Source: Birch Gold Group
The Federal Reserve just raised rates once again, by 0.25%.
The move implies that the central bank has confidence in the economy, and markets are riding that confidence to push upward. But analysis of the fundamentals reveals that both markets and the Fed are missing something. How long can they keep egging each other on without facing facts?
What You’re Being Told
Based solely on official government data, the economic situation today looks pretty rosy.
Then there’s inflation… which the Bureau of Economic Analysis (a sub-branch of the U.S. Department of Commerce) has great things to say about. According to the agency, prices rose by 1.9% over the last 12 months (the period ends in January). That’s just one-hundredth of a percent below the Fed’s target rate of 2%.
To top it all off, officials say that consumer spending spiked 3% in Q4 of 2016.
That’s all well and good. And it would be fantastic if we could know, beyond the shadow of a doubt, that those numbers were true. Unfortunately, it’s not that simple.
Why Government Numbers Can’t Be Trusted
The U.S. government’s official story on the economy is hardly unbiased. With a vested interest in keeping markets calm and appeased, government entities tend to “massage” economic numbers to paint the best picture possible.
According to Mike Bryan, vice president and senior economist at the Atlanta Fed’s research department, the rubric for calculating official inflation numbers has a history of getting changed as often as every month, depending on which pieces of inconvenient input data bureaucrats want to leave out for that given cycle.
Labor statistics are just as susceptible to corruption. In 2014, census survey collectors — whose work goes toward calculating not just general population statistics, but unemployment and economic insights as well — were caught filling in bogus data simply to meet their quota, irreparably tainting any later assertions based on the collection work.
The New York Post writes:
Rather than collect fresh data each month as they are supposed to do, Census workers have been filling in the blanks with past months’ data. This helps them meet the strict quota of successful interviews set by Labor.
That’s just one of the ways the surveys are falsified.
Further, according to John Williams, presidential administrations over the past several decades have all fought to weaken and revise the measures used to calculate CPI and GDP.
Read More Here: Americans Will Lose in the Fed’s Dangerous Game of “Chicken”