster rate most years during this time. The recession of 1974 was followed annual growth of near five percent the following years.
Five percent growth in 1976 did not keep Gerald Ford from losing to Jimmy Carter and it did not keep Reagan from beating Carter in 1980. The reason is GDP is not a great way to measure the economy. The formula for calculating GDP is Consumption + Government Spending + Investment + Net Exports. If inflation is roaring, consumption and government spending will also be roaring. You can have a growing GDP while people are seeing their budgets ravaged by inflation.
Of course, we live in the managerial age and managers can always be counted on to do one thing very well and that is lie about what they are doing. In the case of the economy, the court wizards keep tinkering with how they measure things like inflation to make the number look smaller. Shadow Stats keeps track of these changes and reframes official economic numbers in the old way of measuring them, so that we can compare today with the past.
When we take an honest look at the economy over the last few years, we see that inflation was comparable to the 1970’s, but not quite as high. People who buy food will tell you that prices are rising again, despite some relief last year. In the end, we could replicate the 1970’s in terms of the pattern and duration, even if overall inflation figures are not quite the same. The reason people think the economy stinks, despite the official numbers, is that is does stink for people who buy things.
That brings us back to that Reagan quip and another key point. The American economy over the last thirty years has transformed into something that is really good for people in finance, government, the academy and corporate governance, but it has not been great for people who make things and fix things. The nurse practitioner, which is really a government job, is doing great, but her patients who work in the honest economy are finding it hard to pay those health insurance bills.
Returning to that magic formula for measuring GDP, if the Investment side grows, but consumption remains flat, then GDP rises. Since government always grows and that growth is fueled by the Fed creating debt through the banking system, GDP is just about guaranteed to grow every year, even if the economy is in recession. Put another way, debt-driven government growth not only corrupts the nation but it corrupts the way in which we can measure the corruption.
This corruption has been highly effective. The typical American has barely noticed that it requires two incomes to have the life that used to be possible on a single income, at least for the middle-class. The baby boomers grew up in one income, intact two-parent homes, but they lived as adults in two income, often broken homes. The relative material prosperity came at the cost of social capital. The new way of measuring things masked the real trade-offs that came with the new economy.
We may be reaching the end of the line with the new way of measuring things, which is why people are not buying the official numbers. Those bulging baby boomer portfolios cannot mask the fact that their kids are saddled with debt and are struggling to maintain a lifestyle the parents took for granted. Of course, the next round of young people will enter adulthood in debt and looking forward to paying the pensions and health care costs of eight million retired people.
What all of this gets to is that measuring is necessary, but it is not how things are measured that matters. It is who does the measuring. That was the subtext of that Reagan quip half a century ago. Americans are pessimistic about the economy because it is not good for them. It may be great for the people doing the measuring, but that does not change the fact the typical American is not experiencing great times. That is because of who is in charge, not how they got there.
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Here in Europe, we keep hearing the US economy is going great. Not sure I believe it given the corporate media in the US, just like here in Europe, is not to be trusted.
One of the reasons I tend to follow this blog is you and your readers are able to get past the media “Lies, damned lies, and statistics”.
17
2023 was the worst year for tech startups ever (in the US). That included some $1 billion+ businesses. Kind of like an echo of the 2000 dot-com bubble, but mostly in “private” market.
7
By my read, every commercial real estate office loan which matured in Chicago in 2023 failed to refinance (ie: defaulted).
Not exactly true: one smaller office tower, owned by some dumb-ass Ohio government pension fund, paid off their loan in cash.
1
It’s obvious the vitality in the Loop is substantially reduced from Y2000. They’ve added some activity by converting offices into condos and apartment rentals.
Many businesses simply didn’t renew their office leases, they didn’t necessarily default. They relocated outside the former core business distirict.
So in part what we’re now seeing is a reverse commute. Young and old live in the downtown with its amenities. They commute to the outer limits, ‘burbs and even collar counties. They return home around 7:30 and walk their dogs. The sidewalks are covered by dog waste whereas this was never a thing until ten years ago.
Defaults are likely lower than you’re interpreting. Office rents are sky high, though. Building owners are betting businesses will return apparently.
Certainly better than Germany, but then again we didn’t have our energy supplies blown up by one of our “allies”.
