Wednesday, 24 July 2013

Government Financial Stats Are Rigged – Here’s Why

As you probably know by now, financial professionals don’t really like me. Quite a few IFAs have actually called me a conspiracy kook and that I’m spreading information which is misleading to the public. I still find this amusing considering all I’m doing is spreading cold hard facts. Facts which the media doesn’t know or just won’t publish. This includes the Financial Times by the way. Also I still haven’t met a financial professional who predicted and prepared for the 2001 Tech collapse or the 2008 meltdown. And just like those instances, I’m still yet to meet one who is preparing for the mother of all crashes, the crash of 2013/14/15/16/17/18. Unfortunately I don’t have a crystal ball and so I can only forecast this for sometime in the next 5 years, but this one will be many orders of magnitude greater than the 1929 Great Depression. How do I know? Trends. But this will be a topic for another edition. This rant is solely for Government Stats and was sparked due to a twitter conversation I was having with an IFA and he said that when investing you can and should only plan using the Government figures as they are the facts. Now this is incredibly short-sighted on his behalf and if he did a tiny bit of due diligence instead of blind trust, he’d see my point. So here are the main lies:

According to the Government, UK inflation right now is 2.7%. Now this is the most farcical of all stats as it’s becoming almost common knowledge that REAL inflation is near 10% now. The way they calculate inflation is by taking a metaphoric ‘basket of goods’ which the public buy from day to day like bread, milk, cars, iphones and CDs etc. (But funnily enough, not rent or houses. They used to, but they took it out of this calculation in 1983 as they started to inflate the housing market). So they just compare the prices of this basket to last month, last year, last 5 years etc and plot a graph. So right now they’re telling us it’s 2.7%. Well what they fail to realise or purposely ignore is that EVERYTHING in that basket is now smaller or of less value than previous times. For example, let’s take a Snickers bar (my favourite). In 2003, they were on average 30p. But now, they average around 60p. In fact I’ve spent around 90p in some places, so in 10 years, the price has increased by 100% minimum! AND they are all now 7.2% smaller. This same stat applies to everything else in the basket. So when you crunch the numbers, REAL inflation is near double digits.

Recently the US GDP calculations have been changed. They are now including Research and Development (R&D) spending as part of the revenue. Now this is absurd. The US spends more money on Military (R&D) than every country in the world combined. Even their medicine R&D dwarfs other nations. Now it could be argued that medicine R&D could produce more efficient medicines which would positively bring more revenue in, but it’s negligible. Military R&D has next to no productive use (other than for war) and so this ‘ploy’ is something which will make the US Debt to GDP ratio not look as bad as it really is. They’re the only country in the world to do this but it probably won’t be long before the UK follows suit in order to hide our problems.

Jobs/Unemployment Data
This is a huge topic which I could ramble on for but in a nutshell, when calculating these figures, they are now on purpose stretching the parameters of what a full-time employed person really is. They are now counting people with a ‘part-time job but are seeking a full-time job’ as ‘fully employed’. They are including some forms of charity/volunteer workers as ‘fully employed’ many other profiles. But they’re doing it on the other end of the scale as well by classing some people without a job but are seeking employment as ‘part-time’ employed and so on. So they’re trying to make these figures show that unemployment isn’t as bad as it really is when the poor/rich divide is increasing dramatically! Just have a look at the BBC Documentary ‘Skint’ – it’s shocking but a real insight into the UK’s deprived areas.

Housing Data
Again, another topic which I could bore you on but this one is probably as laughable as the inflation data. For some reason the Government likes to promote to the public that a rising housing market means that the UK economy is improving. And as the public are grossly ignorant with these and investing matters, we just nod and accept what we see in the news etc. So 2 points here: i.) The housing market is NOT a reflection on how our economy is doing, and ii.) The Government is now openly trying to pump up this market again with 95% mortgages! Also when you look at US housing data that’s even more of an exaggeration. What they fail to show us is that the Fed is buying up $85 billion a month of Mortgage Backed Securities, other toxic bonds and also at least 70 000 empty homes per MONTH using proxies.

So there you go. Hopefully you can now see that we need to at the very least question what we get told. Housing, employment, GDP and inflation data is rigged which I hope I’ve demonstrated and that’s only the tip of the iceberg. If they are rigging interest rates, imagine what else they are doing. So when you’re next going to buy a mortgage, invest in the stock market or pensions etc, just please do a double check of REAL adjusted data, not nominal data which gets published. is a great site for real data…

1 comment:

  1. You wouldn't believe what the Job Centres are being told right now (Sept 2013) about the new Universal Credit System with regards Job Seekers Allowance. The job centre advisors are being told that the new criteria for getting "paid" the £71 a week JSA is that all job seekers must look, and prove they are looking for work, for 35 hours a week. I kid you not. This in effect means that all job seekers are FULL-TIME EMPLOYED LOOKING FOR WORK. The agents are saying "how the hell can we prove they are looking for work for 35hrs a week???". The government is one huge centrally controlled massage parlour for stats.