THE MAGIC WEALTH PYRAMID VS U.S. STATISTICS LIARS

Robert A. Blecker is Assistant Professor of Economics at The American University. 

Washington, DC, and an economist with the Economic Policy Institute. 


 In response to criticisms by private economists,’ the Commerce Department’s Bureau of Economic Analysis (BEA) has revised its method of 

calculating the U.S. Net International Investment Position (NIIP). New estimates for 1982-89 released on June 9, 1991 seemed to imply that the U.S. was much less of an international debtor than was previously thought. [HAHAHA] When the new methods were extended to the data for 1990, in estimates released on July 2, 1991, however, the result was only confusion. The BEA reported that one of its 

two new measures of the NIIP improved by $27.5 billion in 1990, while the other one worsened by $92.9 billion! 

 

How typical!  For years, the BEA collected and compared data.  It was easy to track things.  This didn’t please people who wanted to drive the economic car off the cliff.  So they demanded changes!  And did the changes make things clearer?  Or did it sow confusion?  

 

Easy to answer!  It made it impossible to correctly track trends that were definitely aimed straight down to hell.

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This Briefing Paper will explain how the BEA revised its measures and discuss what they imply for our understanding of the United States’ net debtor status. This paper will show that the parts of the NIIP which have been revised are not the parts which reflect our true net debt position, as the term “debt” is normally understood. Neither of the new measures changes the extent to which the U.S. increased its net Financial liabilities to the rest of the world in order to pay for the trade deficits of the 1980s. 

 

I have noticed this long-range program of ideology which has sought to turn debt into something else.  This is classic black magic: things are turned into their exact opposite via magic language spells.  By spinning a web of words around the word ‘debt’, these magicians have worked for years to flip it into a good thing, not pure evil.  

 

The good professor here notes that truth was not the goal of the changes in how data is written and examined but rather, this was toyed with to give a false answer so we could continue with raging trade deficits!

 

They did this with EVERYTHING.  They did this to unemployment data, inflation data, you name it, they toyed with everything in an attempt to cover up the truth.  The refusal to give out the M3 data is along the same lines.  Bernanke claimed, no one was interested in the data.

 

The firestorm of howls led him to tell us, he was still collecting the data.  He just didn’t want to SHARE it with us!  The same with gold: the Fed hides, obscures and misleads by hiding data or making it difficult to compare time frames, as we see in the Treasury data above.

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Moreover, as a glance at Figure 1 will indicate, both new measures show that the overall trend of the NIIP is still very much downward, even though these new measures make the level of the NIIP look higher, and even though one of the new measures (along with the old measure) shows a slight upturn in1990. Nothing in the revised estimates changes the fact that the United States   went from having a large net creditor position at the beginning of the 1980s to being the world’s largest net debtor at the beginning of the 1990s. 

 

They tried to hide this vital information!   There is no point in having data if it is used for lies.  The need for truth is tremendous.  The very ancient concept of Libra was, She was the guardian at the Gates of Death.  She wrote down everyone’s history with this feathered pen.  And weighed our hearts on her scale against this fatal feather.  She insists, we confess the Truth when we come to Her.  

 

Anyone running a system on lies is like Madoff and Stanford: money does seem to come from nowhere and it makes us feel temporarily rich but it is all faux wealth and will vanish in a flash the minute the Truth is told.  Bang!  Gone!  Not even an hour later, does fake wealth survive surveillance from the All-Seeing Eye.

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In addition, there are some special problems with the data for 1990 which account for the apparent improvement in the NIIP in that year by the old historical cost measure and the new current cost measure. Both a temporary fall in the value of the dollar at the end of 1990 and the enormous statistical discrepancy in the U.S. balance of payments for 1990 make these apparent improvements dubious. In fact, it is likely that the true NIIPfor 1990 should be about $60 billion lower by any measure, implying a continued downward trend. 

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Doesn’t this graph look like the mirror image of Shadow Government Statistics wonderful graphs?  ALL of our major data is way, way off.  We can’t compare the past with the present because of this outright lying.  For example, our rulers boast about killing inflation.  I know, since I am on a fixed income, this is one big, fat lie.  No, inflation has ravaged my family since 1996, when my husband was injured at work.  

The upper classes who pay people to lie about inflation don’t care if inflation rages, they make money off of this!  They LOVE inflation!  If their paintings by Monet rise from $1 million to $65 million, they are pleased as punch. If their mansions rise from $5 million to $25 million, they are happy as peas in pea soup!  But they know that if the lower classes are unhappy about inflation, all hell will break lose.  So they lie about it.  When angry lower class people complain, these con men tell us to shut up.

‘What inflation?  I don’t see no stinking inflation,’ they tell us.

http://epi.3cdn.net/8dd5627cab90aafccf_jxm6bnp99.pdf

Under the old method, direct investment was valued at historical cost (book value). That is, the value of U.S.-owned facilities abroad and foreign- owned facilities in the U.S. were both valued at the prices at which they were acquired in the past (net of depreciation). This created a distortion, however, because U.S. firms tend to own production facilities abroad which are older than foreign-owned facilities in the U.S. For example, a Ford plant in Europe or a General Motors plant in Brazil would be valued at the prices of the 1960s or 1970s. when those plants were built, while Honda and Nissan plants in the United States would be valued at the prices of the 1980s. when they were built. 

 

Ah, the innocent days of 1990!  Back then, we had old factories and Japan was building new ones here.  Now, our auto industries are building state-of-the-art factories in China and Brazil!  The bankruptcy has to be managed so Ford and GM can keep these foreign factories while shutting down union factories in the US.  

