The REAL Inflation Rate

I ran across some stats this week I would like to pass on.

As we all know, the government economic statistics are doctored up a bit before release.

How much?

The official inflation rate is about 4%, based on the way the feds calculate it today.

If inflation today, were calculated based on the 1992 formula, it would be 8.6%.

If calculated using the 1980 formula, it would be 12.8%.

Why the change in formulas? What are they hiding?

GDP growth is estimated at 4%. GDP growth is simply how fast the economy is growing. If it is growing, then we can look for favorable employment figures, and the political party in charge can look to get reelected. Of course the opposite is true as well.

Bottom line, the better the GDP number, the better the public feels about the direction our economy (translated: their pocketbooks) his headed.

Back to the numbers.

GDP is about 4%. Half of that has been money spent from home refinancing, that will no longer be spent going forward, as the average American has borrowed all of the home equity they can get.

So this gives us a net expected rate of 2% going forward. Subtract the REAL inflation rate of 12.8% and you come up with negative GDP growth of 10.8%.

The economy is shrinking by 10% a year! This is the truth that Washington doesn't want you to know. And this isn't a Republican or Democrat problem, it's a WASHINGTON problem.

What do you think this will do to the job market?

First, it will destroy all of the jobs we have outsourced to the emerging market countries. This will throw their economies into a tailspin, eventually resulting in defaults on their debt.

When whole nations begin defaulting on their loans, our banking system will be devestated.

Look for this next wave of debt defaults to come from the emerging markets.

Back to the US.

After the outsourced jobs go, then comes the jobs of the average American. No job, no money, no spending.

Then, what do you think that will do to the bottom line earnings of businesses?

Then, what do you think that will do to the stock market?

Can't invest in the stock market, can't trust the banks, can't buy real estate in a falling market? What should I do to preserve my wealth?

I suggest that the ONLY protection one has right now is to invest in GOLD (That is, while you still can.)

The IMF recently approved the sale of 400 tonnes from their gold reserves. For every ounce of gold that is sold, somebody is on the other end buying it.

Who has enough money to buy billions of dollars worth of gold at a time? What do they know that John Q. Public doesn't know?

I submit that they understand the above figures and the direction things are headed and are smart enough to not only protect themselves, but to PROFIT from the future economic downturn.

More millionaires were made during the Great Depression than in the Roaring 20's that preceeded it. Are you ready to get rich?

I am!