Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
WAYS TO SECURE YOUR FINANCIAL FUTURE - 20th Aug 19
Holiday Nightmares - Your Caravan is Missing! - 20th Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

US Money Supply and the Bond Market Blackhole

Interest-Rates / Money Supply Aug 19, 2008 - 04:41 PM GMT

By: Rob_Kirby

Interest-Rates

Best Financial Markets Analysis ArticleWith a show of hands, how many people really believe the U.S. Bureau of Labor Statistics when they report that inflation is running at 2 – 4 %? 

I'm not seeing very many hands. 


As GoldMoney's James Turk recently reported,
“To give you a true picture of just how bad inflation has become, here is what John Williams of Shadow Government Statistics reports in his latest newsletter : "The SGS-Alternate Consumer Inflation Measure, which reverses gimmicked changes to official CPI reporting methodologies back to 1980, rose to a 28-year high of roughly 13.4% in July, up from 12.6% in June." It's no wonder that the demand for precious metal coins and small bars is so strong.”

Of course, if we are being falsehoods on inflation – it necessarily goes that we are also being fed lies about the Bureau of Economic Analysis' [BEA] reports of Real GDP [Gross Domestic Product].   The “deflator” used by the BEA is derived from the BLS's officially reported inflation; and it is backed-out of gross GDP to achieve “net” or real GDP.

The implication here, folks, is that western economies have already been experiencing “real negative growth” for a number of years.

Birth / Death Model and Hedonics Used in Reporting the Unemployment Rate

Chart of Unemployment Rate. U-3, U-6, SGS

Borrowing the above chart from Shadawstats.com, we can see clearly how John Williams has re-constituted the unemployment rate [in bold blue above] to be consistent with how it was measured back in 1980.  Our current unemployment rate [in 1980 terms] is running north of 14%.

In conclusion, we are fed lies about the true rate of inflation, economic output as defined by GDP and the official unemployment rate is perhaps as much as 900 basis points too light.

M3 Reporting and the Monetary Base

Recent research I've conducted and presented has led me to the inescapable conclusion that there are some SERIOUS macro incongruities in the Fixed Income [Bond] complex:

  • I first broached this subject in Pirates of the Caribbean , where I dispelled the [then] popular myth that Caribbean based Hedge Funds were gobbling up unexplainable amounts of U.S. Government Debt.  The reality is they couldn't have.
  • In The Elephant In the Room , presented at GATA's Washington conference in the spring of 08, I documented how J.P. Morgan was seen to be conducting ‘massive' trade in U.S. Government Securities that legally cannot exist.
  • In Dead and Buried, But Not Forgotten , I highlighted the reporting of Daniel Gros showing, “The global financial system seems to have a black hole at its centre. Over the last two decades, US residents have sold a total of about $5,500bn worth of IOUs to foreigners, yet the officially recorded net investment position of the US has deteriorated only by a little more than half of this amount ($2,800bn). The US capital market seems to have acted like a black hole for investors from the rest of world in which $2,700bn vanished from sight - or at least from the official statistics.”
  • In Dead and Buried, I then connected the dots between the possibility of securities and collateral fraud and 9-11.

The revelations in the Gros article are highly suggestive that some SERIOUS MONKEY BUSINESS has occurred with the monetary base; namely, that a stack of bonds have been/were bought [result of foreign revulsion of U.S. debt in the wake of LTCM perhaps?], or monetized if you prefer [likely through J.P. Morgan's absurd 93 Trillion derivatives book], and the fiat money that was printed out of thin air to ‘redeem them'.  These newly created balances were NEVER recorded in official statistics or M3 reporting [as the Gros article suggests] – because acknowledging their existence would be akin to admitting that foreigners had lost faith in U.S. Government Bonds. 

Ladies and gentlemen, bonds DO NOT DISAPPEAR , get misplaced, or otherwise get lost in black holes - period.      

This view, coincidentally, would go a long way to explaining why the Fed stopped reporting M3 Money Supply Aggregates on March 26, 2006.  Could it be that the Fed was really concerned that continued reporting of M3 would have been reverse engineered by someone like John Williams revealing that bonds or debt outstanding does not equal money in circulation?

Making the amount of money in circulation look smaller – in the face of deliberate, wholesale money printing – would make fiat money appear relatively more attractive.

Who would benefit from such an act?

Published monetary aggregate data is perhaps more laughable than bogus published reports that inflation is running at 2 – 4 % levels.
For those of you naïve enough to think that a Central Bank would not commit such an act, please
consider the words of Dallas Fed President Richard Fisher ,
" The Federal Reserve will do what it takes to maintain its credibility, which is central to preserving the integrity of the US dollar ," Dallas Federal Reserve Bank President Richard Fisher said on Tuesday.

This report, from Reuters, continues: " We seek to get it right. And the answer to your question is we will do what gets it right ," said Fisher.

Answering audience questions after a speech to the Dallas Friday Group, Fisher said the US dollar is a " faith-based currency " dependent on the credibility of a central bank.

"In addition to a faith-based currency, we are the currency of the world and we must maintain its integrity..."

Well……………..have they?

By Rob Kirby
http://www.kirbyanalytics.com/

Rob Kirby is the editor of the Kirby Analytics Bi-weekly Online Newsletter, which provides proprietry Macroeconomic Research.

Many of Rob's published articles are archived at http://www.financialsense.com/fsu/editorials/kirby/archive.html , and edited by Mary Puplava of http://www.financialsense.com

Rob Kirby Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules