How to Think Clearly

"Never argue with stupid people. They will drag you down to their level and then beat you with experience." –Mark Twain

If you want to fully understand and appreciate the work of Mike Stathis, from his market forecasts and securities analysis to his political and economic analyses, you will need to learn how to think clearly if you already lack this vital skill.

For many, this will be a cleansing process that could take quite a long time to complete depending on each individual.

The best way to begin clearing your mind is to move forward with this series of steps:

1. GET RID OF YOUR TV SET, AND ONLY USE STREAMING SERVICES SPARINGLY.

2. REFUSE TO USE YOUR PHONE TO TEXT.

3. DO NOT USE A "SMART (DUMB) PHONE" (or at least do not use your phone to browse the Internet unless absolutely necessary).

4. STAY AWAY FROM SOCIAL MEDIA (Facebook, Instagram, Whatsapp, Snap, Twitter, Tik Tok unless it is to spread links to this site). 

5. STAY OFF JEWTUBE.

6. AVOID ALL MEDIA (as much as possible).

The cleansing process will take time but you can hasten the process by being proactive in exercising your mind.

You should also be aware of a very common behavior exhibited by humans who have been exposed to the various aspects of modern society. This behavior occurs when an individual overestimates his abilities and knowledge, while underestimating his weaknesses and lack of understanding. This behavior has been coined the "Dunning-Kruger Effect" after two sociologists who described it in a research publication. See here.

Many people today think they are virtual experts on every topic they place importance on. The reason for this illusory behavior is because these individuals typically allow themselves to become brainwashed by various media outlets and bogus online sources. The more information these individuals obtain on these topics, the more qualified they feel they are to share their views with others without realizing the media is not a valid source with which to use for understanding something. The media always has bias and can never be relied on to represent the full truth. Furthermore, online sources are even more dangerous for misinformation, especially due to the fact that search algorithms have been designed to create confirmation bias. 

A perfect example of the Dunning-Kruger Effect can be seen with many individuals who listen to talk radio shows. These shows are often politically biased and consist of individuals who resemble used car salesmen more than intellectuals. These talking heads brainwash their audience with cherry-picked facts, misstatements, and lies regarding relevant issues such as healthcare, immigration, Social Security, Medicaid, economics, science, and so forth. They also select guests to interview based on the agendas they wish to fulfill with their advertisers rather than interviewing unbiased experts who might share different viewpoints than the host.

Once the audience has been indoctrinated by these propagandists, they feel qualified to discuss these topics on the same level as a real authority, without realizing that they obtained their understanding from individuals who are employed as professional liars and manipulators by the media. 

Another good example of the Dunning-Kruger Effect can be seen upon examination of political pundits, stock market and economic analysts on TV.  They talk a good game because they are professional speakers. But once you examine their track record, it is clear that these individuals are largely wrong. But they have developed confidence in speaking about these topics due to an inflated sense of expertise in topics for which they continuously demonstrate their incompetence.

One of the most insightful analogies created to explain how things are often not what you see was Plato's Allegory of the Cave, from Book 7 of the Republic.

We highly recommend that you study this masterpiece in great detail so that you are better able to use logic and reason.  From there, we recommend other classics from Greek philosophers. After all, ancient Greek philosophers like Plato and Socrates created critical thinking.   

If you can learn how to think like a philosopher, ideally one of the great ancient Greek philosophers, it is highly unlikely that you will ever be fooled by con artists like those who make ridiculous and unfounded claims in order to pump gold and silver, the typical get-rich-quick, or multi-level marketing (MLM) crowd.





STOP Being Taken

If you want to do well as an investor, you must first understand how various forces are seeking to deceive you. 

Most people understand that Wall Street is looking to take their money.

But do they really understand the means by which Wall Street achieves these objectives? 

Once you understand the various tricks and scams practiced by Wall Street you will be better able to avoid being taken. 

Perhaps an even greater threat to investors is the financial media.

The single most important thing investors must do if they aim to become successful is to stay clear of all media.

That includes social media and other online platforms with investment content such as YouTube and Facebook, which are one million times worse than the financial media.

The various resources found within this website address these two issues and much more. 

Remember, you can have access to the best investment research in the world. But without adequate judgment, you will not do well as an investor.

You must also understand how the Wall Street and financial media parasites operate in order to do well as an investor. 

It is important to understand how the Jewish mafia operates so that you can beat them at their own game.

The Jewish mafia runs both Wall Street and the media. This cabal also runs many other industries.

We devote a great deal of effort exposing the Jewish mafia in order to position investors with a higher success rate in achieving their investment goals.

Always remember the following quotes as they apply to the various charlatans positioned by the media as experts and business leaders.   

“Beware of false prophets, which come to you in sheep's clothing, but inwardly they are ravening wolves.” - King James Bible - Matthew 7:15

"It's easier to fool people than to convince them that they have been fooled." –Mark Twain

It's also very important to remember this FACT.  All Viewpoints Are Not Created Equal.