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Since price levels have risen dramatically due to inflation, both at home and abroad, this procedure greatly exaggerated the value of foreign direct investments in the U.S. relative to U.S. direct investments abroad. 

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Also, U.S. gold reserves were valued at the 1973 official price of $42.22 per fine troy ounce. However, the market price of gold soared to about $600 per fine troy ounce at the end of 1980, and has fluctuated between $300 and $500 per fine troy ounce since that time.3 Thus the old method grossly undervalued the official U.S. gold position in the 1980s by a factor of about ten. 

 

THIS BRINGS UP A SEARING ISSUE!  Namely, why have the totally fake valuation of gold?  And do they do this all the time?  I have a lot of trouble, figuring out gold holdings in the Treasury do to instability in calculating the gold values.  Instead of accurately reflecting inflation by having the value numbers change with gold prices, they have a stable, fake valuation.  They may as well say, ‘We have all this gold, hahaha.’  

 

But they could easily show the valuation changes and these do affect how we figure out our balance numbers.  So many screwy things are going on around gold!  It is like this dark corner in our public finances.  It sort of sits there, in the dark and we can barely see its outline as it grows or shrinks in size.  Ron Paul correctly called for an investigation of our gold holdings.  

 

The fact that he is ignored means, this is important and the liars who are screwing with all our basic statistics do not want us to know more information about our gold holdings.

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In contrast, the old measures of portfolio investments had no special valuation problems (aside from the adequacy of the underlying reporting, which will be discussed further below). Most of these assets and liabilities were already measured in current values, and those measured at historical values were mainly items which would be hard to revalue at current prices (such as 

bank loans). 

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The only parts of the NIIP which the BEA revised are (1) direct investment and (2) gold reserves. But it was (3) portfolio investment-the part which has not been revised-which accounted for most of the decline in the U.S. NIIP in the 1980s.

 

So, the ‘portfolio investment’ parts that were not tinkered with by the criminals is the one that showed the most decline?  That is interesting!  It is obvious, this is a crime: the other data showed no decline but the one that wasn’t changed to a new regime DID show a decline so this means, the point of the operation was to prevent us from seeing an obvious decline.

 

 

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Table 1 shows that the negative net investment position for 1990 is reduced by about one-third in the current cost series (-412.2 compared with -617.9 billion dollars) and by about two-fifths in the market value series (-360.6 compared with -617.9 billion dollars). Thus it appears that the U.S. was less in debt in 1990. However, all of this improvement comes from the revaluation of gold stocks and of direct investment to current cost or market value (which are the same for gold). Our net financial debt is unaffected by these changes. as the nation was still $646.7 billion in the red in terms of portfolio investments which were not revalued. The excess of stocks, bonds, and other financial instruments owned by foreigners in the U.S. over those owned by U.S. residents abroad is exactly the same in the new measures of the 

NIIP as it was in the old. 


Finally, as mentioned earlier, the measured net capital inflows into the United States for 1990 were only $28.6 billion. This low figure, which holds down the decreases in all three measures of the NIIP, is almost surely an underestimate. The U.S. balance of payments shows a current account deficit of $92.1 billion in 1990.’ Conceptually, all of this deficit should be exactly matched by net capital inflows. However. only $28.6 billion of net capital inflows were recorded in the capital account of the balance of payments, leaving 

a statistical discrepancy of $63.5 billion. This far exceeds the previous record statistical discrepancy, which was $36.6 billion in 1982 (a year of major capital flight out of Latin America). The $63.5 billion discrepancy is also larger than the claimed increase of $27.5 billion in the current cost measure of the NIIP. 

 

And how do we hid this discrepancy?  Well, so far, ignoring it has worked.  Anyone who yells about this outright fraud are ignored!  Since 99.9% of our major media supports ‘free trade’, all negative data must be ignored or falsified.  I was just horrified as our trade data shot downwards to negative trillion a year levels.  It has improved only during grinding recessions.

 

This is a sign that Libra is trying to force it to balance.  She will use powerful counter forces.  The more we struggle to run things in the red, the more determined She will be to correct this one way or another.  If the only way left is WWIII, we will get that, too!  This is why it is much safer and easier to recognize the need to balance things and stop this attempt at increasing lending when we have already borrowed too much, for example.

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While there are problems with the reporting of all international transactions, the current account figures are undoubtedly more reliable than the capital account figures.’This suggests that most of the $63.5 billion statistical discrepancy is probably accounted for by unrecorded capital inflows. Thus the true NIIPfor 1990 by any measure is probably about $60 billion lower than it appears in the official BEA calculations. In this respect, even the small improvements in the NIIP at historical and current costs in 1990 are probably 

the results of mismeasurement rather than a genuine improvement in the U.S. net investment position. 


How Much Do We Really Owe? 


It is apparent from the disparity among the three measures of the U.S. NIIP, including the two new ones (which differ as much from each other in some respects as they do from the old one), that there is no single number that can truly summarize the United States’ position as a net creditor or debtor to the rest of the world. Nevertheless, it is possible to draw some conclusions from the trends in the available data. 

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None of the revisions to the data on direct investment and gold reserves should obscure the fact that the U.S. had to borrow almost $700 billion more from the rest of the world than it lent to the rest of the world between 1982 and 1990. This is the import of the decline of $689.2 billion in the portfolio investment position, a figure which is not affected by the revised estimation methods. And this is not even counting the giant statistical discrepancy for 1990, which along with previous discrepancies would push this figure to over 

$800 billion.” 

