Submitted by DeepCaster:
“Can’t debate, so they changed the job numbers.” -Jack Welch, former General Electric CEO
Jack Welch’s Intuition – that the Official Numbers from the Bureau of Labor Statistics are Bogus — is correct. The Real U.S. Unemployment Rate is 22.8%. But of equal importance is Welch’s focus on the importance of having reliable numbers as the basis for making sound Business Decisions (and Investment Decisions, we add) in order to protect Wealth and Profit. So we lay out here certain critically important Numbers, and indicate resultant Profit Potential.
Consider, for example, Key Numbers which will help determine the future Gold Price. In the first two months of Last Year, Chinese Gold Imports from Hong Kong were about 11,000 kilograms. This year, for the same period Imports were 72,000 kilograms for the same period, about a 650% Increase.
Yet China is now the largest Gold producer on the Earth.
Conclusion: China is Hoarding Gold. And several Central Banks are increasing their Gold Holdings as well.
Key Profit Nuggets: Despite the foregoing, Gold Stocks are in the aggregate are trading at levels similar to when Gold was under $1000/oz. Conclusion: Gold Shares are going higher and the only question is “when”, a question to which we respond in our Alerts.
Intensifying our focus on Jobs Numbers, they are Critically Important to Investors because they are a Reflection of Economic Health (and thus the Tenure of Politicians) and thus the “Earnings Climate” for Corporations.
Consider:
“The August-to-September change in the headline unemployment rate almost certainly was not a 0.3% decline. The Bureau of Labor Statistics (BLS) knows the reported change in unemployment was wrong—other than by extreme coincidence—and it knows what consistent reporting actually showed. Only politics prevents the BLS from releasing the correct number, whether the unemployment rate actually declined, held even, or rose as predicted by consensus forecasters. The lack of transparency here in the data preparation allows for direct political manipulation.
“The problem is that the BLS knowingly has been preparing the seasonally-adjusted headline unemployment numbers on an inconsistent and non-comparable basis for some time. The September number was prepared using a different set of seasonal factors than was used in coming up with the August number.”
“No. 473: September Employment and Unemployment, August Construction Spending, PCEDeflator”
John Williams, shadowstats.com, 10/5/12
Thus, we reiterate, the US Jobs Numbers for September released in early October were Bogus. Real Unemployment is 22.8%.
Moreover, contrary to the False Claim of Secretary of Labor, Hilda Solis, that the upward revisions of jobs were from the Private Sector, they were actually from upward revisions to State and Federal Government Payroll. Private Sector job Growth actually decreased by 5000, Joel B. Pollak – Breitbart.
The broader official U6 rate, i.e., the part-time and discouraged workers Unemployment Rate, actually stayed unchanged at 14.7%.
Significantly, if the labor force participation rate were the same as when President Obama took office, the Official Unemployment Rate would be 10.7% and the Real Rate higher than 22.8%. Moreover, we are still on pace to create fewer jobs than last year according to a report by James Pethokoukis, American Enterprise Inst.
And consider another critically Important number — the Money Supply Growth and consequent Hyperinflation Potential.
John Williams:
“…the preliminary estimate of annual growth for the September 2012 SGS Ongoing-M3 Estimate… is on track to hit 3.3%, up from a revised 3.2% (previously 3.1%) in August… the upturn in annual broad money growth that began in February 2011, had faltered, leveled out and now is notching higher again. Such a pattern—in an environment of massive Federal Reserve accommodation—still remains suggestive of an intensifying systemic-solvency crisis.”
Id.
Yes, indeed. And, following up on that same point, consider the Inflationary Implications of the Fact that a chart of True Money Supply plus Excess Bank Reserves parked at The Fed is Now going Hyperbolic, indeed, virtually straight Up in recent months.
“On October 6, GoldMoney posted my podcast with Robert Wenzel of EconomicPolicyJournal.com. In that podcast, Wenzel expressed concern about the future inflationary implications of the build-up of excess reserves on the Federal Reserve’s balance sheet. Excess reserves represent balance sheet cash parked at the Federal Reserve Board by commercial banks.
“Being the banks’ own money, they can gear up their balance sheets on it whenever they choose to do so. However, putting aside the gearing potential of excess reserves, we should at least treat it as cash, despite it being regarded as out of public circulation. There is therefore a strong case for it to be included in the True, or Austrian Money Supply quantity.
“TMS is basically cash plus instantly encashable accounts. The chart below is of TMS plus excess deposits at the Fed from 1960 to the present day.
