Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

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