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The revaluations of other types of assets do not change the fact that the U.S. had to borrow this amount. First, the revaluation of the gold reserves merely puts a more accurate price tag on the gold in Fort Knox (or wherever the Treasury keeps it).  [HAHAHA—Ron Paul wants to know this information!!!]  Since we do not use that gold to pay our bills, its greater current market value does not imply lesser net financial obligations to other countries. In fact, as the tables show, although the value of the gold reserves was much higher in both 1982 and 1990 at current market prices than it was at the historical (official) price, its value actually fell slightly over that eight-year span as gold prices came down. 

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Similarly. a more accurate portrayal of the actual value of the direct foreign investment position does not detract from the significance of our increased financial borrowing. In particular, the $88.4 billion rise in the U.S. direct investment position at market value from 1982 to 1990 is due entirely to the boom in the stock prices of existing U.S. equity abroad in the late 1980s. a boom which was only partly offset by the stock price declines of 1990. This is purely a paper gain which can be wiped out in a stock market crash just as 

rapidly as it rose in the boom. [We just saw this happen, didn’t we?]  Indeed, even the $183.7 billion net direct 

investment position at market value for 1990 is $90.6 billion lower than it was in 1989 ($274.3 billion), precisely because foreign stock markets fell by more than the U.S. stock market in 1990. 

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More importantly, this rise in the market value of the U.S. direct investment position does not help us to pay for our increased financial obligaltons to other countries, such as interest and principal on U.S. Treasury securities, or interest and withdrawals on bank deposits held by foreigners. 

 

Bravo!  This was an excellent and rather short report!  And did it change things?  Did Madoff get investigated in 1990 when he was first reported as a scam artist?  No?  Of course not!  The scam is deep and great.  Almost everyone at the top of the economic pyramid wanted to lie and cheat us.  We allowed this to happen because our media is corrupt and supports this sort of treason.  Lying about trade, about gold, about monetary policies: Congress is totally corrupted by bribes by Wall Street gnomes!  They don’t seek the truth, they seek to profit.  Most of the Senate is made up of multi-millionaires, for example. 


 

 

basis-of-all-world-wealth1Despite the 0% spiral into negativity, we already are seeing the dawning of the next inflation wave.  Like the last one, it will be confined mostly to commodities and things we need to survive. The price of gold has, again, scaled the mountains and hit $1,000 an ounce today.  This is due to India buying more gold, again.  As well as savers in America, fearful of the next inflation wave.  While trolling the archives of the Federal Reserve, I again, came up with some interesting pearls of information that seems to have bypassed both Greenspan and Bernanke’s peanut brains.  We will look at some interesting graphs. 

Gold demand soars 84% in Q4

India’s gold demand surged by 84 per cent in the fourth quarter of 2008 on investors’ confidence in the yellow metal as a safe haven.

According to data collated by Gold Fields Mineral Services, an independent consultancy, for the World Gold Council (WGC), India’s gold demand shot up to 147.2 tonnes in the fourth quarter in 2008 from 80 tonnes in the comparable quarter in the previous year. While demand from the jewellery sector rose 107 per cent to 102.1 tonnes, investment demand jumped 47 per cent to 45.1 tonnes, a WGC release said…

Gold prices have appreciated by 10.1 per cent, which works out to an annualised return of 81 per cent, in 2009 so far.

Nothing else had a 81% return this year.  Let’s call this ‘The Year of the Golden Calf’ rather than the ox.  As instability spreads, people instinctively go for traditionalism.  This protects us from destruction, it is a natural, human reaction.  One of the people I correspond with, Larry F., sent me a wonderful book to review [coming up soon, after I finish it]—‘Gold Wars’ by Fredinand Lips.  

 

As gold shoots upwards and it is the first of the commodity markets to turn around, we will need to discuss how gold was changed from a decorative item to the basis of global trade to the total elimination of gold as the basis for trade valuations and how this is now trying to reassert itself via a harsh method, namely, in default.  All the world’s central banks are dead set against gold returning as the trade valuation device.  The hour that one country declares, they will use gold as their basis, this nation will then slowly and finally, very swiftly, take over as the world’s fiat trade currency.

 

I see this in the future.  It is that or we continue to muddle along in a perpetual Japanese-ZIRP system.  Also, this is a queer religious matter: the Derivatives beast was created to protect investments and it has turned into a monster in size and is now stomping the daylights out of all investments….EXCEPT GOLD.  And this is very significant.  For religious reasons, of course.  Gold has been associated with religious power from the very beginning.   And cows [or sheep and pigs!] have been associated portable wealth since time immemorial. 

 

This is why we will first, see inflation in gold, then in animals and then, in grains…the ancient trinity of wealth!  At the top of the pyramid is gold which, in ancient times, was the ‘eye of god’ or the sun. The bags in the cartoon above are filled with grain.  This sustains the animals who stand on it as well as the humans. The plowed field in front shows how human labor on the land creates this wealth.  And the rain clouds: we all pray to the Lightning gods [Pegasus was called ‘Zug’ in the ancient city of Ur, for example] and this brings us rain.  And the apple is the apple of wisdom and life.

 

When we run off to the Goddess of Infinity, seeking wealth WITHOUT labor, wealth that ruins or destroys the pyramid of wealth, all wealth is then destroyed in a firestorm by Libra as She sets things to right again.  We can tip the scales or cheat on the weights only for so long before She stomps into the room and draws Her sword rather than holding Her scales.  See how easy it is to understand things when we draw upon our ancient beliefs?  The gods and goddesses are supposed to protect us from ourselves!  If we listen to their stories or understand their fundamental elements, we can see this as a tool to prevent us from going to infinity. Infinity is, like zero, tremendously dangerous to all living things in the universe.

