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> > The Greatest Scam of All Time > by Martin Weiss > September 18, 2006 > http://www.safehaven.com/showarticle.cfm?id=5917&pv=1 > > Washington's Enron-style accounting is now so widespread and so deeply > ingrained, the nation could be bankrupt and not even know it. > You go to work. You save and invest. You vote in the November > election. And > you assume that everything is business as usual. Then, one day, you > wake up to > the shocking discovery that it's not. > Inflation is at least three percentage points worse than what > they're telling > you. Unemployment and the budget deficit is over double. The > national debt is > at least five times bigger than official tallies. > Almost every number coming out of Washington has been thoroughly > massaged and > greatly distorted, almost always with a bias toward sweeping the > dirt under > the carpet and sugarcoating the truth. > This is not a conspiracy. It just happens naturally. But that doesn't > diminish the potential impact on your money. It's easily the > greatest scam of all > time. > Every single administration -- from John F. Kennedy to George W. > Bush -- has > succumbed to the same temptation to "reform" the data collection > process ... > "streamline" the reporting procedures ... and continually implement > minor, > incremental changes -- all to make things look a bit better. > Each new change has been grandfathered in by the next administration. > And the cumulative effect of all these small changes over time adds > up to a > gross distortion of reality that could directly threaten your > financial future. > Look Back to Recent History, > And You'll See What I Mean. > At Enron, 21,000 employees -- and many more investors -- assumed > that the > company's books were real. Then, one day they discovered it was all > a hoax. > And it was over. > We saw the same thing happen at Adelphia Business Solutions, Global > Crossing, > Kaiser Aluminum, Kmart, McLeodUSA, National Steel, WorldCom, and > scores of > other major, household-name companies. Every one had distorted its > numbers. > Every one went bankrupt. Each left a trail of ruined lives in its > wake. > The distortions were so bad even many of Wall Street's least biased > analysts > missed the boat. Indeed, in a special report I presented to the > National Press > Club, I demonstrated that ... > Among 50 major Wall Street firms we reviewed, 94% continued to > publish "buy" > or "hold" ratings on these failing companies right up to the day > the companies > filed for bankruptcy. > Worse, America's largest auditing firms looked the other way, or even > directly assisted in the accounting distortions. In a report I > submitted to Congress, > I showed that ... > Arthur Andersen, America's most prestigious auditors, gave a clean > bill of > health to 11 companies involved in accounting irregularities. > Deloitte & Touche > and KPMG each gave a clean bill of health to five companies > involved in > accounting problems. And overall, the nation's major auditing firms > gave a clean > bill of health to 42.1% of the public companies that filed for > bankruptcy soon > after their audits. Overall, the auditors failed to warn the public > about > companies that were worth a total of $225 billion at their peak. > Investors lost > nearly every dime. > Today, Fannie Mae, the company that controls most of America's > secondary > mortgage market -- a company without which the entire housing > industry would > crumble -- is also knee-deep in accounting distortions. > Ford, General Motors and Chrysler, which can make or break America's > industrial economy, may or may not have major accounting issues. > But their assurances > to shareholders and employees, made just a few months ago, are > crumbling just > the same. > And this is in "good times," when the economy is apparently strong, > when > inflation and unemployment are supposedly moderate. > Something doesn't fit. Something's terribly wrong with this > picture, and it's > this: The