“Worryingly it conforms to a hyperbolic curve, which is already going vertical in the fashion of a hockey-stick. Where this measure of money has deviated from the hyperbola it has done so by increasing faster than the hyperbola itself…
“We can be sure the Fed doesn’t want to look at things this way; but now that the increase in TMS plus excess reserves is beginning to lag behind the curve, it indicates that monetary policy is failing…
“Confirmation of this alarming discovery is to be found in the chart below, which is of gold from 1900 onwards, and has its own hyperbola…
“… together they represent confirmation of the ultimate collapse of paper money.”
“Accelerating money supply and gold prices”
goldmoney.com, 10/8/12
True Money Supply compared to the Price of Gold.
Therefore, it is not surprising that Real U.S. Inflation is 9.33% — Threshold Hyperinflationary.
From all the foregoing, John Williams correctly concludes:
“…while general circumstances have continued to advance towards the ultimate demise of the dollar, the general outlook is unchanged. While QE3 is an enabling action for the onset of massive inflation, the outside timing of 2014 for the ShadowStats.com hyperinflation forecast remains in place…
The official recovery simply is a statistical illusion created by the government’s use of understated inflation in deflating the GDP, which overstates deflated economic growth…
The long-term fiscal solvency issues of the United States—where GAAP-based accounting shows annual deficits running in the $5 trillion range—are not being addressed…
Neither economic nor systemic-solvency issues have been resolved by U.S. government or Federal Reserve actions, and the most recent readings on income variance suggest that the worst is yet to be seen…
With the economy weak enough to provide political cover for further Federal Reserve accommodation to the still-struggling banking system, QE3 was introduced on September 13th. That action effectively provided for open-ended monetization of U.S. Treasury debt at the Fed’s discretion. The mechanism for eventual full debasement of the dollar now is in place, and it likely will come into full play, as needed to support the banking system and as needed to assure “successful” auctions of Treasury debt.
QE3 likely will lead to a massive dollar-selling crisis, and that will begin the process of a rapid upturn in domestic consumer inflation. A near-term dollar-selling crisis is now of a much greater risk, post-QE3. Separately, though, a dollar-selling crisis could begin at any time…”
“No. 473: September Employment and Unemployment, August Construction Spending, PCEDeflator”
John Williams, shadowstats.com, 10/5/12
Profit Nugget: Only the Monetary Metals, Gold and Silver, and certain essential Tangible Assets such as Energy and Food will serve as Profit Centers and Stores of value as the Inflation Acceleration proceeds. Deepcaster has made specific Recommendations aimed at Protection and Profit from these in recent Letters and Alerts referenced in the Notes below.
And since Real Jobs Growth or lack thereof is a reflection of Economic Health, consider Williams’ conclusion:
“The BLS reported today (October 5th) a statistically-insignificant, seasonally-adjusted September 2012 month-to-month payroll employment gain of 114,000…
http://www.shadowstats.com/imgs/2012/792/image016.gif?vcode=a80094806113945b
“Despite the ongoing and regular overstatement of monthly payroll employment—as evidenced usually by regular and massive, annual downward benchmark revisions (2011 and the just-announced 2012, excepted)—the BLS generally adds in upside monthly biases to the payroll employment numbers. The process was created simply by adding in a monthly “bias factor,” so as to prevent the otherwise potential political embarrassment of the BLS understating monthly jobs growth… That process eventually was recast as the now infamous Birth-Death Model (BDM), which purportedly models the effects of new business creation versus existing business bankruptcies.
“…At present that is a monthly average of roughly 47,000 jobs created out of thin air… as part of the BDM…
“The aggregated upside annual reporting bias in the BDM reflects an ongoing assumption of a net positive jobs creation by new companies versus…
“The broadest unemployment rate published by the BLS, U.6 includes accounting for those marginally attached to the labor force (including short-term discouraged workers) and those who are employed part-time for economic reasons (they cannot find a full-time job). The September U.6 unemployment rate held at a seasonally-adjusted 14.7%…
“In 1994, during the Clinton Administration, “discouraged workers”—those who had given up looking for a job because there were no jobs to be had—were redefined so as to be counted only if they had been “discouraged” for less than a year. This time qualification defined away the long-term discouraged workers. The remaining short-term discouraged workers (less than one year) are included in U.6.
“Adding the SGS estimate of excluded long-term discouraged workers back into the total unemployed and labor force, unemployment—more in line with common experience as estimated by the SGS-Alternate Unemployment Measure—held at 22.8% in September, the same as in August…”
Id.
Profit Nugget: When considering the Prospects for any Investment or Trade, it is essential to consider The Real Numbers which reflect the Actual and Prospective Economic and Financial Context in which the Investment or Trade is Made.