 

Bloomberg.com: Worldwide

 The Federal Reserve today began releasing officials’ longer-term projections for inflation, economic growth and unemployment to anchor public expectations for prices.

New projections for five or six years from now, in addition to the current three-year forecasts, are to appear beginning with minutes of the Jan. 27-28 Federal Open Market Committee meeting, Chairman Ben S. Bernanke announced in a speech today, one hour before the minutes were released.

Fed governors and district-bank presidents are trying to contain the risk of deflation, which would worsen the financial crisis and deepen the recession. The change brings the Fed closer to a formal inflation goal, something that central banks in the euro region, the U.K. and other countries are required to observe in designing interest rate policies.

HAHAHA.  So, they will now release six year plans?  How communistic!  Well, these projections are mostly wishful thinking, I would think.  The act of issuing these things alters their utility to the future.  What we want Bernake to give us is very simple: restore access to the M3 data!  This dimwit thinks he can suppress our demands by releasing ‘projections’ while concealing from us the real data which this is based on.  

 

I spend hours searching for raw data and information.  So do many of the readers here who are very generous with sharing their findings here so we may all use it to educate ourselves.  I greatly appreciate this and periodically, must mention it because it is VALUABLE to me for information is like gold: it is a tool as well as a commodity resource.  I can’t build a world-picture of how things work without measuring tools or numbers.  Numbers are a tool of the gods just like fire.  My father once told me, ‘God writes not in words but in numbers.’  It is a great miracle that we can express all forces and things in nature using just numbers!  Few people give thought as to why this is so.  Our ten digital universe is how we transfered the five fingers of each hand into this marvelous system whereby we can digitalize everything. The computer universe took it further by 1 and 0 everything.  This binary system has made it possible to make a cyber mirror of reality.  Now, we are going off a cliff here!  I hope we can debate this!

 

Back to the Federal Reserve: it exists to circumvent the Golden Eye of Horus.  Instead of restricting things, the Fed wanted to lend with impunity and beginning its very first year, it did.  It funded much of WWI.  That butcher shop would have closed its bloody window much earlier if the Fed didn’t fund it so enormously.  Bernanke started out in office by unilaterally eliminating the M3 data from view so I and others can’t see it anymore. He figured, if it were made invisible like the Holy Ghost, we would be unable to see it.  Well, I can see the RESULTS of all this!  What a catastrophe. 

 

It was like removing the ‘BRIDGE OUT’ signs in the hopes that no one would notice the bridge is missing after the Fed drives us off the cliff.

 

Text: FOMC Minutes – Economy * US * News * Story – CNBC.com

5. In the execution of the Committee’s decision regarding policy during any intermeeting period, the Committee authorizes and directs the Federal Reserve Bank of New York, upon the instruction of the Chairman of the Committee, to adjust somewhat in exceptional circumstances the degree of pressure on reserve positions and hence the intended federal funds rate and to take actions that result in material changes in the composition and size of the assets in the System Open Market Account other than those anticipated by the Committee at its most recent meeting. Any such adjustment shall be made in the context of the Committee’s discussion and decision at its most recent meeting and the Committee’s long-run objectives for price stability and sustainable economic growth, and shall be based on economic, financial, and monetary developments during the intermeeting period. Consistent with Committee practice, the Chairman, if feasible, will consult with the Committee before making any adjustment.

In light of its program to purchase large quantities of agency debt and mortgage-backed securities, the Committee voted to suspend temporarily the Guidelines for the Conduct of System Operations in Federal Agency Issues (last amended January 28, 2003). Mr. Lacker dissented, stating that he views targeted purchases of agency debt and mortgage-backed securities as distorting credit markets and would prefer that the Desk instead purchase Treasury securities.

YIKES!  They are suspending ‘temporarily’, the guidelines? Not only has Bernanke taken down the ‘Bridge out’ sign, now he is throwing away the driver’s manual and unbolted the steering wheel!  And Mr. Lacker objected!  HAHAHA.  He won’t be around much longer, I bet.  How dare he bring up reality?

 

Bernanke thinks, if we buy up all those hideous, ugly places in Phoenix, Arizona, the banking system will work again!  This is insanity.  Those buildings need to be blown up.  And the bankers who funded these suburban horrors should be arrested for crimes against nature!

 

Bloomberg.com: Worldwide

U.S. January Producer Prices Rise More Than Forecast 

U.S. producer prices climbed more than forecast in January as companies tried to boost earnings at the start of the year before demand weakened even more.

The 0.8 percent increase in wholesale costs was higher than projected and followed a 1.9 percent drop in December, figures from the Labor Department showed today in Washington. Excluding food and fuel, so-called core prices rose 0.4 percent, also more than anticipated.

Makers of autos, communications gear and pharmaceuticals were among the industries boosting prices last month even as sales slumped. The worsening global recession will likely limit inflation and minutes of the Federal Reserve’s January meeting showed some policy makers saw a threat of broad declines in prices….

In today’s report, the gain in wholesale prices was led by a 3.7 percent increase in fuel costs. Passenger car prices rose 0.3 percent, communications gear jumped a record 1.3 percent and drug companies boosted prices by 1.1 percent for a second month.

Costs of intermediate goods, those used in earlier stages of production, dropped 0.7 percent after declining 4.2 percent in December. Prices for raw materials, or so-called crude goods, fell 2.9 percent following a 5.3 percent drop.