government's distorting the real truth about the U.S. > economy and > its own books. > How Washington's Enron-Style Accounting Makes > The Great Corporate Scandals of This Decade > Look Like Little White Lies by Comparison > Much like major auditing firms review the books of a GM or IBM, the > U.S. > Government Accountability Office (GAO) audits the books of Uncle > Sam, including > its departments and agencies. > But in its latest year-end media advisory, the GAO plainly states that > "For the ninth straight year, the U.S. Government Accountability > Office (GAO) > is unable to provide an opinion as to whether the consolidated > financial > statements of the U.S. government are presented fairly, in all > material respects, > in conformity with generally accepted accounting principles." > In other words, the same government that is aggressively pursuing > corporations for bad accounting is the most guilty of similar > practices. > In an earlier report to Congress, GAO Director and U.S. Comptroller > General > David M. Walker bluntly explained it this way: > "The current system of federal financial reporting provides an > unrealistic > and even misleading picture of the government's overall performance > and > financial condition ... A key lesson from Enron, WorldCom and other > business failures > is that our free-market system depends on public confidence in the > accuracy of > ... financial information." > But, unfortunately, Washington has so far failed to learn that lesson. > In several departments of the executive branch, especially Defense, > balance sheets don't balance and taxpayer money disappears. So > beyond the > deficit manipulations that we know about, there could be many > others that are > unknown, even to the federal auditors. > This is easily one of the greatest scandals of our time, and yet > it's rarely > discussed and often forgotten. > Investors and > Taxpayers > Hoodwinked! > One veteran economist, John Williams, is so thoroughly convinced that > government manipulations are hoodwinking taxpayers and investors, > he has devoted his > current career to painstakingly documenting the shenanigans at Shadow > Government Statistics (www.ShadowStats.com). > Technically speaking, these issues are not hidden. The government > does tell > you nearly everything it's doing -- in a long series of cryptic > footnotes. But > after 40 years of footnotes, most are long forgotten, even by many > of the > government's own economists. Here's a brief rundown of just the > most obvious > distortions ... > Distortion #1 > The True Unemployment Rate Is Over 12% > One of the first new wrinkles in the unemployment stats was added > during the > Kennedy Administration. And it persists to this very day. > Instead of measuring how many people are actually out of work, they > figured > it would be easier to simply keep track of how many people are > applying for > jobless benefits. > Never mind the fact that the benefits run out after 26 weeks! Never > mind the > hundreds of thousands of "discouraged" workers who have stopped > collecting > benefits months ago! > The government's unemployment number also excludes millions of part- > time > workers who are seeking a full-time job but can't find one ... > millions more who > are disabled ... and even the 2.2 million that are in prison. > Make sense? Not quite. If Mr. A loses his job because he's fired, he's > "unemployed." But if Mr. B loses his job because he's thrown in > jail, he's not > unemployed!? Give me a break. > So what is the true unemployment rate in the United States > including all > those who really want a job but don't have one? > I can assure you it's not the 4.7% that the Bureau of Labor Statistics > reported for August. It's probably closer to 12%, or over two and a > half times more > than the official rate. > Distortion #2 > The True Inflation Rate Is Over 7% > Probably more so than any other number, the government has a > direct, vested > interest in keeping its official inflation numbers low. > Reason: The higher the rate of inflation, the more it has to pay in > Cost of > Living Adjustments to Social Security beneficiaries. > The first major push for inflation-distorting reform began with the > Clinton > Administration. Until then, the inflation measure was based on an > essentially > fixed basket of goods. > Example: The basket included an 8-ounce steak. And no matter what, > they > tracked the same steak through time. > The Clinton Administration, however, argued for a variable basket > of goods. > If the 8-ounce steak got to too expensive, they argued, the typical > consumer > would simply substitute hamburger. So the government should do the > same. > That wouldn't be a measure of the cost of living. It would be a > measure of > the cost of survival. Yet, according to Williams, a series of complex > mathematical changes in how the Consumer Price Index is calculated > -- giving less weight > to higher priced items -- essentially achieves the same goal as the > variable > basket of goods. > Add that to a series of other distortions in the Consumer Price > Index ... and > you've got a measure that's so far removed from reality, it's a > joke. Instead > of the 3.8% announced last week, the true inflation rate could be > well over > 7%. > The biggest victims of this hoax: Anyone collecting Social Security > benefits. > According to Williams, if the Consumer Price Index were calculated > today the > same way it was during the Carter Administration, the payments > would be 70% > larger! > Distortion #3 > Gross Domestic Product > Greatly Overstated > Back in 1991, the U.S. government stopped focusing on the Gross > National > Product (GNP) and started headlining the Gross Domestic Product > (GDP). A key > difference: The payments the government must make to service the > national debt are > missed in the GDP numbers. > Separately, the government always reports the growth in GDP after > subtracting > inflation. > Example: If the GDP growth is 8% and inflation is calculated at 4%, > the > government reports that GDP growth is 4%. > But if the true inflation rate is 7%, then guess what: Instead of > moving > along at a reasonably healthy clip of 4%, the economy is actually > crawling at a > feeble rate of 1%. > Big difference! > No matter what, right now, even the overstated rate is slipping: The > government reports that GDP growth fell to annual rate of just 2.9 > percent in the > second quarter of 2006. > Distortion #4 > Deficits and Debts > The official 2005 budget listed the U.S. federal deficit at $319 > billion. > But according to the GAO, if the government followed the same > generally > accepted accounting principles it demands of corporations, the real > 2005 deficit > would have been $760 billion -- or more than DOUBLE the official > number. > And that's just one year of new debt the government has to take on > to make > ends meet. > If you take a look at the total debts and obligations the > government has > accumulated over the years, the picture gets worse, much worse. > At the end of the first quarter, the total federal debt, including > government > agencies and government-sponsored enterprises, stood at $10.2 > trillion. (In > the Fed's Flow of Funds report of June 8, 2006, see Table L.4. Then > sum lines 4 > and 5.) > But if you also include the estimated unfunded liabilities for Social > Security, Medicare and other programs, the total federal debt is at > least $54 > trillion. > And that's based on three separate studies -- by the American > Enterprise > Institute (AEI), the National Center for Policy Analysis (NCPA) and > the Brookings > Institute. > My Recommendations > First, don't take government stats for granted. If you can't trust > Ford and > Fannie Mae, what makes you think you can trust Uncle Sam? > At the very least, recognize that the government has a built-in > institutional > and methodological bias in favor of good news. It's simply not > prudent to > base your long-term financial future upon them. > Second, take steps to protect your assets from the ravages of > inflation, > whether hidden or not. That includes a continuing allocation to > gold- and ener > gy-related investments, despite any temporary ups and downs. > Third, keep a substantial portion of your money as safe as possible to > protect yourself from the day when the truth starts pouring out. It > hasn't happened > yet. But just as occurred with Enron and WorldCom, once the bubble > of fantasy > bursts, it doesn't take long. > My favorite havens: Treasury-only money market funds such as: > American Century Capital Preservation Fund (800-345-2021), > Dreyfus 100% U.S. Treasury Fund (800-645-6561), > Fidelity Spartan U.S. Treasury Fund (800-544-8888), > USGI U.S. Treasury Securities Cash Fund (800-873-8637), > Vanguard Treasury MMF (800-662-7447), or > Weiss Treasury Only Money Fund (800-430-9617). > Although government officials may distort the numbers, the U.S. > Treasury > Department has never failed to meet its obligations for the payment > of principal > and interest. > Good luck and God bless! > > > > Martin > Martin Weiss, Ph.D. > Editor, Safe Money Report > [EMAIL PROTECTED] > For more information and archived issues, visit > http://www.moneyandmarkets.com. > > -------------------------------1158983145 > Content-Type: text/html; charset="US-ASCII" > Content-Transfer-Encoding: quoted-printable > > <HTML><HEAD> > <META charset=3DUS-ASCII http-equiv=3DContent-Type content=3D"text/ > html; cha= > rset=3DUS-ASCII"> > <META content=3D"MSHTML 6.00.2800.1543" name=3DGENERATOR></HEAD> > <BODY style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial; BACKGROUND- > COLOR: #fffff= > f"> > <CENTER> > <TABLE cellSpacing=3D0 cellPadding=3D0 width=3D740> > <TBODY> > <TR> > <TD vAlign=3Dtop> > <P><FONT size=3D2></FONT> </P> > <P><SPAN class=3Dtitle><STRONG><FONT size=3D5>The Greatest Scam of > All Time<= > /FONT></STRONG></SPAN></P> > <P><FONT size=3D2>by Martin Weiss</FONT></P> > <P><FONT size=3D2>September 18, 2006</FONT></P> > <P><FONT size=3D2><A href=3D"http://www.safehaven.com/ > showarticle.cfm?id=3D5= > 917&pv=3D1">http://www.safehaven.com/showarticle.cfm? > id=3D5917&pv= > =3D1</A></FONT></P></TD> > <TD vAlign=3Dtop align=3Dright width=3D140 rowSpan=3D4></TD></TR> > <TR> > <TD><IMG height=3D20 src=3D"http://www.safehaven.com/images/ > pixel.gif" width= > =3D1></TD></TR> > <TR> > <TD vAlign=3Dtop width=3D600> > <P><FONT size=3D2><STRONG>Washington's Enron-style accounting is > now so wide= > spread and so deeply ingrained, the nation could be bankrupt and > not even kn= > ow it.</STRONG></FONT></P> > <P><FONT size=3D2>You go to work. You save and invest. You vote in > the Novem= > ber election. And you assume that everything is business as usual. > Then, one= > day, you wake up to the shocking discovery that it's not.</FONT></P> > <P><FONT size=3D2><STRONG>Inflation is at least three percentage > points wors= > e than what they're telling you. Unemployment and the budget > deficit is over= > double. The national debt is at least <I>five</I> times bigger > than officia= > l tallies.</STRONG></FONT></P> > <P><FONT size=3D2><STRONG>Almost every number coming out of > Washington has b= > een thoroughly massaged and greatly distorted, almost always with a > bias tow= > ard sweeping the dirt under the carpet and sugarcoating the truth.</ > STRONG><= > /FONT></P> > <P><FONT size=3D2>This is not a conspiracy. It just happens > naturally. But t= > hat doesn't diminish the potential impact on your money. It's > easily the gre= > atest scam of all time.</FONT></P> > <P><FONT size=3D2>Every single administration -- from John F. > Kennedy to Geo= > rge W. Bush -- has succumbed to the same temptation to "reform" the > data col= > lection process ... "streamline" the reporting procedures ... and > continuall= > y implement minor, incremental changes -- all to make things look a > bit bett= > er.</FONT></P> > <P><FONT size=3D2>Each new change has been grandfathered in by the > next admi= > nistration.