Fake News: Economics Edition

in economics •  8 months ago 

by James Corbett
corbettreport.com
February 2, 2019

Just when you thought "fake news" was only about those dastardly Russians hiding under every bed, Japan comes out and admits that 40% of its economic data is bogus. That's right, a report from Japan's Internal Affairs Ministry this week reveals that 22 of the 56 key economic statistics reported by the government are faulty and "that irregularities in 21 of the 22 sets amount to violations of the statistics law."

The story is set to become yet another political scandal plaguing the beleaguered reign of Prime Minister Abe. Not only did the government's use of the faulty statistics lead to an underpayment of unemployment benefits, but, worse yet (according to opposition members in the Japanese Diet), the news is threatening to deliver a serious blow to Japan's global reputation.

"There is no telling how far the impact has spread," one senior BOJ official has ominously warned.

But fret not, dear Japanese. This scandal doesn't make you stand out from the crowd at all. In fact, quite the contrary. It's a well-known fact that every nation in the world fudges the numbers and cooks the books to make things seem rosier than they really are.

Take China. I've discussed this at length before, but it bears repeating: If you believe a word that comes out of Beijing's mouth about China's economic data then you need your head examined. But don't take my word for it, take Li Keqiang's.

Li Keqiang is the Premier of the State Council of the People's Republic of China, sometimes less formally referred to as China's "prime minister." For those unacquainted with the Byzantine hierarchy of the glorious ChiCom system, that means Li occupies the highest administrative position in China and is the formal head of government. And in 2007 he casually admitted that the country's GDP numbers are "man-made" and "unreliable."

Now the idea that China's GDP numbers are man-made and unreliable is hardly STOP THE PRESSES! material, but it's always nice to hear it from the horse's mouth, as it were. At the time Li was Party Secretary in the Chinese industrial province of Liaoning. Since the official numbers were unreliable, he confessed to using three other (and harder to fudge) indicators to determine the true size of economic growth in the region: electricity consumption, rail cargo volume, and amount of loans disbursed. With these three numbers, he asserted that he could get a much more accurate view of Liaoning's economy than he could from the made up GDP numbers, which he insisted were "for reference only."

And wouldn't you know it, it turns out that his suspicions of those local GDP numbers were entirely justified. Two years ago the governor of Liaoning admitted that the province had faked its economic data for years. In one instance, a county over-reported its revenues to the tune of 127 percent.

Hmmm. It's almost like tying bureaucratic promotions to economic performance incentivizes those bureaucrats to cook the books or something. And then, lo and behold, China manages to hit their GDP targets precisely on the money every single year. It must be a miracle.

But let's not pretend that this fake data phenomenon is unique to East Asia. It's the same everywhere in the world where a criminal gang of thugs wants to maintain their stranglehold over the tax cattle (i.e. everywhere in the world).

We could point to the Argentinian fake inflation data scandal.

We could point to the political ruckus in India over that country's fake economic data.

We could point to the Vampire Squid's role in helping Greece fake its way into the Eurozone via "fictional exchange rates."

But why go so far afield when there is no dearth of economic fakery to be found right there in the good ol' US of A? As most Americans know by now, the fraudulent "jobless recovery" of the post-Lehman period was a statistical sleight-of-hand performed by faking various economic indicators.

Indicators like Uncle Sam's phony unemployment statistics, for example. John Williams of ShadowStats.com has been crunching the numbers to show the actual state of the American economy for years now. One of the key government stats that he has fingered for being deliberately misleading is the unemployment number (hardly surprising given how much this number is touted in feelgood stories about the moribund economy in the lying lamestream media).

I had the chance to interview Williams back in 2009 for my "Economics 101" series where he had this to say about the US unemployment stats:

