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Jeff Nielson is the writer/editor of Bullion Bulls Canada. He came to the precious metals sector as an investor in the middle of last decade, and quickly decided this was where he wanted to focus his career. Jeff's background includes four years of Economics at the University of British Columbia, before he went on to earn his law degree from that same institution.

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Economic Forecasts: Lies or Idiocy? Part II

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Originally posted at BullionBullsCanada.

In the first part of this commentary, we observed how the entire body of “experts” and “economists” who populate the mainstream media had not only shown a stunning collapse in the accuracy of their forecasts, but that their lack of accuracy was entirely due to a large, persistent bias toward optimism (i.e. an “economic recovery”).

I offered two explanations for the sudden and pervasive change in the behavior and performance of this group. The “obvious explanation” was that these people were nothing but cynical shills, deliberately “pumping” markets in order to induce investors to funnel their money into Wall Street’s crooked casinos (i.e. U.S. equities markets).

I also discussed the explanation put forth by two Reuters writers who had compiled the data I used for reference, that this behavior was based upon the assumption of “mean reversion” by these experts: simply assuming that our economies would revert back to “normal”. I explained how even if we accepted this explanation that it directly implied that these experts were doing nothing but “guessing” about our economies. And they weren’t even good guesses.

I pointed out how the massive debt-loads which Western economies have inflicted upon themselves and the enormous costs of servicing those debts make it mathematically impossible for our economies to perform at a level equal to the previous (“normal”) trend. Thus, if we accept the Reuters explanation for the sudden, massive failure of these experts to forecast (and understand) our economies it implies incompetence and outright negligence at a phenomenal extreme.

However, there is certainly another way to account for the “herd behavior” of practically all mainstream economists and analysts. Another obvious explanation for the robotic group-think of these individuals is that they, themselves, are victims of brainwashing. Here, the evidence is both abundant and persuasive.

To begin with, we have the two classic ingredients of the propaganda campaign necessary to induce brainwashing: repetition and consistency. It is common knowledge in the field of psychology that if you repeat any premise enough times (no matter how shocking or absurd) that more and more people will come to believe it as true, completely based upon the frequency of the message and absolute consistency in repeating the propaganda.

In this respect, I need merely refer to one of my own, favorite pet-phrases: “media parrots”. The slavish insistence of virtually all business reporters to precisely repeat the propaganda sound-bites which are fed to them is literally maddening. It is equally obvious who the “conductor” has been of this choir of talking-heads: Ben Bernanke.

Go back to 2005 and 2006, the absolute peak of the Wall Street-created housing-bubble (and the $trillions in fraud they had built upon it) and the media parrots were endlessly repeating the Bernanke lie of a “Goldilocks Economy”, where U.S. house prices (and markets) would just keep going up and up forever.

Move on to 2007, to just after the obvious bursting of that bubble, and Bernanke the Puppet-master had the talking heads repeating the lie of a “Soft Landing” over and over and over. This was to try to dupe market chumps into keeping their money on the table, while all of Bernanke’s bankster-buddies were desperately trying to unload $trillions in financial feces.

Then there was the “Mother of All Propaganda Campaigns” which began early in 2009, when Bernanke’s mission was to convince market sheep that a “U.S. economic recovery” had begun. Thus Bernanke had his flock of mainstream media parrots regurgitate the phrase “Green Shoots” countless millions of times. Indeed, if I had heard those two words myself even one more time I would have certainly “snapped” – and gone on a killing-rampage.

The reason why I claim to be able to observe and report on such propaganda, rather than being influenced by it myself is a simple one: I am a self-confessed “contrarian” – and very obviously so. For all such people, we are immune to propaganda (or virtually so). The more often someone tells us something insisting it to be true, the less likely such people are to believe it. Shakespeare immortalized the attitude of all contrarians when he quipped The lady doth protest too much, methinks.”

The wisdom here is apparent. If something is true, then to some extent it should be self-evident – and thus there would be no need to repeat a particular premise again and again and again. In this case, to provide evidence of the mental conditioning which is produced by brainwashing, one merely needs to review the writing of all the mainstream experts/economists from the Spring of 2009 through to the end of that year, and observe how often Bernanke’s two words were parroted.

The reality, of course, is that there were no “green shoots” in the U.S. economy (i.e. a basis for new-and-sustained “growth”), merely a small-and-temporary flurry of economic activity generated by the largest, most-reckless injection of “stimulus” into an economy in all of economic history. I maintained at the time and still maintain now that there wasn’t any “economic growth” in this supposed recovery. If one sought a metaphor to describe the U.S. economy at that point, there was a far more accurate comparison available than to suggest the healthy growth of a new plant: “a chicken with its head cut off”.