Conclusion: regarding the effect of the foregoing Real Numbers, Marc Faber recently agreed with Deepcaster’s earlier forecast that there would be a “Great Equities Crash in 2013.”
“‘Basically, I think QE3, which I think is unlimited, and bond purchases by the ECB bailout of countries have been largely discounted by the market, and the markets have been weakening technically, so I believe that we hamy have here quite a serious setback,’ he said….
“’I just want to have a lot of cash because I think that within the next six to nine months, we can buy just about anything 20 percent lower than it is now.’…
“’…if I look at the presidential candidates today, if Obama is elected, I think the Dow Jones should be negative -13,473, and if Romney gets elected, it should be minus ‘6,000.’”
“Marc Faber: Market Setting Up for ‘Serious Setback”,
Bruno J Navarrro, CNBC, finance.yahoo.com, 10/10/12
Profit Nugget: Be Prepared to short Most Equities at the right time in the next few months.
Best regards,
Deepcaster
October 11, 2012
Note 1: The $US dropped nearly 200 basis points at one point in the last two weeks. No surprise since the Fed’s U.S. Dollar-Destructive Q.E. to Infinity Action, coupled with the ECB’s Similar Action the week before, boosted the Euro vis-à-vis the Dollar, as we earlier Forecast. The very recent $US bounce does not change its weakening Trend.
This Debauchery of the $US weakens its Purchasing Power and thus increases Burdens on the agonized disappearing Middle Class.
The Bernanke claim that buying $40 billion per month in Mortgage Backed Securities would Stimulate the Economy and help the Housing Market is just a Fictitious Cover Story. In fact, it is just another Gift to the Mega-Banks who hold Underwater Paper, and to Wall Street which proceeded to rally on The Fed-sugared High.
Both the Continuous Commodities Index which show Average Annual Price Inflation of 15% and the Real Inflation Number (9.3% per year from shadowstats.com) reveal Serious Inflation is with us and it Intensifying.
And Especially Food Price Inflation.
To increase Yields, Farmers increasingly employ Fertilizer.
And last week’s Buy Reco – a Fertilizer Producer – was trading near its 52 week low at under 40¢ per share when we first recommended it. It has moved up nicely since we recommended you buy in. But it has such great potential that we raise our original “buy under” price to 45¢ per share.
To see our recent Buy Reco aimed at Profiting from the Fed’s Inflation Rocket, read Deepcaster’s recent Alert, “Buy Reco (under 40¢/share) to Ride Inflation Rocket; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold, Silver, Crude Oil, & Equities,” recently posted in ‘Alerts Cache’, on deepcaster.com.
Note 2: “Debauch – to dissipate; to corrupt morally; to lead away from excellence or virtue; to reduce the value, quality, or excellence of…”
The Fed’s U.S. Dollar-Destructive Q.E. to Infinity Action, coupled with the ECB’s Similar Action the week before, boosted the Euro vis-à-vis the Dollar, as we earlier Forecast.
But both Actions Guaranteed Accelerating Price Inflation and thus Deepcaster recommends a Buy Reco (trading around a mere $2.50 per share) to ride that Inflation Rocket.
This Debauchery of the $US weakens its Purchasing Power and thus increases Burdens on the agonized disappearing Middle Class.
The Bernanke claim that buying $40 billion per month in Mortgage Backed Securities would Stimulate the Economy and help the Housing Market is just a Fictitious Cover Story. In fact, it is just another Gift to the Mega-Banks who hold Underwater Paper, and to Wall Street which proceeded to rally on a Fed-sugared High. And, of course, it is a pre-election Gift to President Obama.
Important Consequences will ensue.
To see the Great Profit Potential flowing from this QE and our recent Buy Reco aimed at Profiting from it, read Deepcaster’s recent Alert, “Surmounting Debauchery with Profit; Buy Reco to ride Inflation Rocket; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates; Gold, Silver, Crude Oil; Equities,” recently in ‘Alerts Cache’ at www.deepcaster.com
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I’ll repeat this until folks take it seriously enough to regularly discuss it and its ramifications. Look at chart one in the body of this article. It clearly shows that in the mid 1960s, once the vast bulk of silver had vanished from circulation, initiating the 100% banknote scheme, the ‘money supply’ began its now parabolic rise of volume. My contention is, up to that point, compounding of interest on the loan of banknotes had been ameliorated by newly minted silver. With that ‘governor’ removed, banknotes began automatically inflating coincident with the then complex compounding interest. This process is mathematically exponential and all appearances demonstrate that its in its process of imanent implosion.
Also, despite that his ‘Austro-Classical’ economic perceptions don’t factor in the unique paradigm of our monetary doom, John Williams deserves a hell of a lot more exposure than he’s presently enjoying. I hope the Docs help to remedy that oversight by regular interviews.
