If You Want to Destroy My Sweater


August 17, 2014 by JImbo

 US GDP Grew 4% in the Second Quarter of 2014!


That sounds good. Certainly it sounds better than last quarter’s “GDP lost over 2% in First Quarter!”

I’d LIKE to give credit where credit is due. However, I have to be fair and practical. It’s in my nature.

I’m a moderator. When things sound really good, I even them out with some sober facts. When things look bad, I push for the positive. It’s what I do.

Somewhere in the middle is the actual story. Since “average” and “moderate” don’t make good news stories, the true story is often lost in the headlines. That’s just the market bias to sell newspapers/website advertising.

That’s even before you consider the political and personal biases out there. Do you think the Administration wants you to know how bad things are just before an election? Do they really want to OWN the consequences of their actions over the past 5 years?

Without getting too political or in depth in a markets analysis, let’s be clear. There are lots of unanswered questions out there. We need to at least ask the right questions before we can try get the right answers.

For example… this 4% increase comes after a 2% decrease. So that means it’s more like 2% in the past year, right? Is that just a natural snap-back?

2% is much closer to “average.” So, that’s reasonable. We won’t know final numbers for another month or two (if we truly trust them or agree with their methodology of course.)

Now look at the footnotes in the news. Consumer prices are up 1.9% for the quarter, and 1.3% for the previous quarter. What does this mean?

It means that while things are more expensive, there isn’t much more STUFF. The GDP is based on prices and if things cost more, the same stuff LOOKS like more than it actually is.

You know this when your shopping cart has less in it but the shopping bill is the same every month. We KNOW this, but we don’t THINK about it. It doesn’t make that leap from instinct to rational analysis.

So, factor in those two things… 2% of the growth is “bounce” and 2% is higher costs… and that 4% disappears. We are no further ahead than we were last quarter or the end of last year.

That’s not “growth.” It’s STAGNATION. When you have INFLATION with STAGNATION, that’s called STAGFLATION.

Yes, that Jimmy Carter boogeyman of the economic markets is here and has been for awhile. This time around the government has managed to hide the TRUE inflation rate by claiming it’s “only” 1.9%. That’s simply not true.

The ACTUAL inflation rate is much higher but (as I’ve said many times before if you know me) the government doesn’t REPORT it that way. They are supposed to simply take a “basket” of stuff in the average budget every month and calculate the increase in the cost of the average person’s budget.

What they actually DO is they omit anything that has high inflation rates. That includes food, gasoline, rent, electricity, water, heating fuel, and a half dozen other things.

Wait… isn’t that where most of my money goes? Yup. You got it. You’re waking up!

So yes, if you take everything you actually spend money on out of the equation… you’re left with a few things that have surprisingly low inflation! For example the cost of cell phones, flat screen TVs, clothes and dollar store plastic toys are pretty low!

No, it’s not ethical. We ARE talking about politicians though. What do you expect?

So what’s our REAL inflation rate?

A good guess from multiple sources based on “old fashioned” calculation methods (ie before all the omitting the high price items) puts the figure at least TRIPLE the official rate. A good conservative guess is 6%, but from many consumer polls it could be as high as 8-10%.


That in turn relates to unemployment. Follow me here. It seems like rambling, but these stats are all interrelated.

Interestingly, that inflation rise and GDP drop tracks with the loss of jobs in this country. There are a record number of people without jobs in this country. The government SAYS “unemployment is low” but that’s because they (again) omit many of the unemployed people. If they kept them in it would be at least DOUBLE what it actually is.

To put it simply, if you don’t have a job but aren’t ON unemployment from the government you are NOT UNEMPLOYED. I know it may FEEL like you don’t have a job but don’t worry. The politicians say you aren’t REALLY unemployed. Doesn’t that make you feel better?

So yes, only 63% of the people who CAN work actually ARE working. But that should be seen as a GOOD thing because that loss of about 1% of workers a year are just (to quote politician Nancy Pelosi “Pursuing hobbies and enjoying life instead of working.”)

Well whew that’s a relief! I thought they were starving and unable to work! I’m glad to know they are just on an involuntary vacation pursuing their hobbies. What a nice government we have!

One more factor to add here. The jobs that ARE being created don’t pay as much as those that are being lost. If you lose a $60,000 a year job and pick up one for $45,000 a year that’s still a job, but it’s less money. You simply don’t have as much money.

In fact, If you lost that job and get TWO jobs at $30,000 a year each the government counts that as TWO employed people. While I admit you’re doing the WORK of two people, is it really fair to count as TWO EMPLOYED PEOPLE? Again… politician logic.

So put those things together.

The “bounce” from the last quarter.

The higher inflation.

More people unemployed (but invisible)

And people working more for less money.

I won’t go into the false effects of transitory export/import reporting, market rates or other bullcrap either. Doesn’t matter. You get the idea.

That “4% growth” is a sham. It’s a fun cheery headline that’s based on multiple lies and misinformation.

We are NOT growing. We are in fact STILL IN A RECESSION.

Ask yourself what happens when the Federal Reserve stops printing money to pump into our economy and when the government actually has to fire workers to balance the budget. What happens then?

And why if we’re GROWING does the Federal Reserve still need to pump over a TRILLION dollars a year into an economy “because it’s weak?”

A healthy person doesn’t generally need life support or an IV line.

I’m not an economist. Far from it. I just look around and see things that don’t add up.

Have you ever noticed a loose string on a friend’s sweater and you have the urge to pull the string? Then your friend screams at you for “ruining my sweater!” Or the chipped paint peeling off their house. Or the semi-flat tire on their car.

They don’t FIX the sweater (or their house or their car.) They simply don’t want you to NOTICE it.

Pull some strings and this sweater unravels pretty quickly.


2 thoughts on “If You Want to Destroy My Sweater

  1. Patrick says:

    So each Congressman must count as at least three employed people. Their federal job. Their job with whatever law firm will have them. Last, whatever “consultant” job or jobs, they may have. Keep up the good work boys!


    • JImbo says:

      That is a good point.
      Imagine how high unemployment would be if we got rid of all those corrupt politicians and lobbyists! Who would spend our tax money then? We would be forced to keep our own money and spend it ourselves!


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: