GOVERNMENT MENDACITY
"Gaslighting": v. misleading others to advance one's own interests. We are constantly being gaslighted by those who want us to act in a certain way, buy a product, vote for them or accept something as true that is either misleading or utterly false. This comes at us on a daily basis through advertising, the main stream media, political commentary, and countless social media sites. We focus here on the gaslighting being done by governments and politicians relating to the economy.
When considering their data and commentary on it, one needs to keep in mind the presenters' motives and interests. At bottom, every politician's three goals are to get elected, advance in the political hierarchy in order to wield more power and control more public funds, and get re-elected. To do that they need to raise very large sums of money to spend on their campaigns hoping to induce you to vote for them.
Your twenty dollar political donation to the candidate of your choice is a trifle. Ever since the US Supreme Court ruled in Citizens United v. Federal Election Commission that corporations have First Amendment rights and therefore the right to make huge monetary donations to political candidates and political action committees, those large corporate donors' interests will always prevail over individual voters' interests.
To secure corporate and special interest group donations political candidates promise their donors government (taxpayer) funded benefits. Those benefits may be monetary (e.g., bank bailouts, government buying equity interests in private companies). Or they may be regulatory relief, such as allowing thinly-veiled monopolies to operate with the acquiescence of government regulatory agencies. The regulators have been captured by the regulated industries through political donations and rotating high level employment. This melding of interests of the wealthy elite with government leaders creates a "corporatocracy" (corporate partnership with the government, a/k/a "crony capitalism") that exists in one form or another in all countries - both democratic and autocratic. Keeping this highly lucrative alliance going for the elite requires keeping the people in the dark regarding the true state of government affairs.
Governments Routinely Gaslight Their Citizens
As government finances and the financial health and quality of life of the nation's workers in the US have deteriorated over the last decades, it became necessary for the corporatocracy to foster a public belief that, "All is well" lest voters become angry and vote the corrupt/incompetent politicians out of office, threatening the corporate/political duopoly.
There are three things the vast majority of voters are deeply concerned about: jobs, the purchasing power of their wages and housing. Consequently, it is the government's goal to produce official reports that suggest that, "All is well" when it is increasingly obvious that it is not. While we discuss some of the false and misleading reports issued by the US government, similar gaslighting of the people is being done in all countries.
The Monthly Jobs Reports
One would think that calculating the number of people currently employed would be an objective number easily determined, for example, by examining government-mandated tax-withholding reports. Also, ADP, an American-based, multinational business handles payroll and human resources for businesses around the world. It has over 67,000 employees and provides services to many thousands of businesses employing over 42 million employees. It publishes a monthly employment report showing increases and decreases in US employment of real employees, in real businesses, in the real economy. It would not be difficult to extrapolate its data to calculate employment on the national level.
However, the US government does not rely on either the ADP employment data or tax withholding reports when calculating "official" employment numbers. Instead, it relies on reports prepared by the Department of Labor. The DOL publishes monthly "employment reports" based on two surveys - the Household Survey and the Business Survey - said to "represent a cross-section of the population and the economy". That is, it is not an actual "head-count" of workers, it is based on statistical sampling models of its own design. There are problems with this methodology. For example, the business survey is increasingly unreliable because many businesses do not respond to the survey because it takes manpower, time and money to prepare them all of which can be better spent on their businesses.
Adding to the misdirection, the DOL employs what is called its "Birth-Death Model" that estimates the number of businesses that opened and closed during the reporting period and the estimated number of people those estimated business employed or discharged. These "employment reports" receive much media attention. In subsequent months, the DOL issues revised employment reports. The initial employment numbers have been frequently reduced, sometimes by the tens of thousands of jobs. These revisions get little media attention.
Another monthly DOL report is said to tally the number of unemployed workers, called the U-3 report. The main stream media dutifully report this number each month. What is not mentioned is that "discouraged workers" - those who may have been looking for a job for many months but have not applied for one for the most recent four week period are not included. Of course, they remain unemployed but their numbers are ignored. It also omits those who are working part-time for economic reasons or are "marginally attached" (those available to work and have been looking for a job over the last twelve months but have not found a position). The government-issued employment and unemployment numbers are both designed to flatter the health of the economy rather than accurately report it.
The Inflation Reports
While "inflation" is properly defined as the growth of the money supply, most people think of it as "rising prices" but that mistakes the result for the cause. Consistently rising prices are the result of your government's act of printing money to fund spending in excess of tax receipts. Economist Milton Friedman famously quipped that "Inflation is always and everywhere a monetary phenomenon" meaning an expansion of the money supply.