Sounds like some un-varnished truth.
As far as riding on that inflation rocket…no thanks. I think I’ll just sit on my stack.
I trust John Williams to both know and speak the truth about unemployment and inflation facts and the government not to. This is due to the fact that Williams has made a career of correctly determining these numbers and then selling his knowledge to others who need them in order to correctly develop their business plans. The gov and the Fed, on the other hand, have a great deal at risk, should it become common knowledge among the sheeple how abysmally their plans and policies have failed. It is a virtual certainty that this knowledge would result in a sheeple stampede like no other seen across the world and politicians and banksters dangling from trees and lamp posts would be a VERY common sight all across this nation. Unfortunately, they have done an excellent job with smoke and mirrors to obscure the truth, such that only a few of us are truly aware of their level of complicity in our current political, social, and economic problems.
As to the article itself…
“Conclusion: China is Hoarding Gold. And several Central Banks are increasing their Gold Holdings as well.”
Indeed they are! But a FAR more interesting thought is… WHY? IMO, they know that the days of fiat currency are not only numbered but are shrinking rapidly. This is why China is buying up real estate, farms, ranches, mines, lumber mills and timber farms, mines, businesses, oil fields, and anything else of REAL value as quickly as they can. Further, I also believe that there will come a day (sooner rather than later) when the US dollar loses its World Reserve Currency status and a new world trade currency is introduced. This new currency will be backed, probably by a basket of commodities, that will include PMs to prevent rogue governments from printing unlimited amounts of un-backed currency. The US gov and Fed will squeal like stuck pigs at the mere thought of this but all of the creditor nations will be highly in favor of it.
“Gold Shares are going higher and the only question is “when”, a question to which we respond in our Alerts.”
Like many on here, I have been reading and hearing for YEARS that the miners were “about to break out”, yet all they have done so far is get cheaper and cheaper. Many who invested in mining shares, especially the juniors and the explorers, have lost their financial butts by owning these shares as their prices continue to plummet. Yes, someday, those shares will zoom but the question every investor faces is can they continue to fall longer than I can remain solvent? It is, indeed, a horse race and I, for one, would NEVER bet my financial future on the outcome of a horse race.
“Such a pattern—in an environment of massive Federal Reserve accommodation—still remains suggestive of an intensifying systemic-solvency crisis.””
This also has been repeated often and appears to be something that if said often enough will acquire a mantle of truth. Personally, I do not think that there is any liquidity crisis. The world is awash in cheap fiat currency and any number of central banks are printing more as fast as they can. This gives me two thoughts: 1) it is not liquidity that is lacking, it is a crisis of confidence in our national leaders and their policies; and 2) with the HUGE amount of leveraged money bet on financial drek like derivatives, there is no amount of money that can be printed that would keep the banks solvent once these things start blowing up in the banks faces like a string of dynamite-dominoes. Even trying to do that would be a massive exercise in futility that would destroy any value those currencies now have and bring down the governments printing them.
“Therefore, it is not surprising that Real U.S. Inflation is 9.33%”
No, it is not and everyone who goes to the grocery store, the gas station, the doctors’ office, the insurance office, or the college tuition office is WELL aware of it. Even at the cost of its credibility, the Fed persists in “calculating” inflation using an arcane formula that is adjusted from time to time as it begins to show inflation rising above about 3%. ’If we don’t like the numbers, we don’t fix the problem, we fix the calculation until we do!’ seems to be the Fed’s position.
The BLS is another of the great calculators. My question is, “Why do they have to ‘calculate’ unemployment?”. Can they not simply call up the US Dept. of the Treasury and obtain real daily data on withholding to see how many people are working, how much this has changed since yesterday, and how much was withheld from their checks? Well, actually, yes, they could do that, as the info IS freely available and reasonably accurate as well. But that would yield the truth and not the political CYA BS that is their true interest.
Most of the people believe the inflation rate from the government so they also think that their savings are save and it won’t lose any values. When hyperinflation happens, people will discover that the government lied about the inflation rates.
Commodities are going to be the new money when it all collapses. Whoever controls them at the time and PLACE will be setting the rules. Sure China can buy stuff but they don’t necessarily have actual possession, things collapse whoever is in control of that region is going to end up in control of the commodities.
I wonder if Canada’s unemployment is very high or not. At my school, we have a special that helps us choose which job we would like to do later in the future. The teachers are putting too much hope at your future career. I’m like “With high unemployment rate, there isn’t a lot of hope at finding a specific job that you like in the future”. @UglyDog told me that this is the key for financial problems. I will make a forum about it later on.