</FONT></P> > <P><FONT size=3D2>And the cumulative effect of <I>all</I> these > small change= > s over time adds up to a gross distortion of reality that could > directly thr= > eaten your financial future.</FONT></P> > <P><B><FONT size=3D2>Look Back to Recent History,<BR>And You'll See > What I M= > ean.</FONT></B></P> > <P><FONT size=3D2>At Enron, 21,000 employees -- and many more > investors -- a= > ssumed that the company's books were real. Then, one day they > discovered it=20= > was all a hoax.</FONT></P> > <P><FONT size=3D2>And it was over.</FONT></P> > <P><FONT size=3D2>We saw the same thing happen at Adelphia Business > Solution= > s, Global Crossing, Kaiser Aluminum, Kmart, McLeodUSA, National > Steel, World= > Com, and scores of other major, household-name companies. Every one > had dist= > orted its numbers. Every one went bankrupt. Each left a trail of > ruined live= > s in its wake.</FONT></P> > <P><FONT size=3D2>The distortions were so bad even many of Wall > Street's lea= > st biased analysts missed the boat. Indeed, in a </FONT><A > href=3D"http://li= > nk.weissinc.com/h/73FE/LVOZ/SU/MFW"><FONT size=3D2>special report I > presente= > d to the National Press Club</FONT></A><FONT size=3D2>, I > demonstrated that=20= > ...</FONT></P> > <P><FONT size=3D2>Among 50 major Wall Street firms we reviewed, 94% > continue= > d to publish "buy" or "hold" ratings on these failing companies > right up to=20= > the day the companies filed for bankruptcy.</FONT></P> > <P><FONT size=3D2>Worse, America's largest auditing firms looked > the other w= > ay, or even directly assisted in the accounting distortions. In a </ > FONT><A=20= > href=3D"http://link.weissinc.com/h/9U3Q/LVOZ/SU/MFW"><FONT > size=3D2>report I= > submitted to Congress</FONT></A><FONT size=3D2>, I showed > that ...</FONT></= > P> > <P><FONT size=3D2>Arthur Andersen, America's most prestigious > auditors, gave= > a clean bill of health to 11 companies involved in accounting > irregularitie= > s. Deloitte & Touche and KPMG each gave a clean bill of health > to five c= > ompanies involved in accounting problems. And overall, the nation's > major au= > diting firms gave a clean bill of health to 42.1% of the public > companies th= > at filed for bankruptcy soon after their audits. Overall, the > auditors faile= > d to warn the public about companies that were worth a total of > $225 billion= > at their peak. Investors lost nearly every dime.</FONT></P> > <P><FONT size=3D2>Today, Fannie Mae, the company that controls most > of Ameri= > ca's secondary mortgage market -- a company without which the > entire housing= > industry would crumble -- is also knee-deep in accounting > distortions.</FON= > T></P> > <P><FONT size=3D2>Ford, General Motors and Chrysler, which can make > or break= > America's industrial economy, may or may not have major accounting > issues.=20= > But their assurances to shareholders and employees, made just a few > months a= > go, are crumbling just the same.</FONT></P> > <P><FONT size=3D2>And this is in "good times," when the economy is > apparentl= > y strong, when inflation and unemployment are supposedly moderate.</ > FONT></P= >> > <P><FONT size=3D2>Something doesn't fit. Something's terribly wrong > with thi= > s picture, and it's this: The government's distorting the real > truth about t= > he U.S. economy and its own books.</FONT></P> > <P><FONT size=3D2><B>How Washington's Enron-Style Accounting > Makes<BR>The Gr= > eat Corporate Scandals of This Decade<BR>Look Like Little White > Lies by Comp= > arison</B><B></B></FONT></P> > <P><FONT size=3D2>Much like major auditing firms review the books > of a GM or= > IBM, the U.S. Government Accountability Office (GAO) audits the > books of Un= > cle Sam, including its departments and agencies.</FONT></P> > <P><FONT size=3D2>But in its latest </FONT><A href=3D"http:// > link.weissinc.c= > om/h/P7AT/LVOZ/SU/MFW"><FONT size=3D2>year-end media advisory</ > FONT></A><FON= > T size=3D2>, the GAO plainly states that</FONT></P> > <P><FONT size=3D2>"For the ninth straight year, the U.S. Government > Accounta= > bility Office (GAO) is unable to provide an opinion as to whether > the consol= > idated financial statements of the U.S. government are presented > fairly, in=20= > all material respects, in conformity with generally accepted > accounting prin= > ciples."