ECONOMIC developments
Consequences of Lying Economic Stats
A lesson on Banking & housing prices
McCain/Republican planned tax cut plus Housing Market Crunch
Sub-prime Bailout--banks, not homeowners
Neoliberalism, their global agenda--jk
Neoliberalism, Robber Barons, an historical view--jk
Neocon Economics Data--Reagan to Bush
US DEBT--explained
What 2008 has in store
The Great Debt Crisis Begins-08
Debt to Grow, Whomever is Elected
Trickle-down shit
Analysis of effects of tax cuts--exposes the neocon lie
Municipal Bonds are impacted by home loan defaults--dominoes
Let Them Die, the position of big PHARMA and WTO trade treaties
Financialization, the major new economic trend
China, poverty and manufacturing
Globalization and the Super Rich

Consequences of Lying Economic Stats


The effects of the cooked figures is part of the rewrite of history.   Never trust the ruling class, they are grinding their own ax—a trait of organizations.  Things are much worse than the BLS’s numbers.  See also Kevin Phillip’s article on the Numbers Racquet, published in Harpers Magazine.  What I have written is a call for a true account both of the rate of inflation and a more realistic GDP, one which permits a comparison of the current economic strength of a nations as measured by the purchasing power of the bottom 95%--jk. 

This article was mailed to Monthly Review Magazine (which jk subscribes to), and to 5 radical economists. 

Consequences of use of lying economic stats


What follows below is a call for you who have the skills, access to academic economists and a wide readership to set the record straight as to the actual rate of inflation, and to create a new GDP that reflects the material productivity of our nation.  Economist John Williams ( has addressed this issue in a subscription service for corporations to improve their economic modeling.  Williams finds that the BLS rate underestimates by roughly 7%, for 2006.  See also in 2008 Kevin Philips at  Liberal economists need to correct the economic data so as to present a true accounting of decline under the neoliberal-corporate takeover.   

The ruling globalizing corporations, especially those in the financial sector, use the artificially-low interest rate and official government economic figures which support that low rate to promote their ends.  M.R. shouldn’t use their numbers.  I have found numerous distortions in your articles based on their figurers.  For example there are 3 on page 19 of Internationalization of Monopoly Capital, June 2011 issue:  1) economic stagnation of the last 3 decades; 2) that there has been growth of the world economy faster than the increase in population; 3) giant corporations are too big to fail.  These myths ought to be refuted. 

3)  Two area need to be corrected to contradict the capitalist sales pitch:  one the strength of the economy and benefits to the bottom 95%.  The distortion created by the expansion of currency following the US going off the gold standard in 1972 has inflated the GDP figures without improving wages are wealth for the bottom 95%.  This expansion of credit used in a casino economy distorts both the GDP and the purchasing power of the bottom 95%.  A new measure reflecting the soundness of a nation’s economy is needed.  This new GDP should be based on the good made, exports that serve as a basis to offset cost of imports.  The figure should exclude military expenditures, interest payments, and profits going out of the country.  This measure of the wealth of a nation should not include the inflated service sector that includes finance.  A second figured is need to measure the purchasing power for the bottom 95%, what the worker gets for his labor.  

An accurately measure of the financial state of the bottom 95% would include a basket of the major items that they use:  food, housing, utilities, transportation, education, healthcare, housing and then the number of hours the median income person needs to work to acquire that basket.  Besides serving as a measure of the real economy, it also measures inflation. You could set up a table as to how many hours the median income person must work to purchase these basic items over the last 5 decades. 

Also needing correction is the CPI, which permits the bottom 95% to gauge their declining situation.  The financial sector (the biggest player in the shadow government) keeps prime rates low in favored countries because the debt which they have purchased such as US Treasury bonds and t-bills, are used to meet the reserve requirement (assuming it is enforced) for fractional reserve banking and thereby expand credit.  The expansion of credit accounts for most of their revenues.  If the rates of interest on government bonds reflected the actual rate of inflation—say 12%--then the US would collapse under the load of high interest rates on its debt—as it has in Greece and Spain (a topic worthy of an article exposing the plight of these nations; also one on the high rates paid by underdeveloped nations).  This causes civil unrest, possible defaults on debt, and a reduction in military spending.  The US & EU militaries are the boot in the globalizing corporatist takeover.   These are compelling reasons for an artificially low prime rate for the favored countries.

6) Having pegged the rate of inflation artificially low, it is used to create stats to sell their neoliberal economics in the corporate press.  The expansion of credit creates the illusion of economic growth through their GDP figures based on debt, and the increasing debt of the workers hides their decline in purchasing power.  Interest rates are historically low; but interest payments historically high.  They suck up purchasing power:   consume 23% of the median family’s income, over 800 billion of the federal budget, similar amounts from corporations, and from the state & local governments.  The service sector accounts for 70% of GDP up from 30% in 1970, and most of it consists of finance--which makes 44% of corporate profits.  To count this distortion in the GDP of the service sector by including parasitic finance is like counting the weight of a person with a watermelon-size tumor.[1]  The over-priced health care system is another tumor, as is advertising, and the federal taxes.  The value of their services is only a small fraction of their costs.  They consume too much of the family budget.  Not only has real wages shrunk since 1970 while productivity has risen, but the burden of interest payments, health care, etc has dramatically risen.  While the economy might be stagnant, the conditions of the bottom 95% have declined.  The same too for the world economy, personal wealth for the 95% is declining.  We need figures which accurately reflect the real economy, based on durable goods and resources.  We need accurate figures to measure the worth of labor.    

As for the third point above, “too big to fail”:  M.R. has written of the shadow government which it calls oligopoly capitalism.  They aren’t too big to fail, but too well connected.  Monopolies have in the past been broken up, such as Standard Oil & AT&T, and they can still be broken up, or nationalized if the government served a different master—Lazaro Cardenas nationalized Mexican oil and refineries in 1938.  We need to end the corporatist state, than they can fail.  University economics ought not to be part of the problem, but rather the forum for the fix; and the Monthly Review ought to stand up as it did when it published Why Socialism? by Albert Einstein and The ABC of Socialism by Leo Huberman, rather than become entangled in the university debates on issues that are far removed from the plight of the masses; a debate that obscures that the purpose of government is the promotion of the public weal.

[1]  The problems from financialization come from the expansion of credit without sufficient regulatory oversight.   Expansion is based upon fractional reserves most of which is government debt they hold.  This credit banking allocates based upon maximization of short-term profits; thus the growth of derivates, futures, currency raiding, etc.  Stagnations primary cause is not financialization--as you write--but liberalization as required by free-trade agreements that have removed the power of the state to protect labor and national businesses, set tariffs, which promote a living wage.  The financial sector chose casino markets because of the contracting economy’s poor returns.  We need populism with its measure of government regulations being the betterment of conditions for the bottom 95%. This can only be accomplished by radical political parties whose popularity and success might follow the collapse of the corporatist global order like in 1929, but this time it ought to remove their political voice (the media and political donations).    

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