Inflation is Deflation’s twin sister.  Humans hate the Goddess of Deflation and love the Goddess of Inflation.  But both are very much ‘death goddesses’ and both are extremely dangerous.  To have a massive downturn in asset values while having inflation in necessities is extremely bad.  This means both savers AND debtors are hammered at the same time!  The relentless rise in gold prices shows that inflation is gaining strength.  She comes in waves, not just all at once.  Every surge in US domestic money-handouts creates inflation in necessities for this is not money we are sending to China or Japan.  This money stays home and buys things we need.

 

Now, yesterday, the Treasury handed out the financial statements for our empire.  This led me down an interesting path.  Let’s start with this week’s report:

 

http://www.treas.gov/press/releases/20091211682022799.htm

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OK:  the US reserves have $9 billion euros and $14 billion in yen.  This totals $23 billion.  What a miserable number this is!  All our trade rivals hold more than this, every last one of them holds more than $23 billion!  Good grief.  The IMF and BIS amounts are even more miserable, $17 billion.  With the gold reserves [valued at the old Nixon numbers] is only $11 billion.  Of course, it is about $1 trillion except we can’t use it as a monetary value!  Got that?  More about that later.  I found some very interesting stuff for all the gold bugs who are popping champagne right now.  So hang on! 

 

Here is the 2000 IRP data:

LS-341: U.S. International Reserve Position

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OK: our reserves total was $5 billion less than today.  Our total currency holdings was $11 billion.  This has doubled today.  Euros and yen were equal. Today, yen is more than double the 2000 number.  We don’t have a ‘other central banks and BIS’ listing anymore.  It was $20 billion back in 2000.

 

We do have the IMF numbers: $18 billion in 2000, it is half that at $7.5 billion!  OOPS.  No wonder the Japanese lent $200 billion to the IMF this week.  The SDRs are also down by $2 billion, so far. Gold is the same in both reports.  Now, I dug up, with increasing difficulty [the stupid Treasury has a very shallow pool of information online!] the 1996 data:

International investment position of the United States in 1996

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OK: gold was listed second, not last. HAHAHA.  Um, that is interesting in itself.  The drive to minimize gold has been very relentless this last 20 years.  Back then, they still had to have it close to the top, not at the bottom.  It was $100 billion?  There is no data about amount of gold in weight.  So I have no idea, how they valued it.  Did they do it according to its worth at that time?  It droppedin price by $4.5 billion that year!  So I think it may be price value, not weight.  

 

The special drawing rights were $11 billion.  Today, they are at $9 billion.  The IMF numbers were at $14.6 billion and today, it is at $7.5 billion.  This means, it increased under Clinton by $3 billion by 2000 and then dropped like a rock under Bush.  The 1996 tables have things that none of the later tables show.  And of course, each decade has a totally different way of tabulating information!  So cross-checking becomes a damn nightmare.

 

Now the the BIG numbers: the US official reserve assets:

  • $176 billion in 1996. 
  • $71 billion in 2000.  
  • $76 billion today.

Trying to compare things is hard for several reasons.  One of them is, the rules of the game were changed in the past. Like all other systems we use to track things, people didn’t like the data so they revised the data information so the analysis would be ‘friendlier’ to free trade and the global financial games based on the floating fiat currency system.

 

http://www.clevelandfed.org/research/trends/2008/0808/01intmar.cfm

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According to this graph, our position has rapidly deteriorated since Reagan’s rule.  Since Reagan was promised a bribe by the Japanese who paid him off as soon as he slipped out of the White House, we can see that the downward trend of this graph has gotten much, much worse.  

 

Why is this?  HAHAHA.  I howled about Reagan openly taking a bribe from a trade rival.  I was furious.  The media said, ‘Oh, the Japanese love our President so much, they want to pay him $2.5 million for just one speech!’  I said, ‘This is a bribe, you numbskulls’ but I am not allowed on TV.  So no one heard me yelling.  I did go to DC to demand Congress impeach him for treason.

 

They didn’t.  So the Bush father and son tag team and Clinton the Dawg all ran off to our trade rivals, OPEC and the Chinese for their own bribes.  So, instead of correcting our course, we went off the cliff.  Comparing this graph with the Treasury charts, we can see that someone is lying.  And it isn’t the Cleveland Fed, in this case.

 

While trying to untangle the incomplete data from the Treasury, I found this study from the Economic Policy Institute which was published in 1990:

 

http://epi.3cdn.net/8dd5627cab90aafccf_jxm6bnp99.pdf

Still A Debtor Nation 

Interpreting the New U.S. 

International Investment Data 

By Robert A. Blecker

 

Robert A. Blecker is Assistant Professor of Economics at The American University. 

Washington, DC, and an economist with the Economic Policy Institute. 


 In response to criticisms by private economists,’ the Commerce Department’s Bureau of Economic Analysis (BEA) has revised its method of 

calculating the U.S. Net International Investment Position (NIIP). New estimates for 1982-89 released on June 9, 1991 seemed to imply that the U.S. was much less of an international debtor than was previously thought. [HAHAHA] When the new methods were extended to the data for 1990, in estimates released on July 2, 1991, however, the result was only confusion. The BEA reported that one of its 

two new measures of the NIIP improved by $27.5 billion in 1990, while the other one worsened by $92.9 billion! 

 

How typical!  For years, the BEA collected and compared data.  It was easy to track things.  This didn’t please people who wanted to drive the economic car off the cliff.  So they demanded changes!  And did the changes make things clearer?  Or did it sow confusion?  

 

Easy to answer!  It made it impossible to correctly track trends that were definitely aimed straight down to hell.