Just because something is published in print, online, or aired in broadcast media does not make it accurate. 

More often than not, the larger the audience, the more likely the content is either inaccurate or slanted. 

The next time you read something about economics or investments, you should ask the following question in order to determine the credibility of the source.

Is the source biased in any way?  

That is, does the source have any agendas which would provide some kind of benefit accounting for conclusions that were made? 

Most individuals who operate websites or blogs sell ads or merchandise of some kind. In particular, websites that sell precious metals are not credible sources of information because the views published on these sites are biased and cannot be relied upon.

The following question is one of the first things you should ask before trusting anyone who is positioned as an expert. 

Is the person truly credible?  

Most people associate credibility with name-recognition. But more often than not, name-recognition serves as a predictor of bias if not lack of credibility because the more a name is recognized, the more the individual has been plastered in the media. 

Most individuals who have been provided with media exposure are either naive or clueless. The media positions these types of individuals as “credible experts” in order to please its financial sponsors; those who buy advertisements. 

In the case of the financial genre, instead of name-recognition or media celebrity status, you must determine whether your source has relevant experience on Wall Street as opposed to being self-taught. But this is just a basic hurdle that in itself by no means ensures the source is competent or credible.

It's much more important to carefully examine the track record of your source in depth, looking for accuracy and specific forecasts rather than open-ended statements. You must also look for timing since a broken clock is always right once a day.  Finally, make sure they do not cherry-pick their best calls. Always examine their entire track record. 

Don't ever believe the claims made by the source or the host interviewing the source regarding their track record. 

Always verify their track record yourself. 

The above question requires only slight modification for use in determining the credibility of sources that discuss other topics, such as politics, healthcare, etc.

We have compiled the most extensive publication exposing hundreds of con men pertaining to the financial publishing and securities industry, although we also cover numerous con men in the media and other front groups since they are all associated in some way with each other.

There is perhaps no one else in the world capable of shedding the full light on these con men other than Mike Stathis.

Mike has been a professional in the financial industry for nearly three decades. 

Alhough he publishes numerous articles and videos addressing the dark side of the industry, the core collection can be found in our ENCYCLOPEDIA of Bozos, Hacks, Snake Oil Salesmen and Faux Heroes

Also, the Image Library contains nearly 8,000 images, most of which are annotated.


At AVA Investment Analytics, we don't pump gold, silver, or equities because we are not promoters or marketers.

We actually expose precious metals pumpers, while revealing their motives, means, and methods.

We do not sell advertisements.

We actually go to great lengths to expose the ad-based content scam that's so pervasive in the world today. 

We do not receive any compensation from our content, other than from our investment research, which is not located on this website. 

We provide individual investors, financial advisers, analysts and fund managers with world-class research and unique insight.







Media Lies

If you listen to the media, most likely at minimum it's going to cost you hundreds of thousands of dollars over the course of your life time.

The deceit, lies, and useless guidance from the financial media is certainly a large contributor of these losses.

But a good deal of lost wealth comes in the form of excessive consumerism which the media encourages and even imposes upon its audience.

You aren’t going to know that you’re being brainwashed, or that you have lost $1 million or $2 million over your life time due to the media.

But I can guarantee you that with rare exception this will become the reality for those who are naïve enough to waste time on media.

It gets worse.

By listening to the media you are likely to also suffer ill health effects through excessive consumption of prescription drugs, and/or as a result of watching ridiculous medical shows, all of which are supportive of the medical-industrial complex.

And if you seek out the so-called "alternative media" as a means by which to escape the toxic nature of the "mainstream" media, you might make the mistake of relying on con men like Kevin Trudeau, Alex Jones, Joe Rogan, and many others.

This could be a deadly decision. As bad as the so-called "mainstream" media is, the so-called "alternative media" is even worse.

There are countless con artists spread throughout the media who operate in the same manner. They pretend to be on your side as they "expose" the "evil" government and corporations.

Their aim is to scare you into buying their alternatives.  This addresses the nutritional supplements industry which has become a huge scam.  

 

Why Does the Media Air Liars and Con Men?

The goal of the media is NOT to serve its audience because the audience does NOT pay its bills.

The goal of the media is to please its sponsors, or the companies that spend huge dollars buying advertisements.

And in order for companies to justify these expenses, they need the media to represent their cause.

The media does this by airing idiots and con artists who mislead and confuse the audience.

By engaging in "journalistic fraud," the media steers its audience into the arms of its advertisers because the audience is now misled and confused.

The financial media sets up the audience so that they become needy after having lost large amounts of money listening to their "experts." Desperate for professional help, the audience contacts Wall Street brokerage firms, mutual funds, insurance companies, and precious metals dealers that are aired on financial networks. This is why these firms pay big money for adverting slots in the financial media.