The problem is the wild debt issuance is kinda keeping the plates in the air, but the interest expenses are making the plates wobble.
4
I’m sure with personal credit card interest anywhere between 18%-24%, and given the number of people living pay check to paycheck, that’s not helping.
At least in Germany, while we complain about higher prices, most Germans have very high levels of savings and almost no credit card debt.
Fun fact, the German word for debt is “schuld” which is the same as the German word for “guilt”. We have enough national schuld from the past without adding to it in our present personal finances.
1
When we studied the GD depression circa 12 years old, I asked my 1909-born Grandpa what it was like to live thru it. He said:
I just got up and went to work everyday.
7
1
Lot of people said the same thing about WW2 and other world events. These geniuses like to think they’ve figured out something about life the rest of us haven’t, because life left them alone. Hubris.
4
1
I understood it as meaning that the depression / war wasn’t ever-present. The movies make it look like there were bread lines everywhere and nobody had work and that the war was never-ending bombardment and fights in the streets. In reality, most of the time, for most people, day-to-day life was relatively normal.
Just some perspective.
8
household debt is getting worse by all reports so we can see it plainly there because borrowing is added to the calculation.
anyone know if the government includes their borrowing or currency printing??
1
I don’t think I live in an area where the inflation is as bad as some other areas so prices have gone up at the grocery store but not crazy but I did go have lunch with some people yesterday. Bacon cheeseburger with fries $17.99. Wow.
4
One good thing, I suppose, is that now fast junk food is expensive as preparing your own healthy food or eating in a decent sit-down restaurant. $18 for a burger and fries is obscene.
5
When my wife and I decided to move north out of the suburbs into the mountains, I sold my BMW and bought a used car: a Prius for my now two-hour commute four days per week. I also upgraded my truck to handle the possibility of winter weather and we also paved our long drive from the main road to ensure we could get out of our mountain retreat.
I bought the Prius for a song during the so-called pandemic, but now, that car with 200k miles is worth $15k, which is absurd.
I have people offering insane amounts of money for my Tundra, which is nearly 15 years old.
The car market was warped by the huge drop in prices during the “pandemic,” and the absurd supply chain-driven price jumps and now it’s about to implode. Banks can’t lend money to dealers to refresh inventories since they’re taking a bath at auction on repos, especially on luxury marques. Rates are keeping consumers from buying these overpriced cars on dealer lots.
When the car loan market goes south, the economy will go with it.
6
1
You should of bought a tractor instead of paving your driveway it would serve you better…
2
I have one of those as well. An old one I bought that has no electronic gimcrackery. There’s just something wonderful about filling your tractor with diesel and putting it to work.
I’ve said it before, but it bears repeating. I personally know a healthy family of three whose health insurance just went up 20% to over $2,400 a month. It’s a basic, no-frills silver plan, which is now costing them $30,000 a year before they ever see a doctor or get a prescription filled.
These are not wealthy people, even though they are conveniently too “rich” to qualify for any subsidies, even as illegals and welfare recipients belly up for free/subsidized medical care.
Who can afford this? Our government punishes people who actually work and pay taxes while they reward sloths and foreign invaders. It’s madness.
24
“The typical American has barely noticed that it requires two incomes to have the life that used to be possible on a single income, at least for the middle-class.”
He or she probably does notice that his or her parents, or rather grandparents, were part of a single-income household and that the standard of living, the quality of life, and job security were better than today. Peak per capita earnings probably occurred around 1971. Now even two incomes cannot match that one income from 1971. The last I saw (about 15 years back) was that the two incomes were about 15% less than the one income from 1971, and one income was around 59% less.
“The relative material prosperity came at the cost of social capital.”
Call me jaundiced but I don’t see that relative prosperity. The only item I can see that has come down in price over the years is electronics and the software that accompanies it.
I think the top ten or fifteen per cent of the population is managing to keep its head above water. The rest of us seem to be slowly drowning. The regime has no fix save to rig the numbers for inflation, unemployment, and “growth.” It reminds me of when the chocolate ration gets decreased to 20 grams in Orwell’s Oceania and the regime trumpets on how it just got increased to 20 grams.
10
Not only one income but generally that one income was supporting an actual family, with multiple children. Of course, keeping up with the Joneses has always been a thing, but the consumer propaganda was far less insidious back then.