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This Briefing Paper will explain how the BEA revised its measures and discuss what they imply for our understanding of the United States’ net debtor status. This paper will show that the parts of the NIIP which have been revised are not the parts which reflect our true net debt position, as the term “debt” is normally understood. Neither of the new measures changes the extent to which the U.S. increased its net Financial liabilities to the rest of the world in order to pay for the trade deficits of the 1980s. 

 

I have noticed this long-range program of ideology which has sought to turn debt into something else.  This is classic black magic: things are turned into their exact opposite via magic language spells.  By spinning a web of words around the word ‘debt’, these magicians have worked for years to flip it into a good thing, not pure evil.  

 

The good professor here notes that truth was not the goal of the changes in how data is written and examined but rather, this was toyed with to give a false answer so we could continue with raging trade deficits!

 

They did this with EVERYTHING.  They did this to unemployment data, inflation data, you name it, they toyed with everything in an attempt to cover up the truth.  The refusal to give out the M3 data is along the same lines.  Bernanke claimed, no one was interested in the data.

 

The firestorm of howls led him to tell us, he was still collecting the data.  He just didn’t want to SHARE it with us!  The same with gold: the Fed hides, obscures and misleads by hiding data or making it difficult to compare time frames, as we see in the Treasury data above.

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Moreover, as a glance at Figure 1 will indicate, both new measures show that the overall trend of the NIIP is still very much downward, even though these new measures make the level of the NIIP look higher, and even though one of the new measures (along with the old measure) shows a slight upturn in1990. Nothing in the revised estimates changes the fact that the United States   went from having a large net creditor position at the beginning of the 1980s to being the world’s largest net debtor at the beginning of the 1990s. 

 

They tried to hide this vital information!   There is no point in having data if it is used for lies.  The need for truth is tremendous.  The very ancient concept of Libra was, She was the guardian at the Gates of Death.  She wrote down everyone’s history with this feathered pen.  And weighed our hearts on her scale against this fatal feather.  She insists, we confess the Truth when we come to Her.  

 

Anyone running a system on lies is like Madoff and Stanford: money does seem to come from nowhere and it makes us feel temporarily rich but it is all faux wealth and will vanish in a flash the minute the Truth is told.  Bang!  Gone!  Not even an hour later, does fake wealth survive surveillance from the All-Seeing Eye.

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In addition, there are some special problems with the data for 1990 which account for the apparent improvement in the NIIP in that year by the old historical cost measure and the new current cost measure. Both a temporary fall in the value of the dollar at the end of 1990 and the enormous statistical discrepancy in the U.S. balance of payments for 1990 make these apparent improvements dubious. In fact, it is likely that the true NIIPfor 1990 should be about $60 billion lower by any measure, implying a continued downward trend. 

picture-77

Doesn’t this graph look like the mirror image of Shadow Government Statistics wonderful graphs?  ALL of our major data is way, way off.  We can’t compare the past with the present because of this outright lying.  For example, our rulers boast about killing inflation.  I know, since I am on a fixed income, this is one big, fat lie.  No, inflation has ravaged my family since 1996, when my husband was injured at work.  

The upper classes who pay people to lie about inflation don’t care if inflation rages, they make money off of this!  They LOVE inflation!  If their paintings by Monet rise from $1 million to $65 million, they are pleased as punch. If their mansions rise from $5 million to $25 million, they are happy as peas in pea soup!  But they know that if the lower classes are unhappy about inflation, all hell will break lose.  So they lie about it.  When angry lower class people complain, these con men tell us to shut up.

‘What inflation?  I don’t see no stinking inflation,’ they tell us.

http://epi.3cdn.net/8dd5627cab90aafccf_jxm6bnp99.pdf

Under the old method, direct investment was valued at historical cost (book value). That is, the value of U.S.-owned facilities abroad and foreign- owned facilities in the U.S. were both valued at the prices at which they were acquired in the past (net of depreciation). This created a distortion, however, because U.S. firms tend to own production facilities abroad which are older than foreign-owned facilities in the U.S. For example, a Ford plant in Europe or a General Motors plant in Brazil would be valued at the prices of the 1960s or 1970s. when those plants were built, while Honda and Nissan plants in the United States would be valued at the prices of the 1980s. when they were built. 

 

Ah, the innocent days of 1990!  Back then, we had old factories and Japan was building new ones here.  Now, our auto industries are building state-of-the-art factories in China and Brazil!  The bankruptcy has to be managed so Ford and GM can keep these foreign factories while shutting down union factories in the US.  

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Since price levels have risen dramatically due to inflation, both at home and abroad, this procedure greatly exaggerated the value of foreign direct investments in the U.S. relative to U.S. direct investments abroad. 

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Also, U.S. gold reserves were valued at the 1973 official price of $42.22 per fine troy ounce. However, the market price of gold soared to about $600 per fine troy ounce at the end of 1980, and has fluctuated between $300 and $500 per fine troy ounce since that time.3 Thus the old method grossly undervalued the official U.S. gold position in the 1980s by a factor of about ten. 

 

THIS BRINGS UP A SEARING ISSUE!  Namely, why have the totally fake valuation of gold?  And do they do this all the time?  I have a lot of trouble, figuring out gold holdings in the Treasury do to instability in calculating the gold values.  Instead of accurately reflecting inflation by having the value numbers change with gold prices, they have a stable, fake valuation.  They may as well say, ‘We have all this gold, hahaha.’  

 

But they could easily show the valuation changes and these do affect how we figure out our balance numbers.  So many screwy things are going on around gold!  It is like this dark corner in our public finances.  It sort of sits there, in the dark and we can barely see its outline as it grows or shrinks in size.  Ron Paul correctly called for an investigation of our gold holdings.  