We see the same thing on a more obvious note in the so-called "alternative media," which is really a remanufactured version of the "mainstream media." Do not be fooled. There is no such thing as the "alternative media."  It really all the same. 

In order to be considered "media" you must have content that has widespread channels of distribution. Thus, all "media" is widely distributed.

And the same powers that control the distribution of the so-called "mainstream media" also control distribution of the so-called "alternative media."

The claim that there is an "alternative media" is merely a sales pitch designed to capture the audience that has since given up on the "mainstream media."  

The tactic is a very common one used by con men.

The same tactic is used by Washington to convince naive voters that there are meaningful differences between the nation's two political parties.

In reality, both parties are essentially the same when it comes to issues that matter most (e.g. trade policy and healthcare) because all U.S. politicians are controlled by corporate America. Anyone who tells you anything different simply isn't thinking straight.

On this site, we expose the lies and the liars in the media.

We discuss and reveal the motives and track record of the media’s hand-selected charlatans with a focus on the financial media.  




 

Why Stathis Was Banned

To date, we know of no one who has established a more accurate track record in the investment markets since 2006 than Mike Stathis.  

Yet, the financial media wants nothing to do with Stathis.  

This has been the case from day one when he was black-balled by the publishing industry after having written his landmark 2006 book, America's Financial Apocalypse

From that point on, he was black-balled throughout all so-called mainstream media and then even the so-called alternative media. 

With very rare exception, you aren't even going to hear him on the radio or anywhere else being interviewed.  

Ask yourself why. 

You aren't going to see him mentioned on any websites either, unless its by people whom he has exposed.  

You aren't likely to ever read or hear of his remarkable investment research track record anywhere, unless you read about it on this website.

You should be wondering why this might be.

Some of you already know the answer.

The media banned Mike Stathis because the trick used by the media is to promote cons and clowns so that the audience will be steered into the hands of the media's financial sponsors - Wall Street, gold dealers, etc. 

Because the media is run by the Jewish mafia and because most Jews practice a severe form of tribalism, the media will only promote Jews and gentiles who represent Jewish businesses.  

And as for radio shows and websites that either don't know about Stathis or don't care to hear what he has to say, the fact is that they are so ignorant that they assume those who are plastered throughout media are credible.

And because they haven't heard Stathis anywhere in the media, even if they come across him, they automatically assume he's a nobody in the investment world simply because he has no media exposure.  And they are too lazy to go through his work because they realize they are too stupid to understand the accuracy and relevance of his research. 

Top investment professionals who know about Mike Stathis' track record have a much different view of him. But they cannot say so in public because Stathis is now considered a "controversial" figure due to his stance on the Jewish mafia. 

Most people are in it for themselves. Thus, they only care about pitching what’s deemed as the “hot” topic because this sells ads in terms of more site visits or reads.

This is why you come across so many websites based on doom and conspiratorial horse shit run by con artists.

We have donated countless hours and huge sums of money towards the pursuit of exposing the con men, lies, and fraud.

We have been banned by virtually every media platform in the U.S and every website prior to writing about the Jewish mafia.

Mike Stathis was banned by all media early on because he exposed the realities of the United States.

The Jewish mafia has declared war on us because we have exposed the realities of the U.S. government, Wall Street, corporate America, free trade, U.S. healthcare, and much more.

Stathis has also been banned by alternative media because he exposed the truth about gold and silver. 

We have even been banned from use of email marketing providers as a way to cripple our abilities to expand our reach. 

You can talk about the Italian Mafia, and Jewish Hollywood can make 100s of movies about it.

BUT YOU CANNOT TALK ABOUT THE JEWISH MAFIA.

Because Mr. Stathis exposed so much in his 2006 book America's Financial Apocalypse, he was banned.

He was banned for writing about the following topics in detail: political correctness, illegal immigration, affirmative action, as well as the economic realities behind America's disastrous healthcare system, the destructive impact of free trade, and many other topics. He also exposed Wall Street fraud and the mortgage derivatives scam that would end of catalyzing the worst global crisis in history. 

It's critical to note that the widespread ban on Mr. Stathis began well before he mentioned the Jewish mafia or even Jewish control of any kind.

It was in fact his ban that led him to realize precisely what was going on.

We only began discussing the role of the criminality of the Jewish mafia by late-2009, three years AFTER we had been black-listed by the media.

Therefore, no one can say that our criticism of the Jewish mafia led to Mike being black-listed (not that it would even be acceptable).  

If you dare to expose Jewish control or anything under Jewish control, you will be black-balled by all media so the masses will never hear the truth.

Just remember this. Mike does not have to do what he is doing. 

Instead, he could do what everyone else does and focus on making money. 

He has already sacrificed a huge fortune to speak the truth hoping to help people steer clear of fraudsters and to educate people as to the realities in order to prevent the complete enslavement of world citizenry. 

