Earlier this week, we wrote about how inflation
is hidden both by the Feds and by corporations.
Why
hide inflation? Well for one thing, understating inflation allows you
to overstate GDP
growth.
One of the biggest games played by the bean
counters in Washington. in the US is the overstatement of GDP growth
by understating inflation.
Consider this simple example. Let’s say that
the US GDP grew by 10% last year. Now let’s say that inflation also
grew by 10%.
In
this scenario, real inflation
adjusted GDP growth was ZERO. However, announcing ZERO GDP growth is
a major problem politically.
So what do the Feds do? They claim that
inflation was just 8%, and BOOM you’ve got 2% GDP growth announced
for a year in which real GDP growth was actually zero.
This
game is played all the time via a metric called the GDP “deflator.”
Technically what this is meant to do is remove the effects of
inflation from the GDP growth numbers to show what real growth
was.
However,
what it actually ends up being is an accounting gimmick that allows
the numbers to overstate GDP
growth.
By
now, we all know that the CPI numbers understate inflation
significantly. But the Federal Government uses a GDP deflator that is
even lower the
CPI.
This is like measuring your height in “inches”
that are actually centimeters. In reality you’re still the same
height, but nominally you look a lot taller.
Inflation is a very real problem for the
economy and for the US financial system. We’ve been told to believe
that it is a necessary evil, but the reality is that it concentrates
wealth, weakens the US dollar and raises the cost of living.
None of those are beneficial to the US as a
whole.
Since 2007, the world’s Central Banks have
collectively put more than $10 trillion into the financial system
since 2008. To put that number into perspective, it’s equal to
roughly 15% of global GDP.
This kind of money printing is literally
unheard of in modern history. And it has set the stage for a roaring
wave of inflation to hit the financial system. Indeed, the first
signs are already showing up… not in the “official” Government
data (which is bogus) but in how those who run businesses around the
globe are acting.
For a FREE Special Report on how to protect
your portfolio from inflation, swing by
Best Regards
Phoenix Capital Research
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