Pretty much every stat that the Government issues is grossly misleading and is close to plain lies. The main topics they totally mislead the public on are Inflation, GDP, Unemployment and Housing Data. So here are the bones of it all.

*this was written in 2014

Inflation

According to the Government, UK inflation right now is 2.7%. Now this is the most farcical of all stats as it’s becoming almost common knowledge that REAL inflation is near 10% now. The way they calculate inflation is by taking a metaphoric ‘basket of goods’ which the public buy from day to day like bread, milk, cars, iPhones and CDs etc. (But funnily enough, not rent or houses. They used to, but they took it out of this calculation in 1983 as they started to purposely inflate the housing market). So they just compare the prices of this basket to last month, last year, last 5 years etc and plot a graph. So right now they’re telling us it’s 2.7%. Well what they fail to realise or purposely ignore is that everything in that basket is now smaller or of less value than previous times. For example, let’s take a Snickers bar (my favourite). In 2003, they were on average 30p. But now, they average around 60p. In fact I’ve spent around 90p in some places, so in 10 years, the price has increased by 100% minimum! AND they are all now 7.2% smaller. This same stat applies to everything else in the basket like packets of crisps, fairy liquid bottles you name it. So when you crunch the numbers, real inflation and real living costs are near double digits and are far outpacing economic growth.

Gross Domestic Product

Recently the US GDP calculations have been changed. They are now including Research and Development (R&D) spending as part of the GDP. Now this is absurd. The US spends more money on Military (R&D) than every country in the world combined. Even their medicine R&D dwarfs other nations. Now it could be argued that medicine R&D could produce more efficient medicines which would positively bring more revenue in, but it’s negligible. Military R&D has next to no productive use (other than for war) and so this ‘ploy’ is something which will make the US Debt to GDP ratio not look as bad as it really is. They’re the only country in the world to do this but it probably won’t be long before the UK follows suit in order to hide our problems.

Jobs/Unemployment Data

This is a huge topic which I could ramble on for days, but in a nutshell, when calculating these figures, they are now purposely stretching the parameters of what a full-time employed person really is. They are now counting people with a ‘part-time job but are seeking a full-time job’ as ‘fully employed’. They are including some forms of charity/volunteer workers as ‘fully employed’ and many other profiles. But they’re doing it on the other end of the scale as well by classing some people without a job but are seeking employment as ‘part-time’ employed and so on. So they’re trying to make these figures show that unemployment isn’t as bad as it really is when the poor/rich divide is increasing dramatically! Just have a look at the BBC Documentary ‘Skint’ – it’s shocking but a real insight into the UK’s deprived areas.

Housing Data

Again, another topic which I could bore you on but this one is probably as laughable as the inflation data. For some reason the Government likes to promote to the public that a rising housing market means that the UK economy is improving. And as the public are grossly ignorant with investing matters, we just nod and accept what we see in the news. So 2 points here: i.) The housing market is NOT a reflection on how our economy is doing. There is zero correlation between rising house prices equalling a better economy. In fact, rising house prices reduces GDP. Main reason for that is because as house prices, mortgages and rent increases, it takes up a larger percentage of peoples’ monthly income. As a result, if people are spending more on rent and mortgages, they will subsequently spend less in shops which therefore adversely affects our economy. ii.) The Government is now openly trying to pump up this market again with 95% mortgages! Also when you look at US housing data that’s even more of an exaggeration. What they fail to show us is that the Federal Reserve is buying up $85 billion a month of Mortgage Backed Securities, other toxic bonds and also at least 70 000 empty homes per month using proxies.

So there you go. Hopefully you can now see that we need to at the very least question what we are told. Housing, employment, GDP and inflation data is rigged which I hope I’ve demonstrated and that’s only the tip of the iceberg. If they are rigging interest rates (LIBOR), imagine what else they are doing.

My Solutions?

  • So when you’re next going to buy a mortgage, invest in the stock market or pensions etc, just please do a double check of REAL adjusted data, not nominal data which gets published. www.ShadowStats.com is a great site for real data…
  • Try not to trade based on what you see in the news. Most of the time, the news has already been factored into the price of your market. This is why sometimes bad news comes out, but the market does nothing or even rises.
  • Not really trading related, but if you’re buying a house, be careful. Interest rates are at 300 year lows and they can and will only rise. This will have crippling effects to the economy and housing market. This is a huge topic which I cover in my other book, but what I’m strongly suggesting to my close friends and family is that they fix their mortgage ASAP for as long as possible!
  • Make sure you explore all of the videos at InvestingStarterPack.com – this will make far more sense.