</FONT></P> > <P><FONT size=3D2>In other words, <I>the same government that is > aggressivel= > y pursuing corporations for bad accounting is the most guilty of > similar pra= > ctices.</I></FONT></P> > <P><FONT size=3D2>In an earlier </FONT><A href=3D"http:// > link.weissinc.com/h= > /QMZC/LVOZ/SU/MFW"><FONT size=3D2>report to Congress</FONT></ > A><FONT size= > =3D2>, GAO Director and U.S. Comptroller General David M. Walker > bluntly exp= > lained it this way:</FONT></P> > <P><FONT size=3D2>"The current system of federal financial > reporting provide= > s an unrealistic and even misleading picture of the government's > overall per= > formance and financial condition ... A key lesson from Enron, > WorldCom and o= > ther business failures is that our free-market system depends on > public conf= > idence in the accuracy of ... financial information."</FONT></P> > <P><FONT size=3D2>But, unfortunately, Washington has so far failed > to learn=20= > that lesson.<BR>In several departments of the executive branch, > especially D= > efense,<BR>balance sheets don't balance and taxpayer money > disappears. So be= > yond the deficit manipulations that we <I>know</I> about, there > could be man= > y others that are unknown, even to the federal auditors.</FONT></P> > <P><FONT size=3D2>This is easily one of the greatest scandals of > our time, a= > nd yet it's rarely discussed and often forgotten.</FONT></P> > <P><FONT size=3D2><IMG height=3D224 src=3D"http://www.safehaven.com/ > images/w= > eiss/5917_b.gif" width=3D340 align=3Dleft></FONT><B><FONT > size=3D2>Investors= > and<BR>Taxpayers<BR>Hoodwinked!</FONT></B></P> > <P><FONT size=3D2>One veteran economist, John Williams, is so > thoroughly con= > vinced that government manipulations are hoodwinking taxpayers and > investors= > , he has devoted his current career to painstakingly documenting > the shenani= > gans at </FONT><A href=3D"http://link.weissinc.com/h/2SQY/LVOZ/SU/ > MFW"><FONT= > size=3D2>Shadow Government Statistics</FONT></A><FONT size=3D2> (</ > FONT><A=20= > href=3D"http://link.weissinc.com/h/CT1F/LVOZ/SU/MFW"><FONT > size=3D2>www.Shad= > owStats.com</FONT></A><FONT size=3D2>).</FONT></P> > <P><FONT size=3D2>Technically speaking, these issues are not > hidden. The gov= > ernment does tell you nearly everything it's doing -- in a long > series of cr= > yptic footnotes. But after 40 years of footnotes, most are long > forgotten, e= > ven by many of the government's own economists. Here's a brief > rundown of ju= > st the most obvious distortions ...</FONT></P> > <P><B><FONT size=3D2><I><FONT color=3D#ff0000>Distortion #1</FONT></ > I><BR>Th= > e True Unemployment Rate Is Over 12%</FONT></B></P> > <P><FONT size=3D2>One of the first new wrinkles in the unemployment > stats wa= > s added during the Kennedy Administration. And it persists to this > very day.= > </FONT></P> > <P><FONT size=3D2>Instead of measuring how many people are actually > out of w= > ork, they figured it would be easier to simply keep track of how > many people= > are applying for jobless benefits.</FONT></P> > <P><FONT size=3D2>Never mind the fact that the benefits run out > after 26 wee= > ks! Never mind the hundreds of thousands of "discouraged" workers > who have s= > topped collecting benefits months ago!</FONT></P> > <P><FONT size=3D2>The government's unemployment number also > excludes million= > s of part-time workers who are seeking a full-time job but can't > find one ..= > . millions more who are disabled ... and even the 2.2 million that > are in pr= > ison.</FONT></P> > <P><FONT size=3D2>Make sense? Not quite. If Mr. A loses his job > because he's= > fired, he's "unemployed." But if Mr. B loses his job because he's > thrown in= > jail, he's <I>not</I> unemployed!? Give me a break.