Even knowing that the economy is in a recession/depression, it is the kind of headline that grabs your attention: “Recession Worse Than Prior Estimates, Revisions Show” by Bob Willis at Bloomberg.com. “The first 12 months of the US recession,” he writes, “saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.”
By this time I am losing interest, as I suspected as much, and would have been surprised if things had turned out otherwise. I say this with a certain haughty-yet-snotty attitude because the Austrian school of economics is so easy to grasp, so intuitively correct and now so provably correct, that it is easy to anticipate the long-term when a central bank is creating excessive amounts of money and credit, especially when the majority of it is used to expand government spending. Child’s play!
So seeing the future clearly in economics is easy, unlike forecasting other social institutions, like marriage, which I thought meant that I would be happy for the rest of my life, but which meant that I did not remotely understand the full ramifications of such an arrangement that was not, and I emphasize NOT, even hinted at when we were dating, which should be grounds for some kind of legal action so that I can get my life back, instead of having it wasted by her, and the stupid kids, and the stupid relatives, and the stupid neighbors, and the stupid job, and all the stupid stuff you have to do as a result of being so stupid as to say “Goodbye!” to a life of mindless, selfish hedonism in the first place where, with any luck, you would be dead by now, lying in some gutter with a big smile on your stupid face, instead of putting up with spouses, children, neighbors, et al who are all so stupid that they don’t buy gold, silver and oil even after I always deliberately end the “Happy Birthday” song with, “And if you’re not buying gold, silver and oil, then you are not going to get your wish because the Wish Fairy knows that you are too stupid to know what to do with that kinky stuff for which you are secretly wishing.”
But this is not about any of that, but about the way that the government has now “changed the way it accounts for natural disasters, such as Hurricane Katrina,” which ought to make you suspicious, especially as it was done for “eliminating much of the prior volatility in income calculations”, whatever in the hell that means.
I imagine that the government could use it as an excuse to “find” more money to spend by reducing accrued costs or disguise the fact that government is incompetent. Either one.
I personally think it is the latter, and not just because I am a suspicious and paranoid little rat who thinks that the government is an expensive, disastrous, giant dead-weight loss that is out to get me, but because another interesting change is that “Personal income was revised up over the last decade, after the government boosted its adjustments for the underreporting and non-reporting of income using more recent data from the Internal Revenue Service.”
Of course, I think this is so the government can now say, “Hey! Income was up over the last decade, so shut up about how we are a bunch of incompetent and dangerous bunch of arrogant pinheads who actually believe the stupid stuff we say, like how we say that continual government deficit-spending and continual expansions of money and credit by the Federal Reserve are some kind of blessing and not the most stupid things that we could have possibly done!”
The “found money”, in case you were wondering, apparently comes from income increases as a result of the housing boom, and “in the most recent years reflect gains from rents, interest and proprietors’ income”, as if that distorted boost to income is now “the new norm” or something! Hahaha!
Finally, the Commerce Department “shifted food services, which include meals purchased at restaurants or served in schools, out of the food category.”
Paradoxically, “As a result, the Fed’s preferred inflation gauge – which tracks consumer spending and excludes food and fuel – was pushed up by 0.2 percentage points for the three-year period from 2006 to 2008.”
Later, they explained that “The reason for this is that costs of meals away from home are not as volatile as fresh food, the government said, and therefore services should be included in the measure commonly known as the core index.”
They now compute inflation in “meals away from home” by disregarding the cost of the food, which is going up, and look only at the cost of the labor in preparing the food, which is going up, but not by as much right now because unemployed people are willing to work for peanuts? Hahaha!
If blatant corruption to disguise inflation and incompetence is not enough to convince you to buy gold, then there is nothing I can say to change your mind.
Fortunately, that means more for me, and at lower costs, until the day when you say “Oops! Oh, woe is me for not having listened to the Wonderful And Wise Mogambo (WAWM) when he said to buy gold, silver and oil, and now I rue that fateful day, just as he said I would, and I see that he was right when he said to buy gold, silver and oil, which would have made me, too, say, ‘Whee! This investing stuff is easy!'”
Until next time,
The Mogambo Guru
for Markets and Money