John Williams' Shadow Government Statistics for April
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Gold and Oil Price Surges Foreshadow Dollar, Inflation and Political Turmoil
Inflationary Recession Continues Its Intensification
Both Current-Need and Systematic Manipulations Distort Key Economic Data
The price of gold has more than doubled in the last four years, in a steady run-up to what now is $600 per ounce. That market is sending out a warning signal of extreme danger facing the U.S. dollar and of rapidly increasing risk of severe global instability. Those observing these extraordinary times ignore such warnings at their peril.
At the same time, the political geniuses running Washington continue to fret over the latest polling numbers, while ignoring the unfolding fiscal and structural economic crises that eventually will thrust the U.S. dollar into its final tailspin and the domestic economy and financial markets into crash landings.
There are two broad types of political manipulation of economic data, systematic and current-event, and both are at work distorting economic reports. A new example of systematic manipulation -- using methodological change or redefinition -- is noted in this month's "Reporting Focus" on the PPI. Imported goods were excluded at one point from the pricing surveys. In an era of a generally weakening dollar, that removed some inflationary pressures from a series that was supposed to measure inflationary pressures.
The current-event manipulation, however, is what will dominate key economic figures out through the mid-term election. It involves direct political intervention in the reporting process in order to enhance the reported results. Indeed, the relatively happy news from the employment/unemployment front in March appears to have been carefully crafted by Administration manipulators. Similar efforts are likely to generate a reported surge in first-quarter GDP growth, as well as ongoing "strong" jobs data.
Nonetheless, continued negative inflation-adjusted growth in money supply (M2), monthly declines in key components of the purchasing managers surveys, sharp downturns in annual change for housing starts and help-wanted advertising, flat to negative annual change in consumer confidence and real earnings, and a record trade deficit all continue to show faltering economic activity.
Then there is inflation. With oil pushing $70 per barrel and gold at $600 per ounce, how can anyone talk about low and stable inflationary conditions with a straight face? Some inflation considerations are discussed in the following section on gold and in this month's "Reporting Focus" on the PPI.
Despite all the hype and all the propaganda, the doctored data are not fooling Main Street U.S.A., and they are not fooling the gold market......