"Unemployment was first surveyed back in the 1940s and its definition has changed over time. The way I look at unemployment is along the lines of what would be [the] more common experience. For most people, if you ask the average person whether or not he or she is unemployed it doesn't take too long to get a response. The average person knows whether he or she is unemployed; they don't have to think about it. However, if you think you're unemployed that may not necessarily match the government's definition.
"The government publishes six levels of unemployment. They have a level 'U1' unemployment up through 'U6.' The level 'U3' is the popularly followed unemployment rate, which was published at 9.4% seasonally adjusted in May [2009]. The broadest measure, U6, was up around 16% in May, and that included among other categories those referred to as 'discouraged workers.' A discouraged worker would be a person who would normally consider himself to be unemployed. A discouraged worker is someone who's out of work, wants a job, is willing and able to work, but what differentiates this person from what's standardly [sic] considered unemployed by the government is that they haven't looked for work in the last year. The reason they haven't done that is that there are no jobs to be had where they live.
"Well back in 1994 all these series were redefined, the questions were redefined. And up to that point in time a discouraged worker had been considered someone who, you know, again, was without work, willing and able to work but hadn't looked for work because there was no job to be had. There was no time limit on it. You could have been discouraged for two years, you could have been discouraged for five years, it didn't make any difference how long you hadn't looked. At that time it was redefined that if he hadn't looked for work in the last year you were considered discouraged. But if it was more than a year—say two years or five years—you were no longer counted, and that knocked several million people off the of the rolls of the broader measures of the unemployed.
"I estimate what that number would be now if they still counted the discouraged workers the way they were counted back in 1994 and before, and on that basis I would say that the broad unemployment rate is probably around 20%. If you went around and just ask people, you know, 'Are you unemployed or not?' the response you'd get would be in the 20% range."

Of course, all of the numbers Williams cites pertain to the time the interview was recorded back in 2009, but sadly the "discouraged worker" trick (as well as other faulty definitions) are still being used to fudge the numbers. For the record, Williams' unemployment rate estimate as of December 2018 is 21.4%, and you can find his other "shadow stats" on US money supply, inflation, GDP and dollar strength on his website.

But just when you think this mess of cooked books, fake data and statistical tricks couldn't get any worse . . . it does!

As Dr. Mark Skidmore revealed in our recent landmark interview on the Pentagon's "missing" trillions, the US government has taken this phenomenon to an entirely new level by actually making it "legal" for federal agencies to lie to the public about their budgets!

This jaw-dropping development is buried in an October 4, 2018 update from the Federal Accounting Standards Advisory Board given the typically narcolepsy-inducing title "Statement of Federal Financial Accounting Standards 56." Those who are able to make it past that utterly nondescript title are confronted by one of the most brazen examples of "legal" illegality in the history of the world. Dr. Skidmore and Catherine Austin Fitts—Dr. Skidmore's co-author at missingmoney.solari.com—have broken this document down in their comprehensive blog post on "Understanding New Government Financial Accounting Loopholes." The gist of this incredible guideline document is that federal agencies are now allowed (in the interest of "national security," of course) to "modify" their unclassified general purpose federal financial reports (GPFFRs) so long as "the effect of the modification does not change the net results of operations or net position."

Let me repeat that again for the hard of thinking: The federal government now reserves the right to openly lie about their financial reports, so long as the bottom line number is correct.

This is absolutely incredible. Every regime in history has lied to its public, but it's difficult to find an example of one that has ever enshrined its "right" to lie to its people in black and white. Well, here it is. In the name of "national security," governments can move around line items, mislabel expenses, hide revenue sources, and otherwise fake their budgets.

Again, the incredible brazenness of this move is difficult to overestimate. Readers are highly encouraged to read through Skidmore and Fitts' article for the nitty-gritty details. But in case you ever needed a slam dunk argument to use against a credulous, fluoride-addled, MSM-addicted friend who believes the economic lies coming out of the government's mouth, here it is.

So does all of this fake economic news make you fret? "Don't worry!" says The New York Times. "The idea that politicians could force government bureaucrats to fake the statistics, and do so without any leaks, is hard to believe." And as we all know, The New York Times and its fellow travelers in the dinosaur media are bastions of truth, so that should put your mind at ease.

Right?

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Keep this in mind when the next world population numbers come out.

The grand-daddy of all US government statistics is the US census. And if one looks back into the corruption and double dealing that's transpired in that data... including the loss of 99.9% of all the census data from 1890 and before. Due to a mysterious fire and response to the fire. One can imagine where the current politicians learned the method.

Thanks again James for pointing out such a glaring indicator of where we are at as a society. It sure lends to the necessity of alternatives to the government and it's lacky's monopoly on "indicators".

In my book, that says "OPPORTUNITY" all over it!

  ·  7 months ago Reveal Comment