  

Rules to Remember

Rule #1: Those With Significant Exposure Are NOT on Your Side.  

No one who has significant exposure should ever be trusted. Such individuals should be assumed to be gatekeepers until proven otherwise.  I have never found an exception to this rule.

Understand that those responsible for permitting or even facilitating exposure have given exposure to specific individuals for a very good reason. And that reason does not serve your best interests. 

In short, I have significant empirical evidence to conclude that everyone who has a significant amount of exposure has been bought off (in some way) by those seeking to distort reality and control the masses. This is not a difficult concept to grasp. It's propaganda 101.   

Rule #2: Con Artists Like to Form Syndicates.

Before the Internet was created, con artists were largely on their own. Once the Internet was released to the civilian population, con artists realized that digital connectivity could amplify their reach, and thus the effectiveness of their mind control tactics. This meant digital connectivity could amplify the money con artists extract from their victims by forming alliances with other con artists.

Teaming up with con artists leads to a significantly greater volume of content and distraction, such that victims of these con artists are more likely to remain trapped within the web of deceit, as well as being more convinced that their favorite con artist is legit. 

Whenever you wish to know whether someone can be trusted, always remember this golden rule..."a man is judged by the company he keeps." This is a very important rule to remember because con men almost always belong to the same network.  You will see the same con artists interviewing each other,referencing each other, (e.g. a hat tip) on the same blog rolls, attending the same conferences, mentioning their con artist peers, and so forth.

Rule #3: There's NO Free Lunch.  

Whenever something is marketed as being "free" you can bet the item or service is either useless or else the ultimate price you'll pay will be much greater than if you had paid money for it in the beginning. 

You should always seek to establish a monetary relationship with all vendors because this establishes a financial link between you the customer and the vendor. Therefore, the vendor will tend to serve and protect your best interests because you pay his bills. 

Those who use the goods and services from vendors who offer their products for free will treated not as customers, but as products, because these vendors will exploit users who are obtaining  their products for free in order to generate income.   

Use of free emails, free social media, free content is all complete garbage designed to obtain your data and sell it to digital marketing firms.

From there you will be brainwashed with cleverly designed ads. You will be monitored and your identity wil eventually be stolen. 

Fraudsters often pitch the "free" line in order to lure greedy people who think they can get something for free. 

Perhaps now you understand why the system of globalized trade was named "free trade." 

As you might appreciate, free trade has been a complete disaster and scam designed to enrich the wealthy at the expense of the poor. 

There are too many examples of goods and services positioned as being free, when in reality, the customers get screwed.  

Rule #4: Beware of Manipulation Using Word Games. 

When manipulators want to get the masses to side with their propaganda and ditch more legitimate alternatives they often select psychologically relevant labels to indicate positive or negative impressions.

For instance, the financial parasites running America's medical-industrial complex have designated the term "socialized medicine" to replace the original, more accurate term, "universal healthcare." This play on words has been done to sway the masses from so much as even investigating universal healthcare, because the criminals want to keep defrauding people with their so-called "market-based" healthcare scam, which has accounted for the number one cause of personal bankruptcies in the USA for many years.  

When Wall Street wanted to convince the American people to go along with NAFTA, they used the term "free trade" to describe the current system of trade which has devastated the U.S. labor force.

In reality, free trade is unfair trade and only benefits the wealthy and large corporations.

There are many examples on this play on words such as the "sharing economy" and so on.  

Rule #5: Whenever Someone Promotes Something that Offers to Empower You, It's Usually a Scam.

This applies to the life coaches, self-help nonsense, libertarian pitches, FIRE movement, and so on.

If it sounds too good to be true, it usually is.

Unlike what the corporate fascists claim, we DO need government.

And no, you can NOT become financially independent and retire early unless you sell this con game to suckers.  

Rule #6: "Never argue with stupid people. They will drag you down to their level and then beat you with experience." –Mark Twain

Following this rule is forcing the small and dewindling group of intelligent people left in the world to cease interacting with people. 

You might need to get accustomed to being alone if you're intelligent and would rather not waste your time arguing with someone who is so ignorant, that they have no chance to realize what's really going in this world. 

It would seem that Dunning-Kruger has engulfed much of the population, especially in the West.     

  • How to Think Clearly
  • STOP Being Taken
  • Media Lies
  • Why Stathis Was Banned
  • Rules to Remember
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    Learn how to beat them at their own game.

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    The Media Works With Wall Street to Rip You Off.

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Start Here

Games Washington Plays: Trick #2, GDP Delusions

I continue where I left off – discussing just a few of the ways Washington tries to fool us by its misuse and manipulation of data. Washington likes to remind critics that Americans enjoy the highest living standard in the world.

As evidence of this, government “experts” discuss statistics such as GDP growth, employment, wealth, income and wage growth, and other economic data without defining exactly what they are referring to or explaining all the assumptions used.

