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PPI Shows No Inflation—April Fool’s!

PPI Shows No Inflation—April Fool’s!

In what amounts to the best April Fool’s joke of the day, the labor department
released the much-delayed February Produce Price Index which, according to
government statisticians, apparently rose by the standard.1%!

Buried beneath the headline number, the government claims that February gasoline
prices only increased by 2%. However, unleaded gas prices on the New York Mercantile
Exchange actually rose by 10% during the month of February. More amazingly,
the government contends that heating oil prices fell by 7.7% during the month
of February, when the actual price of heating oil on the New York Mercantile
Exchange rose by 10.2%! By what slight of hand are government magicians able
to transform a 10.2% increase into a 7.7% decrease? Abracadabra, with a wave
of its statistical magic wand, government statisticians are able to make inflation
disappear right before our very eyes!

However, don’t be an April fool— believe the market, not the government.
Within minutes of the release of the “benign” PPI, gold futures surged
to a new fifteen-year high of $433 per ounce, and silver futures surged to
a new seventeen-year high of $8.20 per ounce. Gold and silver prices, traditionally
the best market indicators of inflation, are screaming inflation loud and clear;
all one has to do is listen. However, Wall Street economists, the biggest April
fools of them all, attribute the rise in gold and silver prices to fears of
terrorism. After all, these price surges can’t be indicative of inflation
because the government says there isn’t any.

In fact, Wall Street economists routinely rationalize apparent “paradoxes” when
economic reality contradicts government propaganda. For example, the “jobless
recovery” assumes there is a recovery. However, if government statistics
under-estimate inflation, by definition they must over-estimate GDP growth,
which is adjusted for inflation; if the GDP price deflator under-estimates
inflation, growth is exaggerated. Perhaps there are no jobs because there is
no growth, or maybe “strong” GDP numbers actually reflect inflation
and not growth!

Government statistics also claim that U.S. productivity is growing much more
rapidly than the productivity of its trading partners. However, if that were
true, America’s balance of trade would be improving, instead of deteriorating
to new record levels. Perhaps strong productivity growth is simply another
illusion being created by government prestidigitation rather than economic
reality.

Instead of acting like a bunch of sheep, blindly following government statisticians
to the absurd conclusion that there is not even a hint of inflation, investors
need to pull the government wool (the price of which is surging, by the way)
out of their eyes. It is only by ignoring rosy government economic indicators
that these so-called “paradoxes??? can be seen for what they really
are, proof positive that the government is doing exactly what it has accused
Martha Steward of doing: lying.

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