9
keeping up with the Joneses
—
I’ll see those generic complaints about intergenerational costs, but left unsaid is the fact that I could probably only get a barn with the same specs that my parent’s home had when they bought it (single pane windows, cheap, no-ground wiring, no a/c, etc.). Yes the regime has made many (many) things way more expensive than they should be, but still, a big chunk of those intergenerational costs is the lack of desire to live like the previous generation.
3
2
“a big chunk of those intergenerational costs is the lack of desire to live like the previous generation.”
The previous generations lived in all-white neighborhoods. Now, if you buy a smaller, cheaper house, your neighborhood will soon be overrun with diversity. Compton used to be a pretty nice place to live. Not anymore.
Part of the reason Americans overspend on houses is to avoid the joys of diversity. Many, I believe, would gladly live in a smaller, less expensive house if the neighborhood was well kept and free of crime.
5
Part of the reason Americans overspend on houses is to avoid the joys of diversity.
Especially Leftists. They do so love to be far from the consequences of their “BLM” yard signs.
3
The Chicago my parents moved to in the ’60’s MADE things. Everyone with a bit of gumption in the Midwest moved there.
Schwin bicycles;
Sears;
Montgomery Ward;
Bally pinball and arcade machines;
Candy companies up the wazoo;
Typewriters and adding machines;
Lincoln Logs;
Motorola radios (later, cell phones);
Zenith TV’s;
First Chicago Bank, Harris Bank, LaSalle Bank, Continental Bank.
ALL GONE.
Now what is Chicago known for? An obese trust fund governor, freak show mayors, illegal aliens, car jacking and murder.
6
Yet another problem explained with simplicity and clarity, and the root culprit is once again the corrupted bureaucrats in DC who play fast and loose with their official duties and solely serve the political interests of their patron politicians. The new slogan is “They hate us” and couldn’t care less if we object or complain because they have the power and they are not accountable for their malfeasance. And nothing will change until the environment changes.
Some hue to the delusion that someday voting harder will produce a messiah and lead us to the promised land. Kick the can, ignore vote fraud, muddle through, and crack open another beer on the couch. Fat ass is and fat ass does, and only a collapse can motivate real change. Which opens the door of opportunity to actually do something tangible and effective. A lot of people are chomping at the bit in anticipation of the day of reckoning, but we must wait for the fog in order to possess the element of surprise. Spontaneity is a potent thing.
11
“Put another way, debt-driven government growth not only corrupts the nation but it corrupts the way in which we can measure the corruption.”
Exactly. Part of the “long con” by the Regime is the fetishization of the GDP statistics. Borrow/print money, spend money on war, grifters and illegal immigrants – none of which helps our standard of living – lie about inflation and magically, Real GDP increases. Rachel Maddow gets on TV and tells you the economy is great!
It’s just axiomatic, given the massive government debt we have, that inflation is going to run hot for the rest of our lives. This inflation will devalue the savings of the rubes, lower real SS and pension costs and keep this sh*tshow going for a while longer.
10
Even the best case scenario with GDP it’s like taking all the daily high and low temperatures from the past year from all over the country and averaging it all into one number. I mean, it tells you something, just nothing important. Add in to that the number is probably bogus then it tells us less than nothing.
2
Yes it’s like BMI lol.
It can be all muscle and manufacturing and investment.
Or it can be fat – gibs, fried chicken and warfare.
Yea it’s a shit sandwich when I made more than the year before but have less in my pocket at the end of the day…
6
Propaganda usually works. In a polity as saturated with curated Regime press releases as the United States is, that tends to be particularly true. Inflation is practically impossible to spin, though, since as you mention everyone who buys things–the vast majority–sees prices unfiltered. Sen. Elizabeth Warren took a stab at it with “Big Grocery,” and while she is a particularly bad liar, that dog would not hunt for Bill Clinton.
4
To be fair, the entire idea of ‘The Economy’ and all of it’s various metricks and analysts desperately trying to make it into a ‘respectable science’ is rather tiresome to me. The term ‘The economy is doing bad/good’ can be unpacked in so many ways as to make it meaningless – except as a propaganda factoid fit for consumption by those who like easy answers.