In Part 1 of this series, we saw how hedonics can alter GDP and inflation data. Here we look at some additional problems with GDP. After you read this piece, I hope you will agree that the misuse of GDP data as an indicator of economic strength has been one of the biggest errors made in the field of U.S. economics. 
I can make a strong case that over the past three years there has been virtually no GDP growth other than maybe three quarters. After adjusting for hedonics, the use of debt and the other gimmicks, it’s clear the U.S. economy has grown little since 2005.
Sound crazy? Sure it does – but only if you’ve accepted the data from Washington at face value, as the media always does. But this grand illusion cannot remain hidden much longer. Already, we are seeing just some of the effects of Washington’s deception – the real estate meltdown and banking crisis.
Bernanke is trying to wipe it all under the table by passing out over $1.2 trillion to the banking system, with much more to come. This has caused the further devaluation of the dollar and soaring oil prices.
But the real effects still linger in the background, waiting to surface. When, I cannot say for certain, but I will guarantee you they will surface. Soon, the junk bond market will overshadow all other worries. And this could easily lead to a huge problem for the $40 trillion global credit default swaps market.  
Since the stock market fallout in early 2000, Washington has been desperate to keep consumers spending at any cost. They like the fact that consumers are spending, even if it has been for imported goods and even though these purchases have been made using credit. As far as they’re concerned, strong consumer activity keeps GDP numbers high, pointing to the illusion of economic growth.
After the Internet meltdown, Greenspan smashed rates down to 1% because consumers had no real money to spend. But even that wasn’t enough, so Bush issued rebate checks hoping consumers would head for the stores to buy more of what they really didn’t need – more electronic gadgets and other imports.
In 2008, Bush issued an even larger rebate for consumers to inflate GDP. Now there is talk from Congress of another rebate check.
These irresponsible actions by the Fed and Washington are creating more damaging consequences in exchange for superficial, short-term gains. Americans need good jobs and affordable basic necessities – food, energy, and healthcare. 
A few hundred dollars passed out by Bush isn’t going to do much. It won’t even pay for the increases in gasoline costs consumers have faced in 2008. What it will do however, is precisely what Bush intended it to do – boost GDP data so economists can claim that there is no recession. Never mind this money has to be borrowed. It’s all a game of numbers to Washington.  
Many politicians (mostly republicans, including Bush) extinguish any criticisms of large federal and trade deficits, insisting they have no real meaning. Rather than point to deficits as an indicator of economic vulnerability, many of our elected officials highlight GDP as a direct measure of economic growth and thus living standards.
These misguided souls believe debt (and therefore deficits) is good for the economy because it helps add to GDP growth. In reality, the massive trade deficits created under the Bush administration have been responsible for the acquisition of critical U.S. assets by China and the Middle East.
Meanwhile, the U.S. economy remains highly leveraged and now faces a situation whereby its creditors may soon refuse to hold onto U.S. Treasuries due to their rapidly diminishing value and credit quality. 
The gross domestic product is a measure of the value of all goods and services produced in the national economy available for consumption. But GDP numbers say nothing about the source of consumption, whether it’s from cash on hand or mounting debt. As well, GDP numbers include government spending, such as that for Katrina and the wars in Iraq and Afghanistan.
It doesn’t take a genius to realize that these expenditures haven’t led to better living standards for most. Just ask victims of Katrina if their living standards have improved. And how can anyone claim that spending up to $2.4 trillion (over the next few years) in Iraq to blow up buildings and rebuild them will improve the living standards of Americans? Even worse, this is money that is added to America’s ballooning record debt.
Meanwhile, America’s own infrastructure continues to be neglected – bridges and highways have collapsed, underground water pipes have broken, drinking water is toxic and contains, among other things, numerous pharmaceutical drugs, from sex hormones to anti-depressants.
Even Washington’s U.S. Army Corp of Engineers has estimated it will take at least $2 trillion to restore America’s infrastructure to “good condition.” Other groups have stated these estimates to be much higher. Of course, if America does receive these needed funds, they will count toward the GDP data, although living conditions will only be restored, not improved. 
Besides the loose assumptions of GDP, the methods of calculation are also flawed. For instance, the nominal GDP is deflated using a chain-type inflation metric which significantly understates the real inflation rate. This leads to inflated GDP data. And of course Washington fails to adjust GDP growth to the annual population increase, which once again results in a higher GDP.
Finally, GDP can be calculated using constant or current dollars; the former doesn’t consider the effects of inflation while the later does. When making comparisons of GDP data over time, investors should only use constant dollar GDP data.
Unfortunately, when GDP data is plastered throughout the media, rarely is the source of this calculation been mentioned, leaving investors to assume constant dollar GDP data has been reported, adjustments for population growth have been made, and realistic adjustments for inflation are included. 

