Read This Blog: You are losing your wealth daily

This blog is vitally important, please suffer through it


I have an ING stock account that was designed to automatically buy shares in any odd-lot amount every month.  It was a handy way to invest before stocks became dubious and being in the dollar crazy. Now, I only have a few thousand shares in a Canadian gold mine and I am waiting for them to find mud, so my shares will jump through the .01 per share level.


ING has created a new place to park uninvested money, a bank account.  This is in addition to their money market for uninvested funds.  Here are the respective rates in the advertisement:

New FDIC Insured  Cash Balance	Money Market   Cash Balance
0.50% APY1	0.01%

How are returns calculated?

Wow.  Half a percent! FDIC insured!  I wonder what PayPal is offering?


This announcement is a reminder to look at the real inflation rate to see how how the dollar is doing to preserve our wealth. If you do anything, go to the end and see how your dollar is doing vs. gold.


There is a great site that undoes the lying in government statistics which you can find by clicking on the headline. If you are a grown up, you lived through inflation during the Carter years, Carter now being the second worst president.

Inflation

There was near hysteria over the Carter inflation rate, he was 1977 to 1981, so the government met the problem of hysteria by redefining inflation so it could report more attractive numbers.


The government would never lie (also called "errors") to us, would they?


From John Williams 2004 introductory essay on the manipulation of numbers and the theory behind "shadow stats" from the above site:

· As former Labor Secretary Bob Reich explained in his memoirs, the Clinton administration had found in its public polling that if the government inflated economic reporting, enough people would believe it to swing a close election. Accordingly, whatever integrity had survived in the economic reporting system disappeared during the Clinton years. Unemployment was redefined to eliminate five million discouraged workers and to lower the unemployment rate; methodologies were changed to reduce poverty reporting, to reduce reported CPI inflation, to inflate reported GDP growth, among others. 

The new inflation rate does not include food and fuel. This is what we used to call lying. Still you can rest assured, if you get your news from TV, as your gas prices double, there is no inflation.


Say, what could cause inflation?



Since inflation is classically  defined in relation to the monetary base, I guess we ought to look at that. See graph.


If you are an economist, you will not see anything out of the ordinary under the Obama reign. Still, give it a try.


The current dispute over the debt ceiling is about not having more increases as debt requires the increase of the monetary base through creating "money."


Do notice the shaded area that captures the whole crap shoot. Notice the correlation between monetary base and the real inflation rate in the first graph.


Bottom Line:  If you get 1/2% interest and your dollar is devaluing at 10% a year, your money is vanishing.  Is this just the whim of economics?  


No, it is an intentional inflation. In the end, it is the transference of your wealth to others.  It is stealing designed by the people we elected into office. I repeat:  it is stealing. The government and banks will NEVER tell you this as they are taking your money. Your stock broker will NEVER recommend you buy gold. 


In addition, since it is humanly impossible for citizens to pay our national debts, inflation is the only way we can water down our money so we can pay our bills. You will lose your wealth, investors will lose their return, and no one will invest in the U.S. so our interest rates will skyrocket. 


A John Williams analysis in 2008 and he still stands behind it:

...The U.S. economy is in an intensifying inflationary recession that eventually will evolve into a hyperinflationary great depression. Hyperinflation could be experienced as early as 2010, if not before, and likely no more than a decade down the road. The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, and gross mismanagement....

This simple fact is why gold is so popular, from Seeking Alpha:

I suppose I should find the coffee vs. dollar graph.
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A closing note from Williams:

...As a result of the systemic manipulations, if the GDP methodology of 1980 were applied to today's data, the second quarter's annualized inflation-adjusted GDP growth of 3.0% would be roughly three percent lower (effectively netting to zero percent or below). In like manner, current annual CPI inflation is understated by about 2.7% against the pre-Clinton CPI methodology (would be about 5.7%), and the unemployment rate is understated by about seven percent against its original design and what many people would consider to be actual unemployment (would be about 12.5%). 

As to the financial results of federal operations, the application of accrual accounting and generally accepted accounting principles to federal operations shows an actual fiscal year 2003 deficit of $3.7 trillion, as reported by the U.S. Treasury, versus the reported cash-basis $374 billion....