Letters by a modern St. Ferdinand III about cults

It is not only the Globaloney Warming Fascistas and One-World Marxist morons who 'hide the decline'. In the case of the obvious cooling climate, the Gaia cult has a hard time to hide reality – though they still maintain that Mommy Earth is going to explode from on overdose of Co2. Not so for the Economistas and the Keynesian-Government will save us-cult. They have every incentive and every method to hide the economic decline – and they do it very well. The simple fact is that the usual metrics to inform the hoi-polloi about GDP, economic expansion or contraction and inflation are absolute hokum. The impact on policy and policy makers, not to mention the geniuses who covet political and economic control are vast.

Governments have one goal: to expand the state to fill all the most important requirements of the political-economy. It is bureaucratic narcissism and statism. Governments are not some Keynesian economic actor which is stable and static. They are more like the Friedman depiction of flourishing, dynamic, and often times immoral enterprises quite interested and focused on money, power and regulation. They are not benign Marxist entities full of morality, faith and hope. They wish to rule and to coerce.

In this regard the methods that all modern Governments use to control their economy are premised on three facts:

1.Control the money supply and interest rates or monetary policy through a supposedly independent central bank [the US Fed Reserve long ago lost its political virginity and independence].

2.Issue endless propaganda and 'science' supporting economic demand or consumer side management as evinced by the works of Keynes and Samuelson, even though any serious study of economic reality renders both Keynes and Samuelson completely and utterly irrelevant and dangerous.

3.Always spend more money, and always call for more regulation. Any 'crisis' even if caused by government, such as the current US housing finance criminality, is blamed on external actors or the convenient 'market'.

To buttress the above the Government must control all economic data. Thus the spectacle during the 1930s of the Nazis reporting 6% per annum 'GDP' growth when the entire Nazi state was autarchic; had no foreign capital; little foreign trade and almost no private investment. Pray tell where the economic growth came from ? The Nazis printed money, stole private assets and used them to fund state projects – but the debt or the inflation from the printing presses were never calculated as costs. Yet the grinning Western idiots in the media accepted the Nazi claims of GDP acceleration – endorsing the Nazi 'economic miracle' and musing about how to copy the Fuhrer's genius.

GDP is a silly calculation developed by the Russian born economist Kuznets and presented to FDR's treasury in 1934. The very fact that GDP as a sacrosanct measurement was formed during the statist communalist career of FDR should give any sentient human pause enough. But even Kuznets admitted many times that the calculation was not meant to be accurate – just a rough guide as to how the economy was reacting to government policy. As I wrote a while ago – GDP is simply totally inaccurate:

“First Kuznets came up with the 'expenditures approach' where you add up total spending on all final goods and services or in eco-geek speak:  (Consumption goods and services (C) + Gross Investments (I) + Government Purchases (G) + (Exports (X) - Imports (M)) or [GDP = C + I + G + (X-M)].
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The most primary objection to using the expenditure model  is that the output bought in a nation state is not reflective of its true economy. As the Austrian-school economist Shostak stated a government for instance, can build pyramids across a country – a totally useless enterprise – but GDP would reflect a large growth. This would be a fallacious growth of course. Government spending replaces private capital and leads to debt and interest payments – neither of which are factored against public spending 'GDP' stimulus'.'

GDP thus overstates the role of government – which is precisely its purpose. Imagine if the Black Jesus paid every American $1 to go dig a hole which he would call 'infrastructure spending'. Americans dig their holes and then receive in aggregate $300 million. But that money has to come from somewhere and since the US is running huge deficits, it would have to come from foreign lenders like the Chinese or from the printing presses of madman Ben Bernanke. Both carry costs of course. None of the costs are factored against the $300 million. You could imitate the Nazis and build useless colossi everywhere and the 'economists' would be telling us that GDP expanded by x %. This is simply idiocy.

The other reason why GDP rates are bogus is inflation. If you factor in real inflationary rates GDP in the US has actually been flat or in decline for the past 10 years. Governments conveniently leave out most of the costs that each household faces. Food, energy and housing prices are excluded from the inflation number – more than 50% of most household budgets. If you were to normalize for this, actual GDP growth over the past 10-15 years has been less than 1 % per annum.

“In other words, the actual GDP growth rate from 1990 to 2006 was only 29.5%, an annualized rate of 1%. This is a far cry short of the official government statistics.

I still haven't corrected for the increase in the number of households. In 1989, there were 93,347 thousand households, and there were 114,384 thousand households in 2005. That is a gain of 22.5%. If you subtract 22.5% from 29.5%, you get 7%. (The housing stats table doesn't have an entry for 2006, so I used 1989-2005 instead of 1990-2006.)

Contrary to official reports, GDP has only increased by 7% per household from 1990 to 2006. That is an annualized real GDP growth rate of only 0.27%.

If you use M3 instead of M2, you would find that GDP has decreased substantially since 1990. Luckily, the Federal Reserve ceased publishing M3!”

Controlling interest rates, the money supply and information on economic growth and inflation is rather important for the Statists. They can manufacture crises whenever they want and then demand government action. It is as if a group of people burned down your house and then told you that they are the only ones who can rebuild it – for a nice profit. You might be rather chagrined at such a claim and state of affairs. But that is what we are faced with the scampering political baboons and their illiterate bureaucracy. They can print money, create inflation, incur unsustainable debts, manipulate GDP and inflation reports – and then tell us to trust them, that yes they will fix all of the problems which they have coincidentally produced. It is psychologically deranged. It is the talk of madmen.

“Let's summarize. Our current methods of calculating GDP are NOT correct and lead only to the stimulation of government and union goons running our lives. The consumer is not 70% of the economy. Ergo demand or consumer 'stimulus' plans are bound to fail. What are needed are plans, policies and obsessions to stimulate supply, and the creation of capital and jobs. Want to help the so-called poor ? Besides weeping and moaning for more governmental transfers how about this ? Stimulate the supply of jobs and wages. That will do more to 'fix' the economy and help the 8% of people who are poor, than all the demand side plans of the 'Great Men' can possibly do.”

Exactly right. Which is why it will never happen and which is why bankruptcy is America's future.