</FONT></P> > <P><FONT size=3D2>So what is the <I>true</I> unemployment rate in > the United= > States including all those who really want a job but don't have > one?</FONT>= > </P> > <P><FONT size=3D2>I can assure you it's <I>not</I> the 4.7% that > the Bureau=20= > of Labor Statistics reported for August. It's probably closer to > 12%, or <I>= > over two and a half times more than the official rate.</I></FONT></P> > <P><B><FONT size=3D2><I><FONT color=3D#ff0000>Distortion #2</FONT></ > I><BR>Th= > e True Inflation Rate Is Over 7%</FONT></B></P> > <P><FONT size=3D2>Probably more so than any other number, the > government has= > a direct, vested interest in keeping its official inflation > numbers low.</F= > ONT></P> > <P><FONT size=3D2>Reason: The higher the rate of inflation, the > more it has=20= > to pay in Cost of Living Adjustments to Social Security > beneficiaries.</FONT= >> </P> > <P><FONT size=3D2>The first major push for inflation-distorting > reform began= > with the Clinton Administration. Until then, the inflation measure > was base= > d on an essentially <I>fixed</I> basket of goods.</FONT></P> > <P><FONT size=3D2>Example: The basket included an 8-ounce steak. > And no matt= > er what, they tracked the same steak through time.</FONT></P> > <P><FONT size=3D2>The Clinton Administration, however, argued for a > <I>varia= > ble basket of goods</I>. If the 8-ounce steak got to too expensive, > they arg= > ued, the typical consumer would simply substitute hamburger. So the > governme= > nt should do the same.</FONT></P> > <P><FONT size=3D2>That wouldn't be a measure of the cost of > <I>living.</I> I= > t would be a measure of the cost of <I>survival.</I> Yet, according > to Willi= > ams, a series of complex mathematical changes in how the Consumer > Price Inde= > x is calculated -- giving less weight to higher priced items -- > essentially=20= > achieves the same goal as the variable basket of goods.</FONT></P> > <P><FONT size=3D2>Add that to a series of other distortions in the > Consumer=20= > Price Index ... and you've got a measure that's so far removed from > reality,= > it's a joke. Instead of the 3.8% announced last week, the true > inflation ra= > te could be well over 7%.</FONT></P> > <P><FONT size=3D2>The biggest victims of this hoax: Anyone > collecting Social= > Security benefits. According to Williams, if the Consumer Price > Index were=20= > calculated today the same way it was during the Carter > Administration, the p= > ayments would be 70% larger!</FONT></P> > <P><B><FONT size=3D2><I><FONT color=3D#ff0000>Distortion #3</FONT></ > I><BR>Gr= > oss Domestic Product<BR>Greatly Overstated</FONT></B></P> > <P><FONT size=3D2>Back in 1991, the U.S. government stopped > focusing on the=20= > Gross <I>National</I> Product (GNP) and started headlining the > Gross <I>Dome= > stic</I> Product (GDP). A key difference: The payments the > government must m= > ake to service the national debt are missed in the GDP numbers.</ > FONT></P> > <P><FONT size=3D2>Separately, the government always reports the > growth in GD= > P <I>after</I> subtracting inflation.</FONT></P> > <P><FONT size=3D2>Example: If the GDP growth is 8% and inflation is > calculat= > ed at 4%, the government reports that GDP growth is 4%.</FONT></P> > <P><FONT size=3D2>But if the <I>true</I> inflation rate is 7%, then > guess wh= > at: Instead of moving along at a reasonably healthy clip of 4%, the > economy=20= > is actually crawling at a feeble rate of 1%.</FONT></P> > <P><FONT size=3D2>Big difference!</FONT></P> > <P><FONT size=3D2>No matter what, right now, even the overstated > rate is sli= > pping: The government reports that GDP growth fell to annual rate > of just 2.= > 9 percent in the second quarter of 2006.</FONT></P> > <P><B><FONT size=3D2><I><FONT color=3D#ff0000>Distortion #4</FONT></ > I><BR>De= > ficits and Debts</FONT></B></P> > <P><FONT size=3D2>The official 2005 budget listed the U.S. federal > deficit a= > t $319 billion.