 

The fact that he is ignored means, this is important and the liars who are screwing with all our basic statistics do not want us to know more information about our gold holdings.

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In contrast, the old measures of portfolio investments had no special valuation problems (aside from the adequacy of the underlying reporting, which will be discussed further below). Most of these assets and liabilities were already measured in current values, and those measured at historical values were mainly items which would be hard to revalue at current prices (such as 

bank loans). 

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The only parts of the NIIP which the BEA revised are (1) direct investment and (2) gold reserves. But it was (3) portfolio investment-the part which has not been revised-which accounted for most of the decline in the U.S. NIIP in the 1980s.

 

So, the ‘portfolio investment’ parts that were not tinkered with by the criminals is the one that showed the most decline?  That is interesting!  It is obvious, this is a crime: the other data showed no decline but the one that wasn’t changed to a new regime DID show a decline so this means, the point of the operation was to prevent us from seeing an obvious decline.

 

 

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Table 1 shows that the negative net investment position for 1990 is reduced by about one-third in the current cost series (-412.2 compared with -617.9 billion dollars) and by about two-fifths in the market value series (-360.6 compared with -617.9 billion dollars). Thus it appears that the U.S. was less in debt in 1990. However, all of this improvement comes from the revaluation of gold stocks and of direct investment to current cost or market value (which are the same for gold). Our net financial debt is unaffected by these changes. as the nation was still $646.7 billion in the red in terms of portfolio investments which were not revalued. The excess of stocks, bonds, and other financial instruments owned by foreigners in the U.S. over those owned by U.S. residents abroad is exactly the same in the new measures of the 

NIIP as it was in the old. 


Finally, as mentioned earlier, the measured net capital inflows into the United States for 1990 were only $28.6 billion. This low figure, which holds down the decreases in all three measures of the NIIP, is almost surely an underestimate. The U.S. balance of payments shows a current account deficit of $92.1 billion in 1990.’ Conceptually, all of this deficit should be exactly matched by net capital inflows. However. only $28.6 billion of net capital inflows were recorded in the capital account of the balance of payments, leaving 

a statistical discrepancy of $63.5 billion. This far exceeds the previous record statistical discrepancy, which was $36.6 billion in 1982 (a year of major capital flight out of Latin America). The $63.5 billion discrepancy is also larger than the claimed increase of $27.5 billion in the current cost measure of the NIIP. 

 

And how do we hid this discrepancy?  Well, so far, ignoring it has worked.  Anyone who yells about this outright fraud are ignored!  Since 99.9% of our major media supports ‘free trade’, all negative data must be ignored or falsified.  I was just horrified as our trade data shot downwards to negative trillion a year levels.  It has improved only during grinding recessions.

 

This is a sign that Libra is trying to force it to balance.  She will use powerful counter forces.  The more we struggle to run things in the red, the more determined She will be to correct this one way or another.  If the only way left is WWIII, we will get that, too!  This is why it is much safer and easier to recognize the need to balance things and stop this attempt at increasing lending when we have already borrowed too much, for example.

.

While there are problems with the reporting of all international transactions, the current account figures are undoubtedly more reliable than the capital account figures.’This suggests that most of the $63.5 billion statistical discrepancy is probably accounted for by unrecorded capital inflows. Thus the true NIIPfor 1990 by any measure is probably about $60 billion lower than it appears in the official BEA calculations. In this respect, even the small improvements in the NIIP at historical and current costs in 1990 are probably 

the results of mismeasurement rather than a genuine improvement in the U.S. net investment position. 


How Much Do We Really Owe? 


It is apparent from the disparity among the three measures of the U.S. NIIP, including the two new ones (which differ as much from each other in some respects as they do from the old one), that there is no single number that can truly summarize the United States’ position as a net creditor or debtor to the rest of the world. Nevertheless, it is possible to draw some conclusions from the trends in the available data. 

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None of the revisions to the data on direct investment and gold reserves should obscure the fact that the U.S. had to borrow almost $700 billion more from the rest of the world than it lent to the rest of the world between 1982 and 1990. This is the import of the decline of $689.2 billion in the portfolio investment position, a figure which is not affected by the revised estimation methods. And this is not even counting the giant statistical discrepancy for 1990, which along with previous discrepancies would push this figure to over 

$800 billion.” 

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The revaluations of other types of assets do not change the fact that the U.S. had to borrow this amount. First, the revaluation of the gold reserves merely puts a more accurate price tag on the gold in Fort Knox (or wherever the Treasury keeps it).  [HAHAHA—Ron Paul wants to know this information!!!]  Since we do not use that gold to pay our bills, its greater current market value does not imply lesser net financial obligations to other countries. In fact, as the tables show, although the value of the gold reserves was much higher in both 1982 and 1990 at current market prices than it was at the historical (official) price, its value actually fell slightly over that eight-year span as gold prices came down. 

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Similarly. a more accurate portrayal of the actual value of the direct foreign investment position does not detract from the significance of our increased financial borrowing. In particular, the $88.4 billion rise in the U.S. direct investment position at market value from 1982 to 1990 is due entirely to the boom in the stock prices of existing U.S. equity abroad in the late 1980s. a boom which was only partly offset by the stock price declines of 1990. This is purely a paper gain which can be wiped out in a stock market crash just as 

rapidly as it rose in the boom. [We just saw this happen, didn’t we?]  Indeed, even the $183.7 billion net direct 

investment position at market value for 1990 is $90.6 billion lower than it was in 1989 ($274.3 billion), precisely because foreign stock markets fell by more than the U.S. stock market in 1990. 