It is common knowledge that the “official” numbers for U.S. inflation understate actual inflation by roughly 5-6% (if not more) – as demonstrated by John Williams of Shadowstats.com. It is simple arithmetic (and economics) that for each percentage point that inflation is understated that GDP is overstated by a commensurate amount. The reason for this is obvious. Every estimate of GDP must be “deflated” by the prevailing rate of inflation in order to remove the impact of price increases from the GDP calculation.

At no time during this so-called recovery has “official” U.S. economic growth equaled the degree of exaggeration on U.S. inflation numbers, hence there is no mathematical basis for believing that a “recovery” ever began. This is reinforced by a multitude of economic statistics including all-time record rates of food-stamp usage by Americans, all-time highs for “underwater” mortgages, all-time highs for long-term unemployment, and all-time highs in mall vacancies and bankruptcies (along with many others).

Further proving that no “recovery” could have possibly occurred in the U.S., the “incremental” GDP produced by each new dollar of U.S. debt turned negative – i.e. each new dollar of U.S. debt produced less-than-zero GDP. Precisely how could the U.S. possibly borrow-and-print its way to an “economic recovery” when each new dollar of that debt only caused the U.S. economy to shrink even more? Indeed, a “capitalist” (i.e. credit-based) economy where each new dollar of debt causes the economy to shrink is quite obviously “a chicken with its head cut off” – thrashing in futility, with death being an imminent certainty.

How then do we explain the slavish insistence of an entire flock of mainstream experts and economists that there was a “U.S. economic recovery”, if not to conclude that they have been brainwashed by U.S. government propaganda? Were they all just “shills” pumping the markets? Were they all just guessing that the U.S. economy must “revert” to its “mean”? Or are they all just sycophants looking to ingratiate themselves with their corporate masters by mindlessly repeating the words of B.S. Bernanke?

In the case of one sub-group of these puppet-experts – the “economists” – there is an entire, additional source of programming to produce such mental conditioning: our universities. Many other commentators/historians have documented how large corporations (predominantly the banks) have stacked the economics departments of our “institutes of higher learning” with disciples of Keynesian economics: proponents (conveniently) of both profligate money-printing and debt-to-infinity.

Having passed through this educational system myself, I have firsthand experience with the mental programming which all students of economics receive as they acquire their training. There is a surreal dichotomy which exists in the economics departments of Western universities. On the one hand, much of the education on economic fundamentals is untarnished. “Supply and demand”, and many of the nut-and-bolts concepts which are the basis of all economic analysis are still presented and taught faithfully.

Then, suddenly and frighteningly, the moment we leave the realm of pure economic theory and begin “learning” about how our economic systems actually function, we enter the entirely faith-based realm of Keynesian economics, “fractional-reserve banking”, and “fiat currencies”.

During my own four years of study, I never even bothered questioning my professors about Keynes’ economic “model” of economies relentlessly and perpetually increasing their levels of debt. Being adept with numbers, it was always completely apparent that over the long-term the arithmetic of Keynesian economics could never “add up”. The voracious manner in which compound interest consumes wealth means no economy with ever-increasing debts could ever be sustainable.

However, in the case of both fractional-reserve banking and fiat currencies, I did seek to obtain “enlightenment” on these subjects. I asked how a fractional-reserve banking system could be anything other than a Ponzi-scheme. I asked how/why anyone would believe that the bankers’ (un-backed) fiat-paper was worth anything at all.

I never received anything remotely resembling an “answer” to those questions. Instead, there would be some clumsy charade of circular reasoning with an inevitable post-script added that these things “were difficult to explain”. The obvious implication was that there was a failure of comprehension on the part of myself, as opposed to any deficiency in instruction or the underlying theory itself – and that I would eventually understand these “principles” as I reached more advanced levels of study.

In fact, the attitude I faced was exactly identical to what an acolyte experiences in seminary school, when questioning some venerable priest about a troubling section of the Bible. When the priest sees by the look of confusion on the acolyte’s face that his “explanation” hasn’t enlightened the acolyte, he adds that “it will all become clear when you get closer to God”.