</FONT></P> > <P><FONT size=3D2>But according to the GAO, if the government > followed the s= > ame generally accepted accounting principles it demands of > corporations, the= > real 2005 deficit would have been $760 billion -- or more than > DOUBLE the o= > fficial number.</FONT></P> > <P><FONT size=3D2>And that's just <I>one year</I> of new debt the > government= > has to take on to make ends meet.</FONT></P> > <P><FONT size=3D2>If you take a look at the <I>total</I> debts and > obligatio= > ns the government has accumulated over the years, the picture gets > worse, mu= > ch worse.</FONT></P> > <P><FONT size=3D2>At the end of the first quarter, the total > federal debt, i= > ncluding government agencies and government-sponsored enterprises, > stood at=20= > $10.2 trillion. (In the </FONT><A href=3D"http://link.weissinc.com/ > h/M2C1/LV= > OZ/SU/MFW"><FONT size=3D2>Fed's Flow of Funds report of June 8, > 2006</FONT><= > /A><FONT size=3D2>, see Table L.4. Then sum lines 4 and 5.)</FONT></P> > <P><FONT size=3D2><IMG height=3D310 src=3D"http://www.safehaven.com/ > images/w= > eiss/5917_c.png" width=3D346 align=3Dleft>But if you also include > the estima= > ted unfunded liabilities for Social Security, Medicare and other > programs, t= > he total federal debt is <I>at least</I> $54 trillion.</FONT></P> > <P><FONT size=3D2>And that's based on three separate studies -- by > the Ameri= > can Enterprise Institute (AEI), the National Center for Policy > Analysis (NCP= > A) and the Brookings Institute.</FONT></P> > <P><B><FONT size=3D2>My Recommendations</FONT></B></P> > <P><FONT size=3D2><B><I>First,</I></B> don't take government stats > for grant= > ed. If you can't trust Ford and Fannie Mae, what makes you think > you can tru= > st Uncle Sam?</FONT></P> > <P><FONT size=3D2>At the very least, recognize that the government > has a bui= > lt-in institutional and methodological bias in favor of good news. > It's simp= > ly not prudent to base your long-term financial future upon them.</ > FONT></P> > <P><FONT size=3D2><B><I>Second,</I></B> take steps to protect your > assets fr= > om the ravages of inflation, whether hidden or not. That includes a > continui= > ng allocation to gold- and energy-related investments, despite any > temporary= > ups and downs.</FONT></P> > <P><FONT size=3D2><B><I>Third,</I></B> keep a substantial portion > of your mo= > ney as safe as possible to protect yourself from the day when the > truth star= > ts pouring out. It hasn't happened yet. But just as occurred with > Enron and=20= > WorldCom, once the bubble of fantasy bursts, it doesn't take long.</ > FONT></P= >> > <P><FONT size=3D2>My favorite havens: Treasury-only money market > funds such=20= > as:</FONT></P> > <P><FONT size=3D2>American Century Capital Preservation Fund > (800-345-2021),= > <BR>Dreyfus 100% U.S. Treasury Fund (800-645-6561),<BR>Fidelity > Spartan U.S.= > Treasury Fund (800-544-8888),<BR>USGI U.S. Treasury Securities > Cash Fund (8= > 00-873-8637),<BR>Vanguard Treasury MMF (800-662-7447), or<BR>Weiss > Treasury=20= > Only Money Fund (800-430-9617).</FONT></P> > <P><FONT size=3D2>Although government officials may distort the > numbers, the= > U.S. Treasury Department has never failed to meet its obligations > for the p= > ayment of principal and interest.</FONT></P> > <P><FONT size=3D2>Good luck and God bless!</FONT></P> > <P><FONT size=3D2></FONT> </P></TD></TR> > <TR> > <TD vAlign=3Dtop width=3D600><BR> > <P><FONT size=3D2>Martin</FONT></P> > <P><FONT size=3D2>Martin Weiss, Ph.D.<BR>Editor, Safe Money > Report<BR>suppor= > [EMAIL PROTECTED]</FONT></P> > <P class=3Ddisclaimer><B><FONT size=3D2>For more information and > archived is= > sues, visit </FONT><A title=3Dhttp://link.weissinc.com/h/7EBZ/2XPU/ > JQ/KR7 hr= > ef=3D"http://link.weissinc.com/h/7EBZ/2XPU/JQ/KR7"><FONT > size=3D2>http://www= > .moneyandmarkets.com</FONT></A><FONT size=3D2>.</FONT></B><FONT > size=3D2> </= > FONT></P></TD></TR></TBODY></TABLE></CENTER></BODY></HTML> > > -------------------------------1158983145-- Complete archives at http://www.sitbot.net/ Please let us stay on topic and be civil. 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