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More importantly, this rise in the market value of the U.S. direct investment position does not help us to pay for our increased financial obligaltons to other countries, such as interest and principal on U.S. Treasury securities, or interest and withdrawals on bank deposits held by foreigners. 

 

Bravo!  This was an excellent and rather short report!  And did it change things?  Did Madoff get investigated in 1990 when he was first reported as a scam artist?  No?  Of course not!  The scam is deep and great.  Almost everyone at the top of the economic pyramid wanted to lie and cheat us.  We allowed this to happen because our media is corrupt and supports this sort of treason.  Lying about trade, about gold, about monetary policies: Congress is totally corrupted by bribes by Wall Street gnomes!  They don’t seek the truth, they seek to profit.  Most of the Senate is made up of multi-millionaires, for example. 


 

 

Now, onwards to another report from the Cleveland branch of the Federal Reserve:

 

The Net International Investment Position :: Owen F. Humpage and Michael Shenk :: Economic Trends :: 08.06.08 :: Federal Reserve Bank of Cleveland

The Net International Investment Position

Owen F. Humpage and Michael Shenk

The United States has run a current account deficit almost continuously since 1982. We have financed this deficit by issuing financial claims, such as stocks, bonds, and bank accounts, to the rest of the world. Since 1986, foreigners have held more claims on the United States than U.S. residents have held on them, or, in the jargon of international finance, the United States has maintained a negative net international investment position. Last year, that negative position reached a record $2.5 trillion…

Reflecting the increased integration of global financial markets, both U.S. and foreign financial claims have increased much faster than U.S. GDP since the mid 1990s, especially since 2001. Contrary to reports that some foreign governments have been diversifying out of dollars, foreign official holdings of U.S assets have increased steadily by 5 percentage points since 2001. Official reserves accounted for 19 percent of foreign claims on the United States in 2007. U.S. holdings of foreign securities have also increased their share of total U.S. claims on foreigners in recent years ; they now account for 43 percent of that total. Direct investments, however, have been shrinking as a share of both U.S. claims on foreigners and foreign claims on the United States.

picture-911

This isn’t ‘globalization’, this is the bankruptcy of the US.  Note the ‘hockey stick’ characteristic of this graph!  Foreign powers who trade with us increasingly own us!  Who would have guessed this would be the outcome of the changes in figuring out US red ink flows?  Heh.  Our markets inflated [yes, this is the Goddess of Inflation’s work, She adores hockey and plays a mean game, She loves to high-stick everyone].  It went from $1 trillion in 1980 to $15 trillion in US holdings.  And foreign holdings went from a quarter trillion dollars to over $22 trillion and the total went to over $35 trillion!  This is disgusting to look at.  

 

Foreign powers, trade rivals and competition overseas has huge claims on the US.  Trillions and trillions of dollars of claims which we have to pay.  We own less and less.  Even as rank inflation raises the numbers to ludicrous levels, the share of foreign claims has doubled faster than our own claims based on inflated numbers.  And looking at this graph, we can clearly see that ‘inflation’ was NEVER tamed at all.  It was growing like weeds, hidden from view.

 

AFP: China says forex assets safe but face ‘grave’ challenge

“By the end of 2008, the national foreign exchange reserve assets on the whole were kept safe,” Fang Shangpu, a deputy administrator of the State Administration of Foreign Exchange, told reporters.

“We provided abundant liquidity (for the country) to cope with the crisis and at the same time we also made some profits,” he said, without elaborating.

However, he warned that the financial crisis had not yet bottomed out and its negative impacts would continue to be felt, possibly affecting China’s forex investments.

“China holds nearly two trillion dollars in foreign exchange reserves that is (exposed) to the international market. It certainly faces grave challenges,” Fang said.

Words of warning from one of those holders claims against US property and value.  The Dragon is worried, we will collapse the entire system.  This is why WWIII is a danger, of course.  The Dragon will not allow us to skip off, free.  I am also betting, since the Dragon always loved gold and has golden scales, Mr. Shangpu was referring to buying gold when he mentioned, ‘making some profits’.  

 

Bloomberg.com: Worldwide

Bank of America, AmEx May Suffer on Card Defaults 

Credit-card defaults may rise beyond 10 percent this year, breaking records and wiping out more than half of annual profit for lenders including Bank of America Corp. and JPMorgan Chase & Co., analysts said.

Loan failures are about to surpass a previous high of 7.53 percent as people losingjobs amid the U.S. recession can’t repay debt, according to Fitch Ratings. The defaults may peak at 10 percent to 11 percent of loans by yearend under a stress scenario, Goldman Sachs Group Inc. analyst Brian Foran said yesterday in an e-mail, reducing 2009 earnings for issuers including an almost 40 percent cut forAmerican Express Co.

And last of all: the credit card money machine is finally breaking down, last of all.  Bankrupt Americans fleeing their unsustainable mortgages try to keep up the credit cards to the bitter end.  Now, we see the end in sight here; they can’t limp along much longer.  Even as Congress and the President try to patch this mess with MORE debt on future tax earnings, eventually the futility of all this will force them to stop.

 

We need social care for the People or we have a revolution.  Seeing how corrupt our entire government is, the revolution solution grows daily in its appeal.  I warned everyone about this a long, long time ago.  But the rulers won’t listen to me.  They tell each other, I am insane.  I draw stupid cartoons.  I talk about goddesses that represent various forces all the time.  Yes, I am insane.  Like Libra.

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

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2 responses to “THE MAGIC WEALTH PYRAMID VS U.S. STATISTICS LIARS

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