Problems Measuring Living Standards
The importance of GDP as an economic indicator is reflected by its frequent use as a measure of living standards within an economy or nation. However, there are many weaknesses in the use of GDP as a measure of a nation’s living standard. In short, GDP only provides an overall measure of economic output of a given nation, but speaks nothing of individual living standards or the overall well-being of a population.
As an example, consider that a nation which exports 100 percent of its production (Iraq for instance, due to oil exports) might have a high GDP but not necessarily a high standard of living. As it turns out, many other factors are involved in determination of living standards, such as employment and wage data, inflation, interest rates, currency exchange rates, debt levels, fiscal and monetary policy, and government benefits.
Finally, quality of life (which is a significant component of living standards) is determined by other factors unrelated to finances such as life span, work week, minimum required vacation days, social factors, and many other variables.
The counterargument is that while GDP may not provide an accurate measure of living standards, trends in living conditions tend to move in the direction of changing GDP data. While that may be true over a long time frame, in my opinion that cannot be said necessarily for less than a five-year period.
Yet, when GDP figures are released each quarter, the stock and bond markets react as if this number has provided an accurate picture of the economy. In reality, this is rarely the case. And when Washington wants to assure consumers that the economy is strong, officials remind us that the U.S. has the world’s largest GDP, and thus highest living standards.
What they fail to mention however, is that the methods used to calculate GDP are flawed. As well, the productivity gains have not been equally distributed to all Americans. If in fact GDP data serves as an accurate measure of improvement in living standards, it only applies to the top 10% of wage earners. 

Failure to Account for Deficits
Because consumer spending accounts for about 66 percent of the GDP, and since the majority of goods purchased in the U.S. are produced overseas in full or in part, GDP growth indicates the extent of exportation of America’s asset base when it’s running large annual deficits.
In order to better understand this rationale, recall that each federal budget deficit is added to the national debt, which is financed by selling U.S. Treasury securities. Foreign nations have financed 50 percent of this debt, so America has been trading ownership rights for imported goods.
Thus, even if GDP data indicates net productivity, this data does not factor in the deficit incurred as a result of government spending or the trade imbalance—all of which adds to the national debt and decreases America’s net worth or wealth. 
As well, consider that the annual deficits have been financed by foreign nations to the tune of 99 percent in 2004, and by 81 percent between 2003 and 2005. If you were selling your goods and services to a customer who couldn’t afford to pay using cash, wouldn’t you extend them credit? Sure you would; you’d benefit two-fold in receiving profits from sales and financing charges. But there’s credit risk involved based upon the debtor’s ability to repay the principal with interest.
Along with the weak dollar, the increased credit risk of U.S. Treasuries threatens to increase the global push for dethroning the dollar as the universal currency.
For many years, America has maintained the highest credit status in the world. Its high standing as a debtor is directly tied to its perceived ability to repay debt obligations. But if the dollar loses its position as the universal currency, this perceived repayment ability would falter, causing foreign holders to dump dollar-denominated assets. And U.S. Treasury securities would be the first to go.
This would easily trigger a global catastrophe. Understand that most nations already want out of the weak dollar. If one or more large holders of U.S. Treasury securities begin to sell, such as China, this could cause other nations to do the same in anticipation of a price drop. Thus, what might have been intended as a benign and gradual liquidation of U.S. debt by one nation could snowball into a collapse quickly.  
Many point to America’s annual 5.0 percent GDP growth rate over the past decade as a sign of its continued stability and economic dominance. During that same time period, America’s trade deficit has grown by over 25 percent per year, household debt as a percentage of disposable income has doubled, and household savings has declined by 75 percent.
What does that tell you? To me it says America’s “growth” has been fueled by credit spending that’s been grossly disproportionate to this “growth.” Credit spending is certainly no indicator of wealth, but lack thereof. 
America has been consuming much more than it produces for three decades. Early on, this excess consumption was buffered by the enormous wealth surplus generated after WWII. But now America’s dangerous consumption trends from the past 15 years have surfaced due to the depletion of its post-war wealth. As a result, it faces a huge debt burden financed largely by foreign central banks and financial institutions.
In fact, America’s global competitors have been transformed into its bankers and suppliers, providing financing for its undisciplined government and consumer spending practices.
This chronic behavior has allowed foreign nations to gain more influence over America, both economically and politically. And when they decide to no longer lend the U.S. government money, interest rates will skyrocket to double digits and the dollar will nose dive.
That’s right. The real dollar crisis is ahead of us. You might have noticed as of late, several nations are telling Washington how they should be running things - nations with a huge financial stake in the U.S. economy. The U.S. is now dependent on these nations for economic sustenance. Therefore, America can no longer push other nations around.

