Posts Tagged ‘Economy’

Great Collapse: a hyperinflationary great depression

April 29, 2011

Ok, now Shadow Government Statistics is scaring me with this report on a hyperinflationary great depression. 

Essentially – the government is monetizing the debt, killing the dollar, for a deficit we can’t afford anyways.  All leads to a massive, Weimar Republic type collapse…soon.  Like in the next 12 months.

What’s scares me about this is its using statistics and data to verify what I’ve heard other people I trust who say the same thing.

Correlation is powerful.  This is scary.

BTW, the WSJ is starting to see this too.

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Alternative Fiscal Deficit and Debt – Scary Stuff

April 24, 2011

I am loving Shadow Government Statistics.  Very interesting reading.

One scary page was the 2010 Financial Statements of the U.S. Government.  The US government uses cash accounting – something a small business of 1-2 employees would use.  Meanwhile, in the real world, any company with more than 10 people uses GAAP accounting (or accrual accounting).

With GAAP, if you owe money in the future (like, umm, social security checks) to someone, you have to call it out on your financial statements now.  With companies using GAAP, this call-out usually becomes a liability (aka debt).  This attempts to clearly shows investors what the company’s future looks like.

But the federal government doesn’t do this.  If it accrues liabilities (like Obamacare or Medicare for baby boomers), the Feds don’t include these future debts in the financial statements. They just count the cash in and cash out in one year.  Like a babysitting business would.

This year, the Federal government ran a cash deficit of $1.294 Trillion.  An already disgusting number.  But, what if we required the Feds to use GAAP (just as GE, WalMart, and any other business does).  Oh, in that case, Shadow Government Statistics estimates the deficit this year at $5.3 Trillion (4X HIGHER!).

And what if we did this into the future?  Well, in that case, our already disgusting federal debt of $14.2 Trillion explodes to $76.3 Trillion in current dollars.

Who’s got that in their savings account?

If Inflation is Under Reported, then GDP is….

April 24, 2011

The most popularly followed inflation-adjusted economic statistic is the GDP, which reflects the growth in dollar economic activity minus the growth in inflation. If inflation is understated, which it is, then the resulting real GDP is overstated.

Isn’t that the truth lately!!

Inflation is high, but the government reports it low which makes GDP higher. So that paltry 2% GDP growth right now is probably more like -2%.

More good stuff at Government Shadow Stats.