“The Gross Domestic Product (GDP) is one of the broader measures of economic activity and is the most widely followed business indicator reported by the U.S. government. Upward growth biases built into GDP modeling since the early 1980s, however, have rendered this important series nearly worthless as an indicator of economic activity. The popularly followed number in each release is the seasonally adjusted, annualized quarterly growth rate of real (inflation-adjusted) GDP, where the current-dollar number is deflated by the BEA’s estimates of appropriate price changes. It is important to keep in mind that the lower the inflation rate used in the deflation process, the higher will be the resulting inflation-adjusted GDP growth.” – John Williams – Shadowstats
GDP is the economic statistic bankers, politicians and media pundits use to convince the masses the economy is growing and their lives are improving. Therefore, it is the statistic most likely to be manipulated, twisted and engineered in order to portray the storyline required by the elite. Two consecutive quarters of negative GDP growth usually marks a recession. Those in power do not like to report recessions, so data “massaging” has been required over the last few decades to generate the required result. Prior to 1991 the government reported the broader GNP, which includes the GDP plus the balance of international flows of interest and dividend payments. Once we became a debtor nation, with massive interest payments to foreigners, reporting GNP became inconvenient. It is not reported because it is approximately $900 billion lower than GDP. The creativity of our leaders knows no bounds. In July of 2013 the government decided they had found a more “accurate” method for measuring GDP and simply retroactively increased GDP by $500 billion – essentially out of thin air. It’s amazing how every “more accurate” accounting adjustment improves the reported data. Economic growth didn’t change, but GDP was boosted by 3 percent. However, this upward adjustment pales in comparison to the decades long under-reporting of inflation baked into the GDP calculation.
GDP is adjusted for inflation. The higher inflation factored into the calculation, the lower reported GDP. The inflation deflator used by the BEA in their GDP calculation is even lower than the already bastardized CPI. According to the BEA, there has only been 32 percent inflation since the year 2000. They have only found 1.4 percent inflation in the last year and only 7.1 percent in the last five years. You’d have to be a zombie from the Walking Deador an Ivy League economist to believe those lies. Anyone living in the real world knows their cost of living has risen at a far greater 70 rate. According to the government, and unquestioningly reported by the compliant co-conspirators in the the corporate media, GDP has grown from $10 trillion in 2000 to $17 trillion today. That percent growth over the last fourteen years is dramatically overstated, as revealed in the graph below. Using a true rate of inflation exposes the fraud being committed by those in power. The country has been in a never ending recession since 2000.
Your normalcy bias is telling you this is impossible. Your government tells you we have only experienced a recession from the third quarter of 2008 through the third quarter of 2009. So despite experiencing two stock market crashes, the greatest housing crash in history, and a worldwide financial system implosion the authorities insist we’ve had a growing economy 93 percent of the time over the last fourteen years. That mental anguish you are feeling is the dissonance of wanting to believe your government, but knowing they are lying. It is a known fact the government, in conspiracy with Greenspan, Congress and academia, have systematically reduced the reported CPI based on:
- hedonistic quality adjustments,
- geometric weighting alterations,
- substitution modifications,
- and the creation of incomprehensible owner’s equivalent rent calculations.
Since the 1700s consumer inflation had been estimated by measuring price changes in a fixed-weight basket of goods, effectively measuring the cost of maintaining a constant standard of living. This began to change in the early 1980s with the Greenspan Commission to “save” Social Security and came to a head with the Boskin Commission in 1995.
Simply stated, the Greenspan/Boskin Commissions’ task was to reduce future Social Security payments to senior citizens by reducing the CPI and thereby reducing cost of living adjustments to social security recipients. The tactic provided an “easy way out” for politicians. Politicians would lose votes if they ever had to directly address the unsustainability of Social Security. As a result, they allowed academics to work their magic by understating the CPI and stealing $700 billion from retirees in the ten years ending in 2006. With 10,000 baby boomers per day turning 65 for the next eighteen years, understating CPI will rob them of trillions in payments. This is a cowardly dishonest method of extending the life of Social Security.
If CPI was calculated exactly as it was computed prior to 1983, it would have averaged between 5 percent and 10 percent over the last fourteen years. Even computing it based on the 1990 calculation prior to the Boskin Commission adjustments, would have produced annual inflation of 4 percent to 7 percent. A glance at an inflation chart from 1872 through today reveals the complete and utter failure of the Federal Reserve in achieving their stated mandate of price stability. They have managed to reduce the purchasing power of your dollar by 95 percent over the last 100 years. You may also notice the net deflation from 1872 until 1913, when the American economy was growing rapidly. It is almost as if the Federal Reserve’s true mandate has been to create:
- finance wars,
- perpetuate the proliferation of debt,
- artificially create booms and busts,
- enrich their Wall Street owners,
- and impoverish the masses. Happy Birthday Federal Reserve!
When you connect the dots you realize the under-reporting of inflation benefits not only the government but corporations as well. If the government was reporting the true rate of inflation, corporations would be forced to pay their workers higher wages, reducing profits, reducing corporate bonuses, and reducing profits. Reporting a true rate of inflation would force long-term interest rates higher. These higher rates, along with higher COLA increases to government entitlements, would blow a hole in the deficit and force politicians to address our unsustainable economic system.