If anyone wants to know how we’re doing now, ask an older family member about their life and work? How much did they make? How many holidays did they have? Did they own a house? A car? How many kids? Did they get by on a single income. I have found that, by applying this common-sense reasoning, the people of today are in a thoroughly (materially) worse state, on-the-whole, than those of sixty years past.
Of course, the real story is the spiritual and cultural decline, which is the most damning – but don’t worry! Still got that sweet, sweet loan for my new Mercedes I never needed! And I’m doing great.
This is not to say that the study of economics has not merit – it is more a pointer towards very loos statements that mean nothing. But in a world where BAE Systems is thriving and your local grocery store is failing, a keener analysis is needed. Averages and other things tell us very little about the local things than affect us most – probably why they’re used.
It’s just another big, abstract thing to focus on – all the while, Gomez and Obefemi pour in across the border and commit crimes in your neighbourhood – but that economy is doing swell!
Lord have mercy.
14
“Bad money pushes out good” applies to everything, not just money. Bad money (QE, 0% rates) funds bad ideas and bad people, good people take what they can and leave. I’d say that sums up where we are at currently.
2
I love the optimism on this site. “When the SHTF then we’ll get a chance to make everything right”. “Eventually the PTB will get theirs”. “Trump will be elected, close the border and cause Republicans to grow a spine”. I love to read a good work of fiction as well as the next guy, but I like my reality to mirror what I see every day. More than likely the SHTF event will be far worse for our side than the establishment, the PTB are the PTB for a reason; too rich and powerful to ever be brought to justice this side of the grave, and before this November, Trump will either be jailed, dead, or overwhelmed in the election by the addition of as many false votes as needed. As I’ve read on this site before; get in shape, learn to blend in, take care of your family, have faith in God and yourself and enjoy the ride to the bottom as much as is possible. Oh, and if they come for you-Take as many of them with you as possible. It might make them think twice before coming after others.
10
8
“Trump will be elected, close the border and cause Republicans to grow a spine”.
Heh. I’d like know, even amongst some of the more milder minded commenters on this site, who has ever said this?!
12
Tell that to the guillotine in france.
1
This is not Breitbart, Cymry Dragon. Nobody talks like that here.
5
Maybe I am conflating sites. If sensibilities were offended, my apologies.
I mean, if you’re a renter who commutes to work you’re gonna have a significantly different outlook on the economy than someone who bought their house in the 2010s and refinanced down to an artificially low interest rate.
The economy for many young people is brutal where middle aged people it’s probably just peachy.
Nobody can convince me that a lot of this discourse isn’t politically motivated. Speaking bluntly, people are really nervous that Biden might not win reelection, so they’re trying to gaslight people into thinking their experience isn’t reality and the economy is actually really good
On the other hand I also occasionally fall prey to the defeatism prevalent on the online right and in the media. The fact is that most millennials own homes and 42% of them owned by 30, compared to 48% of gen x and 51% of boomers, but far more millennials choose to go to college or live with partners before marriage/home buying. The overall picture is not as bad as some people portray it.
5
7
“The economy for many young people is brutal where middle aged people it’s probably just peachy.”
Yes, it’s brutal for young people, particularly renters. But it’s hardly “peachy” for middle-aged people. Many are going without health insurance or paying insane rates just to have coverage. As far as groceries, everyone is paying more money for smaller portions. Yes, people who bought a home under lower interest rates are doing better, but the government is busy trying to load up their neighborhoods with Section Eighters and illegals. Hospitals are being overrun with people who don’t belong here, and nearly nobody in government is doing a damn thing to stop it.
Unless you’re in the elite, the overall picture is, indeed, quite bad, and getting worse every day.
11
The only thing i will say to your comment is based on the cooked government numbers:
GDP went up 330 some billion last quarter
Debt was up somewhere around 800 billion.
As Charlie sheen in his crazy early 2000 phase would say #notwinning
1
And the GDP increase was all inflation, because the GDP deflator used to correct for that is far too low…
1
A lot of down votes, but he’s generally right. Millennial homeownership rates are about where they were for GenX and Boomers at the same age, same with wealth per capita.
The issue is that people are struggling to maintain that lifestyle – two incomes instead of one. The other issue is that there’s a growing gap between the haves and have nots in the country.
The top 20% are doing great and aren’t worried. The next 40% are doing okay – they own a home and some money – but they feel (correctly) that their grip on that lifestyle is tenuous at best. The next 40% are utterly screwed and they know it.