The combination of these two forms of mind-control is as daunting as it is pervasive. On the one hand, we have the propaganda-machine itself: blaring its message with near-infinite frequency and absolute consistency. On the other hand, there is the economic priesthood, sanctifying all of this propaganda with the “blessings” they bestow from their ivory towers.

The one certainty of any and all propaganda campaigns is that they must eventually fail. The longer that an entity (usually government) attempts to maintain a particular deception/illusion, the greater the cumulative departure from reality. Not only do the individual items of propaganda become steadily less plausible, but collectively there are an ever greater number of internal inconsistencies and contradictions which serve to further weaken the persuasiveness of the propaganda.

The immediate propaganda objective of pretending that there is a “U.S. economic recovery” underway has nearly exhausted its own shelf-life. Undoubtedly there will be a new initiative which replaces it – with the twin objectives of attempting to preserve the banksters’ paper empire while continuing to deceive and placate the masses. I can only hope that when the next barrage begins that the timeless wisdom of Shakespeare will help to shield readers from its insidious effects.

There Are 3 Responses So Far. »

  1. The brainwashing components of which you speak are not confined to economics. As a medical researcher, the same circumstances that you describe for economics apply equally to medicine. Just as the banks and corrupt Wall Street institutions have captured the educational system, pharmaceutical companies have equally corrupted the research, practice, and teaching of medicine. It was my understanding of how brainwashed medicine has become that led me to pursue alternative economic insights such as those offered by Implode. My thinking was, “If the monolithic pharmaceutical control and distortion of research can occur in medicine, it must occur in other areas that are mantra driven.” Suddenly, ‘I am a long term investor’, and, ‘My doctor said to lower my cholesterol’ became equally misleading, with both distortions requiring creative math to complicate an otherwise simple matter. To we medical researchers that are not employed by pharma, assuring the public that there was no risk when one became a long term investor became the equivalent to the constant rant that cholesterol drugs save lives.

    Anthropologically, herd behavior offered survival value, reduceing the chances of our becoming prey. Today, these same hard wired instincts (safety in numbers) are what make us prey. Economist, physicians, etc., those to whom we seek advice and counsel are a part of the propaganda chain. You have offered wonderful insight to elucidate these phenomenon.

  2. My complements to the author for an article so well written and refreshing sane and accurate. I think that everything in this piece is accurate I would like to add that the problems we face are not limited to just the area of economics. In my college days, I studied philosophy. Just as generations of economists were being indoctrinated into a Keynesian view of economics, the philosophy departments were busy with indoctrination towards the German based philosophies base in collectivist socialist non reality thinking. This is the conflict between rational thinking and mysticism.

    The destruction and fall of western civilization will continue until such time that a philosophical awakening takes place. Only when we reject the philosophies of Hegel, Kant, and Husseral and the rest and once again turn toward rational reality based thought such as Aristotle, Descartes, and Ayn Rand, will the world have a chance of moving in a positive direction. Only when we return to rational thinking will things get better.

    Only when we reject the ideas of collectivism and return to those of individualism will we stand a chance of living in a rational world. The university brainwashing has happened over several generations. It will not reverse itself in a short time.

    There is no economic recovery taking place.

  3. Tom Kane, I fully agree with you that the “dumbing down” and sheep-mentality of our societies has DELIBERATELY been sewn into most facets of our lives.

    Your example about doctors being little more than sales-drones for the pharmaceutical companies is a good one.

    Robert, I also agree with the general thrust of your comment that we need a FUNDAMENTAL revision of what passes for “philosophy” in our modern world. However, where I will partially disagree is that the “answers” can be found in “individualism”.

    I do NOT see the devolution of our cultures as being a failure of “personal responsibility” at the individual level. This is because what has DESTROYED our economies has NOTHING to do with such philosophical principles.

    Roughly 50 MILLION people are NOT ALLOWED TO WORK in Western economies, due to massive structural unemployment – and the REFUSAL of our governments to end that structural unemployment by switching to a four-day work week.

    Obviously “individualiasm” cannot help those 50 million people.

    Secondly, as a matter of basic arithmetic, ALL INCOME TAXATION SYSTEMS permanently funnel wealth FROM the poor/middle-class to the VERY wealthy.

    In the 100 years of income taxation, $10’s of TRILLIONS has been plundered from our economies in this manner – and is now being HOARDED by the ultra-wealthy. It is this MASSIVE wealth-hoarding which has hollowed-out our economies to the point of collapse.

    Again, “individualism” will do NOTHING to redistribute those STOLEN $10’s of TRILLIONS…

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