Failure to Account for Savings and Debt
Calculation of GDP also neglects to factor in the external effects of saving versus spending. Japan’s case is particularly illustrative of this point. The savings rate in Japan has been high ever since the NIKKEI collapsed nearly twenty years ago. As a result, while the GDP is not as high if Japanese had spent more of what they earned, they are not slaves to debt.
As well, Japanese companies have been investing large amounts of capital overseas (e.g. auto facilities, insurance and media in the U.S.) resulting in a much lower GDP than one might expect.  
In the case of America, decades of declining savings and increased debt burdens are not factored into GDP data. But borrowed money falsely inflates this data. Likewise, economies experiencing asset bubbles (eg. real estate, credit, and the stock market) tend to show higher GDP figures than in reality since consumption is higher than can be maintained over an extended period. And during these asset bubbles the total credit bubble grows along with the GDP. This is the current state of America. 
In fact, it appears as if the Federal Reserve will continue creating bubbles as its only way to prop up GDP data. But we all know what happens to bubbles. They eventually burst. A few years ago, we experienced unthinkable devastation as a result of Greenspan’s Internet bubble.
Today, we are seeing the early stages of the implosion of Greenspan’s real estate-driven credit bubble. And since Bernanke refuses to let events run their normal course, we will no doubt experience a more catastrophic correction down the road as a result of his misuse of the printing presses. 

Failure to Adjust for Net Output
Another shortcoming of GDP is that it measures output that produces no net change or productivity, such as that seen for reconstruction of New Orleans after hurricane Katrina. While capital was pumped into the region to help restore living standards, no net improvement was made relative to before the disaster (unless you count the estimated $1.5 billion stolen from FEMA by some).
Yet, GDP data assumes these expenditures resulted in improvements. In fact, one could argue that living conditions are worse now. I’m sure those who have been exposed to the formaldehyde-laden mobile homes would agree.
GDP counts government spending at all levels, from the war in Iraq and hurricane Katrina to homeland security. And despite President Bush’s enormous spending spree, tax revenues as a percentage of GDP haven’t been this low in many years. What does that tell you? The government has been borrowing money to pump up into the economy without registering commensurate returns.
If these investments had been successful, America would have net job and real wage growth, and a strong dollar which would provide affordable energy, utilities, and healthcare. But we see a much different picture despite record federal and trade deficits, as well as record consumer and national debt. The overall impact of these trends can be seen by the weakness of the dollar.  
Thus, it’s easy to see that a nation that is increasing its debt can show healthy GDP numbers when in fact the picture isn’t as rosy as reported. This is especially true when credit spending has accounted for a large amount of the GDP growth, as in America’s case.
Therefore, when examining GDP data, one should investigate where and how the productivity occurred, whether there was net improvement to the majority of Americans, and what costs (debt or deficit) were incurred, rather than focusing on the magnitude of the number. 

Failure to Account for Resource Depletion
Growth sustainability cannot be predicted by looking at GDP. Upon initial examination it appears that some nations (eg. in the Middle East) are able to maintain high GDP numbers despite the lack of industrialization. In the Middle East, productivity is almost exclusively dependent upon the amount of fossil fuels remaining as well as the cost and efficiency of crude production.
Since oil reserves are limited, some nations disregard environmental protection laws in favor of increasing production (United States, China, Europe, and Canada). However, in the long run huge expenses could be incurred for cleaning the environmental mess that was made decades earlier. 
Accordingly, short-term gains in GDP are inflated since the economic activities that have led to GDP data have created future liabilities that have not been reflected in a nation’s financial statements. In America’s case, the massive liabilities for mandatory expenditures (the $51 to $72 trillion shortfall) are not shown in its financial statements.
GDP data should be adjusted for estimates of contingent liabilities that may be incurred as a result of say, a nation’s disregard for maintaining a clean environment and government benefits that have been promised or guaranteed - similar to the practice required by all publicly traded corporations. 

Failing to Adjust GDP for Real Inflation
How can Washington calculate GDP without proper adjustments for inflation? That is precisely what they do. They select the most modest inflation measures (chain-type inflation) to adjust for the nominal GDP data.

Failure to Adjust for Annual Population Growth
Since GDP growth is a measure of productivity, and productivity is influenced by population growth, doesn’t it seem reasonable that GDP should be adjusted to the annual population growth rate? From 1990 to 2002, the annual growth in the U.S. population was 1.2%. Since 2002, it has slowed a bit down to around 1.0 to 1.1%. If we subtract this from the GDP data, the “economic growth” over the past few years does not appear to have been so robust.
And if more accurate measures of inflation were used to adjust nominal GDP, it paints a very worrisome picture.