1
I’d agree with you, but just wait until the job losses start piling up. As long as the music is playing, ya gotta keep dancing 😉
I remember the years right before 2008, and those felt like the roaring 20’s compared to what we have today. Everybody was doing great, until they weren’t.
VBL (I believe) mentions the waves of both inflation and bank collapse. First wave inflation, 2022, first wave bank collapses March 2023.
More of both to come.
Remember iceland?
1
Economic statistics have always been rigged. Unemployment has always been calculated by how many people with a 40-hour a week job lose it and file for benefits. It’s a vestige of the New Deal economy. If you’re part of the gig economy or a part-timer with no benefits, you’re not even on the radar.
GDP is a false metric, it includes government spending which is fueled by debt, but the government added $24 trillion in debt since 2008. I think last year’s deficit was $1.7 trillion alone.
One of the biggest false metrics is the stock market. The Dow hit 38,000, an all-time record high, last week. It went up 6,000 points since November. What, pray tell, is driving this “economic boom” in the last two months? Frankly it’s just a Ponzi scheme, like the entire FIRE sector. I think the Gen Xers and early Millennials are going to get fucked in equities when the Boomers cash out. There’s no way the “market” can be sustained indefinitely…
6
Dubya inherited a $5T debt and left Obama with a $10T debt. Obama left Trump with a $20T debt and Biden is on track to close to a $40T. 3 double presidencies in a row doubled the debt each time. Are we really going to $80T in 2032? What does that even mean? Will the world accept this? What will a loaf of bread cost in 2033?
2
“I think the Gen Xers and early Millennials are going to get fucked in equities when the Boomers cash out.”
Got news for you. The equities problem is going to hit boomers, too, and the worst, because there is no way those are paper losses.
Retirees have to take out an IRS-defined portion of their 401(k) and IRA every year, whether up or down market. My Silent father got utterly hosed in the aftermath of 2008, when he was forced to liquidate annualized average valuation at collapse prices.
And as you say, this will only get worse as there are fewer people left to buy up the equities the boomers have to cash in. The upshot? Millenials for sure, but also the later X and early Z, maybe the entirety of Z, will end up being able to buy equities on the cheap.
Zman : “What all of this gets to is that measuring is necessary, but it is not how things are measured that matters. It is who does the measuring”.
That reads a lot like a statement generally attributed to J. Stalin that: it’s not who votes, but who counts the votes that matters.
A couple of metrics I watch re: economic health –
credit card balances a record $995 billion according to data from TransUnion. (Let’s just call it 1 trillion). Total credit lines reaching a record aggregate total of $4.6 trillion. That’s not healthy and is not going to end well.
Long time since I patronized McDonalds, but I gather a ‘value meal’ may be upwards of $15. That’s not healthy and is not going to end well either (in more ways than one).
The list goes on, but something is rotten in the USA (and probably in the state of Denmark).
10
The GDP stats are even more corrupted than people know…Martin Armstrong and his researchers have discovered that government salaries are double counted in the GDP stats, so the real GDP is far less than reported…
Of course, in the old days, they measured actual output…By that measure, the US is in a depression…But debt creation by the Fed is masking it…
5
And our GDP is also fake because the GDP deflator, given their fake inflation numbers, is far too low….
1
Can’t think of a single official statistic that’s trustworthy. Just a quick grab from the bag:
– excessive deaths: grudging acknowledgement that it is up for middle age and young cohorts. But they probably understate it considerably. Dissident vloggers seem far more credible here. And the professional medical literature is manifestly captured. This is killing large numbers of people right now. Not will, not might; IS.
– illegal immigration: they don’t know how many and whatever they think the real number is, it’s higher than the number given. Complete FUBAR situation
– military comparisons; why is it that the most lavishly spoiled military is running out of the bare essentials while the much leaner and cheaper Russian army is raining hundreds of tons of artillery shells down in Ukraine. Does Russian math now work differently from ours? Or are our leaders just incredibly corrupt, greedy and incompetent??
– the economy: given the above why trust anything these people say. “Safe and effective”…. We’re flying blind, no one has a handle on the real data. If they did there would be fewer screwups
8
I happen to believe the “immigration” numbers. Because under the current regime, there is zero incentive for illegal aliens to evade border patrol, and every incentive to turn themselves in. And the regime, believing that “immigrants” are the lifeblood of their future utopia and a moral good, thus want to brag about how many there are.
