Tag: Government

The Government is Doctoring Inflation Rates To Secretly Confiscate Your Wealth

Inflation is defined as the rate of which the price of goods and services increase.

If you were to imagine the cost for a can of drink at the vending machine, petrol at the pump, housing or bread, the prices would have been much lower when you were growing up than they are now. That’s inflation in action.

If our wages don’t keep up with inflation, then our money doesn’t go as far and the standard of living falls.

So what is the current inflation rate? As of January 2021, the government quotes it at 0.7%. Compared to the 1970s where there was rampant inflation, this figure is historically low. Losing 0.7% of the value of your cash savings each year is a minor nuisance at best, and if your interest rate in your savings account matches that, then you wouldn’t be losing any value in your money in real terms at all. But there’s a twist in the tale.

What if the government’s figure of 0.7% didn’t actually match up to what’s really going on with prices in the country? What if real inflation was closer to 10%? After all, the US and UK governments have been inventing trillions of dollars of money in recent times in a process called quantitative easing, which is known to cause inflation.

In 1996, governments in the USA and UK decided to change the way that inflation rates would be calculated. They now use certain tricks such as substitution (using the price of the cheapest available type of product in the category they are calculating), geometric weighting (if they find something that has gone up a lot in price such as healthcare or property, they will assign an inappropriately low percentage of the calculation), and hedonic adjustment (reducing the price of an item like televisions because the item is higher quality than it was the year before). Hidden inflation is becoming more common too, such as when companies give you less of a product like Dairy Milk or Walker’s crisps for the same price, hoping that you won’t notice.

Even if you don’t understand this last paragraph fully, it basically means that the government is tweaking around figures in a formula to get a desired result, instead of doing it fairly. But why would they want inflation rates to seem lower than they actually are?

Firstly, because GDP numbers are inflation-adjusted. If governments are adjusting for inflation by their own fake figures instead of the real ones, it makes it look like the economy is growing even if the economies are actually going backwards. Put another way, because real inflation is at least 7% higher than quoted, it means that if the stock market isn’t growing at least 7% per year, people who invest into it aren’t actually profiting at all in real terms.

Additionally, governments want to quote low inflation rates so they can get away with meagre pay rises like the 1% it is giving NHS workers across the country. The news was not taken lightly after over a year of NHS workers being stretched to the limits during the COVID-19 pandemic. But, imagine if the government had given the 1% pay rise and then broke the news, “Oh, by the way, inflation is actually at 8%, not 0.7%.” The government would have basically rewarded the NHS workers by reducing their spending power by over 7%. The funny thing is that this is the reality.

It’s in the government’s best interests to keep the inflation rates lower than they really are – it makes them look better, and keeps the public from realizing that their standard of living may be dropping.

So, what if you’re reading this and you have excess cash that is sitting in a checking or savings account? You obviously won’t want the value of it to go down by 10% each year. Andrew Craig, the author of How to Own the World suggests to find a way to ‘own’ inflation. This means to buy things that we know are going up in price along with inflation – property, gold, commodities and shares.

Policing for Profit: How the Poor Are Being Robbed by the Politicization of Justice

In the last few decades, a vast expansion of federal criminal law in the United States now means that the police have power to formally charge innocent people for doing everyday activities. Most of us feel relatively secure in that we aren’t criminals, but through the politicization of justice, everyday citizens are now being targeted by the state.

According to James Rickards in his book The Road to Ruin, paramilitary style police raids in the United States went from 3,000 to 45,000 annually between 1980 and 2001. That’s over 100 raids per day across the United States in 2001.

The growth of police power in the United States isn’t just limited to raids. People in poor neighborhoods get targeted on the streets, and end up paying fines that essentially tax the poor to meet revenue targets outlined by the city. In neighborhoods like Bedford-Stuyvesant in Brooklyn, New York – where almost half the population is African-American – police patrol the streets to stop and search anyone that “fits the description”. This even happens to people that are walking the twenty yards from their car to their apartment after work, or people that are smoking a cigarette on their porch.

Poverty-stricken citizens have been known to be arrested, strip-searched, and then charged with crimes such as “obstructing pedestrian traffic” (on an otherwise empty street). Although unconstitutional, police deliberately choose poor neighborhoods because their victims don’t have the option to pay $1000 for a lawyer and take the time off work and find the transport to go to court to seek justice. Instead, their hand is forced to pay a $500 fine and accept a criminal record that harms their job prospects.

So why are the police doing this? In recent times, the United States has had a problem with the amount of sovereign debt they are taking on, and cities are running on budget deficits too. The police in the cities are therefore tasked to generate revenue from the poor. They’re even incentivized and rewarded, and competitions are held for officers to try to generate the most revenue.

Police in the United States also have the ability to seize assets after an arrest before conviction. Even if proven innocent, the accused often do not have the resources to fight to get their assets back. The assets get shared out among people involved in the investigation to boost revenue in resource-limited localities. Highway patrol effectively enact a state-sanctioned highway robbery.

Not only is there obvious cost to the poor, there can be a cost to police too. Violence against officers is much more likely when people know that the police are effectively corrupt and unconstitutional. The reports of police brutality in the United States don’t seem to be going away any time soon either.

It’s hugely disconcerting to know that the state has the power to formally charge anyone they wish to – we are all effectively felons. The ever-increasing surveillance state has been demonstrated by people like Edward Snowden, a whistleblower that worked for the Central Intelligence Agency. The government are able to collect data from social media websites, the NFC and GPS on your cell phones, CCTV with facial recognition and even toll booths you have driven through. The digitization we have experienced in our lifetimes means that there is no such thing as privacy anymore. The only question is whether your time has come yet.

How UK Government Has Used Statistics to Influence Behaviour During the Covid-19 Pandemic

At the time of writing there are currently 161 cases of Covid-19 per 100,000 in my area, according to a page on the BBC website. That’s the same as 0.161% of the population.

Which statistic sounds more daunting?

Daniel Kahneman writes in Thinking, Fast and Slow that when formatting a probability, a frequency (e.g. 161 per 100,000) elicits a more emotional response than a percentage does. We picture 161 people that are infected, and therefore realize that there’s a threat. It’s much more difficult for us to imagine 0.161% as a threat, and formatting the statistic in this way makes it seem like Covid-19 is much less of an issue.

I believe that the UK government are familiar with this phenomenon, and have chosen to present statistics as total case numbers and frequencies per 100,000 of population (instead of percentages). Amid a national lockdown, the government of course wants compliance and this is a small detail that can influence the public perception of Covid-19.

I am not suggesting that the government have been deviant or unethical in any way, but the fact that the format in which statistics are written does influence the way that we think about things.