There is another factor affecting prices and that is the "velocity" (turn-over rate) of the money in circulation - how fast people spend it. Theoretically, if the government printed $1.3 trillion out of thin air to give $5000 to each adult, and all those people put it into saving accounts, that money would not be flowing through the economy bidding up prices for goods and services. But that ignores the business of banks. They take in deposits and promptly lend them out to individuals and businesses who buy houses and autos, build plants, and pay workers. Banks do this to earn interest income on the deposited money. So, newly printed money promptly finds its way into the economy.
In earlier times when paper money was required to be backed by gold, the government's ability to increase the money supply was constrained. To issue more paper currency units (dollars, pounds, marks, francs) it had to first acquire more gold to back it. When governments went off the gold standard, they became free to print money without limit - up until the time no one wants it any more and the house of cards collapses (e.g., German marks after WWII, US continental dollars after the American War of Independence, and French assignats after the French Revolution).
When governments vastly increase the amount of their money in circulation, that does not increase the supply of goods and services. Rather it causes the new money to bid against pre-existing money for existing goods and services with the result being rising prices. The US Federal Reserve Bank has a stated goal of increasing the inflation rate (CPI) by 2% a year. There is no legitimate economic basis to do so. A growing economy does not need more money. A shrinking economy does not need less money. Prices will always adjust in the market to meet the supply and demand of goods and dollars - all without the need for any government interference.
Ask workers how much they benefit from having the purchasing power of their wages, savings and pension shrink 2% a year - year over year - without end. Note that the Fed has not met its 2% goal in more than five years. The rate is now said to be 3.4% - 60% over target. But that is not the worst of it. The reported CPI number is a fiction.
The US government provides monthly reports claiming to disclose the rate of price inflation - of course without admitting that it is the sole cause of it and has no intention of stopping. The Bureau of Labor Statistics, a division of the Department of Labor claims to report changes in the cost of consumer goods and services. It continuously changes the method of calculating the rate of price inflation through both minor adjustments and comprehensive revisions. It is free to include or exclude items and alter the weight it gives them at its sole discretion. Unsurprisingly, these "revisions" always result in a lower reported rate of price inflation (i.e., dollar devaluation).
The so-called "Core Inflation Rate" excludes the cost of food and energy - two things that every person in the nation consumes every day of his or her life. The stated justification for omitting these costs is that they are said to be "volatile" - which begs the question - "So what? Everyone must consume them!" There is also the "Chained CPI" that reflects changes in consumer buying habits. If beef gets too expensive and people switch to chicken, the price of beef is weighed less in the calculation. This ignores the lowering of one's standard of living due to rising prices and therefore understates the true cost of rising prices. There is also the "Super-Core CPI" that ignores food, energy and housing - the three biggest expenses of most peoples lives. There are other calculations, but the effect of all of them is to consistently understate the true cost of living.
ShadowStats.com has created charts showing the dramatic effect of the government's changes in its calculations over time. Here is a dated chart (through May 2023) showing inflation rates that were calculated using the government approved 1980 methodology (top blue line) verses the rate as it has been "revised" by the DOL over time. The difference is dramatic - over 8%. If you are getting annual 3% salary increases, you are losing 5% of your wages to inflation - year after year. This has continued to the present. It is no wonder so many people are struggling to live paycheck to paycheck.
Wages have not kept pace with real price inflation for decades. The only way to end this theft of workers' wages is to stop expanding the money supply. Doing so would stabilize prices. Wages would then continue to buy the same quantity of goods and services. However, that will not happen. It will not happen because the governing elite benefit massively from the status quo.
The Falsification of Housing Costs
Housing costs are a key component of the consumer price index. People typically spend about 30% of their take-home pay on housing. So it is important to accurately report housing costs. Zillow is a business that produces data about rents being paid by real people for real properties throughout the US. That would be an excellent source of data for the government to use in calculating price inflation and setting housing policies. It does not do so.
Instead, its methodology includes cold-calling homeowners and asking them what their houses would rent for. Specifically it asks,
If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities.
Unless the person called is in the home rental business, he or she would have no idea. If they owned their home for 5, 10 or more years, their response would be a ridiculous guess and invariably low - exactly as intended. This is the government's so-called "Owner's Equivalent Rent" data set. The top red line in the chart below is Zillow's actual rental cost data. The dramatically lower green line is the government's OER calculation. No rational person could believe that the OER is an honest or reasonable method to calculate housing costs. These examples show how government data releases are continuing efforts to gaslight the public concerning the real state of the economy. Rely on them at your personal risk.
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