One sign the economy is cratering is the car market. It’d be interesting to see the vehicles sold to consumers versus fleet sales. I saw a Youtube video from a big-time used car dealer in Nevada who said banks were taking a bath on luxury repos at auction, which cuts into the amount they can loan dealers to acquire new stock and how much they can loan out to consumers. Also, banks have bought whole loan packages from “buy-here-pay-here” used car lots and they’re not able to do it anymore because there is no liquidity.
This dealer said his business is going south on luxury cars, but he’s selling beaters at a pretty good clip, which he says is a sign of an economic contraction. This tells me the data we’re fed by these bureaucrats is absolute bull squeeze.
It also doesn’t help the new car market that every car sold now has a giant screen in the dash that distracts the driver, all of these stupid electronic nannies for “safety” and a 2.0 liter turbo four or heaven forbid, a turbo three-cylinder. This is so the car won’t have too much carbon emissions, never mind this gas is harmless.
V-8s and now V-6s are headed for extinction. Then CAFE will swoop in at 50-plus MPG and every car will have the added complexity of a hybrid system before the only thing that can satisfy regulators is EVs, which cost and weigh twice as much as an internal combustion-powered car and go half as far.
The crackup is coming. It reminds me of that scene from the silly Mothman movie when the suspension bridge in West Virginia collapses into the Ohio River. It starts slowly and when the chain reaction really gets going, it accelerates like a funny car after the Christmas tree turns green.
8
EVs cannot serve as mainstay personal transportation in the Great Lakes states or like. Temps were recently -9F true/-30F windchill. We have two more of those dips forecast. Even the chargers fail below 0F. Improved battery and power distribution technologies will not be riding to the rescue for decades IF.
There’s also the wealth transfer effect partially accounted for by reparations (not just for Blacks) in the form of affirmative action, D.I.E., other racial and gender preferences, ever projective and inefficient cash transfers and then the big one, demographic change, all intended to “level the distributive playing field” at the expense of the middle class which happens to be mostly white and non-“progressive.”
What would be the normal curve of wealth distribution in the theoretical socialist society becomes, in practice, heavily skewed to one side. A plantation economy is doable and may be our future if economic collapse doesn’t overtake us, even a relatively untroubled future, so long as people feel they’re not being cheated and held in contempt. Orwell’s proles, for the most part, weren’t malcontents.
4
There are three main ways the government rigged the inflation numbers in the late 1990s, by adding circular methodology to the official BLS formula:
First, they now change product weightings for high/low inflation items (substitution effect). For example, if chicken and beef are weighted equally in the formula and the cost of beef skyrockets, they assume more people will eat chicken, and readjust the formula accordingly.
Second, they now try to filter out product improvements. The fancy electronics that are now included in almost every mechanical product, from cars to washing machines, are assigned a value and subtracted from the inflation formula, despite the fact that these improvements don’t fundamentally alter the utility of the products. In many cases they make them less durable, overly complicated and more expensive to repair.
Third, they swapped out home prices for comparable rent calculations. The reasoning is that when you buy a home, part of the purchase is an investment, whereas renting an apartment is all current expense. So they now try to factor out the investment part of home price increases.
There is some validity to these changes, but it renders them incomparable to prior figures, and gives the government a lot of flexibility in managing the adjustments, all of which seem to be made in the direction of lowering official inflation figures. This is very similar to how all the adjustments made by “climate scientists” are in the direction of making the raw temperature readings appear warmer.
8
Measuring the economy is like measuring your dick. You can manipulate the ruler and angles all you want to get a desired number, but the reality is when you show it for the first time to your new lady or a confused young man and see their reaction(in this metaphor, dealing with the real costs the average person experiences).
If they say, “Awwwww…..” time to get a Porsche.
4
Measuring the economy is like measuring your dick.
At least measurement of your nob only concerns a few metricks. But ‘The Economy’? Forget it.
I spent a large part of my younger years reading various economic texts, entranced by the theories and the mathematics. Most of it was worthless. There seem to be a few hard and fast rules about money, and most of this seemed to be common-sense.
