Wednesday, June 30, 2010

Torture Numbers, and They'll Confess to Anything.

Why does it often seem as if government statistics, especially regarding the unemployment rate, fail to reflect reality? In short, because economic statistics reflect the "reality" those in power want you to see.

For example, in 1982, the Reagan administration reformulated both the unemployment rate and the Consumer Price Index in order to create the illusion that would ensure his agenda. Unemployment figures were too drastic, so the administration altered the equation by dropping people who had not looked for a job in the last two weeks, freshly unemployed teenagers, etc. Then, he decided the inflation rate should appear more "under control". So, he waved his magic wand and presto, a few things disappeared...and a few things magically appeared, for ex., the cost of renting a home replaced the cost of buying a home.  Anyway, you get the picture. It only got worse under George H.W. Bush...

Shadow Government Statistics "exposes and analyzes flaws in current U.S. government economic data and reporting, as well as in certain private-sector numbers", and provides charts and graphs reflecting what's really happening as you can see below:

Chart of U.S. Unemployment
Courtesy of ShadowStats.com

Chart of Growth in U.S.Gross Domestic Product (GDP)
Courtesy of ShadowStats.com

Chart of U.S. Consumer Inflation (CPI)
Courtesy of ShadowStats.com

Chart of U.S. Money Supply Growth
Courtesy of ShadowStats.com

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