Failure to Report Year-over-year Changes
When the Commerce Department reports GDP figures each quarter, the data isn’t reported like a U.S. corporation. When a corporation provides an earnings statement, it shows comparisons of revenue, earnings, etc. from the same quarter of the previous year (called year-over-year reporting).
In contrast, the U.S. government reports changes in GDP relative to the previous quarter. In addition, each quarterly GDP figure is annualized or multiplied by a factor of four, which implies this quarterly figure will continue over the next three quarters. Why do corporations report year-over-year numbers but the U.S. government reports a rolling, highly inaccurate, annualized number?  
According to Washington, GDP can be used to compare living standards with other nations. This would imply that all nations calculate GDP in a similar manner. As far as I am aware, all other developed nations report GDP changes as year-over-year.
Why does this matter anyway? Consider that year-over-year numbers minimize the effects of business and economic cycles. The fact is that all businesses (and therefore government operations) experience changes in business health and earnings due to seasonal or business cycle fluctuations inherent to their industry, the dynamics of the company, and the economic cycle. Therefore, in order to minimize the effects of these variables, companies report the year-over-year changes.  
For instance, let’s take a look at Mattel, a toy manufacturer that’s known to generate the majority of its revenues during the month of December. Let’s assume the fourth quarter is responsible for 70 percent of the firm’s annual earnings (an accurate assumption), while subsequent quarters contribute 10 percent equally to earnings.
If Mattel reported fourth quarter earnings like the U.S. government, it would appear as if its growth was exploding during the first quarter of earnings announcements. In conclusion, because each quarterly GDP figure is extrapolated over 12 months, it’s virtually impossible to detect GDP trends accurately even if the numbers, when reported were accurate. But as we shall see next, accurate reporting is rare. 

GDP is Inaccurate for up to Five Years
If the previous considerations haven’t been enough for you to question the accuracy of GDP data, you should keep in mind that Washington provides GDP revisions for up to five years after the data was first reported.
That’s why you often hear adjustments to GDP numbers long after they were first made public. It’s also why the government often changes the dates of recessions several months and sometimes many years later.
While these adjustments might be a valuable exercise for historians, they do nothing to alert consumers and investors of the current and future expected economic environment. There’s no way to consistently and accurately predict future growth trends using GDP data due to these inaccuracies. 
Washington’s official definition of a recession is two consecutive quarters of negative economic growth, as measured by GDP data. As a recent example of the inaccuracy of GDP numbers, on July 30, 2004, the Bureau of Economic Analysis (BEA) issued its revised GDP data for 2001. According to the definition of a recession, we now know that there was none during 2001 since the latest numbers do not show two consecutive quarters of declining GDP growth.
Looking back at that period, I leave it you to determine if the U.S. was in a recession. So take note all you journalists out there, including the Associated Press - STOP referring to the “recession of 2001” because according to the economic “Gods” you so highly worship, it DID NOT EXIST! 
The reality is that we did indeed have a recession in 2001; a severe recession in my view. As the National Bureau of Economic Research (NBER) points out, recessions can be defined by data other than looking at GDP. A recession is defined by a decline in economic activity.
In many cases GDP says nothing of this, especially when much of the GDP has been due to a war, cash-back financings (home equity loans and cash-back mortgages) during a real estate bubble, and the overall increased economic activity fueled by this bubble. In fact, according to the Federal Reserve, 40% of the GDP growth during the 2005-2006 period came from cash-back financings from homes that were greatly overvalued.
This same “follow the leader” mentality by pundits and journalists has led them to believe that America is not in a recession as of July 2008. Anyone with a brain knows we are in a recession that most likely began in early 2008. But if we adhere to Washington’s very restricted definition of recession, it is possible that these economists missed numerous recessions in the past.
Relying solely on GDP data that is subject to revision for up to five years is too inaccurate to provide a reliable measure of economic activity. But when you consider how poorly GDP data reflects real economic activity for consumers, it becomes even more dubious.
In conclusion, the basic rules of reasoning never change. When one tries to paint an accurate picture of a complex variable such as the health of the economy or living standards by looking at one number, they’re fooling themselves and those they represent.
The best way to measure economic growth and changes in living standards is to examine other macroeconomic indicators in addition to GDP, such as interest rate (yield curve) and inflation trends (the CPI and PPI, core and non-core), trade imbalances, currency exchange rate trends, job loss and recovery, underemployment, real wage and benefit growth, debt and money flow trends. And if you do elect to use GDP as a measure of economic activity, at least measure it accurately and make the appropriate adjustments.
With thousands of economists working for the government or in academia serving on government committees or as consultants for government agencies, it seems strange they’re unwilling or unable to provide a comprehensive analysis of the economy based on other data.
Then again, the current system of illusion and confusion serves Washington just fine. Most serve as parrots, mimicking the same lines they hear from myopic economists in their ivory towers. Consumers don’t need economists to tell them what the data of the day means based upon flawed calculations.
They need economists to report realistic data. Only then will they stand a chance to come up with accurate forecasts. If they cannot achieve this then they are only serving as record-keepers at best and partners in deception at worst. With all the forecasts economists make, I know of not a single one who has made a fortune in the stock market as a result of these “timely and valuable” forecasts.  
 
 
 
 
 
 
 


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