The only decent explanation of money systems that I’ve seen and how humans interact to make ‘The Economy’ has been due to von Mises and later Rothbard; but they had their own failings. In the end, I gave up trying to understand – I felt I was getting stupider, frankly!
Some things are just hard because they are complecks systems. And complecks systems are hard.
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The preferred method is to start from the taint, once around the balls, then out to the tip.
I just tell them I need a yardstick. It’s not technically lying. There is a 3″ spot on the yardstick after all.
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“The economy also grew at a faster rate most years during this time. The recession of 1974 was followed annual growth of near five percent the following years.”
When you lie about inflation, you can count inflation as growth. I’m pretty sure Nixon removed some stuff from the inflation numbers, I think fuel, housing and food.
Chris Martenson is a bit of a crank, but this video is pretty good. It’s called fuzzy numbers. It’s a quick video about how the government has been mucking with the official statistics for political reasons for many decades.
https://www.youtube.com/watch?v=zPkTItOXuN0
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Well, that’s what running big deficits when unemployment is low will do for you. Running a 6.2% of GDP deficit when unemployment is extremely low and the country isn’t in recession is unprecedented.
If you run big deficits all the time, it’s almost impossible to go into recession – at least as long as the world will finance those deficits.
What would the economy be like if we were running normal deficits of ~3% of GDP? Well, subtract that 3% from the real GDP growth of 2.5% and you get -0.5% growth.
Would the US economy be growing at a healthy clip without unusually large deficits? Probably not. But, hey, as long as the debt market is willing to buy our debt at fairly low interest rates, this game will go on.
But it will end. People always tell me, “Citizen, people have been worrying about the debt and deficits since the 1980s and nothing ever happens.” I tell them that debt to GDP under ~90% usually means that you’re okay as a country, so, yeah, people were worrying for no reason.
But, historically, once your debt to GDP goes over 100% (our debt to GDP is 120%), things usually go bad within a decade or two. Not tomorrow, but not after we’re dead either. The US has a lot of rope being the global reserve currency, but we’re not immune from simple math.
At 4% interest rates on treasuries, the govt will pay 4.8% of GDP toward interest on the debt. Given the fact that we run structural deficits of ~3%-4% even without interest on the debt (so 8%-9% total deficit), that’s not going to fly over time. I don’t care if you have the GRC or not.
But for now, we can play that game. Run big deficits and keep the economy out of recession.
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That Wharton study I posted says once debt gets to 175-200% of GDP, we are doneski
As a side note, there is no one-size-fits-all inflation rate that the American people are experiencing. For a boomer, with a paid off house and on Medicare, the inflation rate is far lower than for the millennials in prime child bearing years, who also have student loans. While the boomer feels like a rubber band hit him, the millennial feels shot in the face at point blank. This is a major driver, not the only one, why millennial women not on WIC and Section 8, have wombs as empty as Taylor Swift’s, who has no excuse for that other than she’s on to screwing a football player and may or may not keep him, but will definitely write a song about him.
As another side note, if you’re into the ganja, especially on a Bob Marley level, prices have fallen through the floor on that.
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Even the long dead guy who invented GDP thought it was a poor measure of prosperity. La Wiki:
The modern concept of GDP was first developed by Simon Kuznets for a 1934 U.S. Congress report, where he warned against its use as a measure of welfare
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Government produces nothing. It can only take or print. The fact that government spending is included is laughable on its face. If you want to look at that number, which has massive calculation problems on its own, at least look at the one with the government spending deflator built in.
One of the best metrics is energy utilization. If you see massive distillate builds you have to ask why. The Saudis just mothballed a massive Aramco project that would have been a million barrels a day. They clearly found that given the global economy, not just ours, this won’t be needed soon. It’s a worldwide slowdown. We’re all in debt. We’re all a mess. This hasn’t happened in a very long time. No one is thinking about countries like Egypt right now. Huge population, Egyptian Pound is falling through the floor. China is in a huge liquidation mode. Etc.
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The elites through their green energy projects seem to be downsizing the Western economies at least. Now when they want to advertise measurements of the economy they would like to use the “downsized” model while not talking about those left abandoned by the downsizing. They just want to pretend those people do not exist.
The people left behind and outside of the downsized economy are ignored in the measurements, as an example those who have given up on finding a livable job are quickly excluded from the labor statistics.
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