We have a major problem with statistics !

Government statistics are becoming more of a self serving sham as every day passes. The truth is that nobody knows what the real GDP is and nobody knows what the real rate of inflation is ! We are told that the American GDP is circa $12 trillion dollars but this includes a whole raft of hedonic adjustments. For example a computer 10 years ago would have cost $1500 today it costs $500 but today's computer can do far more than yesterdays computer so we will give it a value of $2000 as regards the GDP calculations. Farce?

Inflation is calculated without using figures for "volatile" housing, food and energy. Maybe I am wrong but I would say that mortgage costs, and heating and petrol costs together with food are my largest costs BUT THEY DO NOT FIGURE ANYWHERE IN THE COMPUTATION OF THE OFFICIAL INFLATION FIGURES instead of mortgages they use rents, which is convenient as they are then able to completely ignore the whole housing bubble. Farce?

Nearly everyone relies on the governments inflation figures to calculate COLA allowances against Pensions, Benefits and most Wage increases. You are being, for want of a better word screwed. Imagine that everyone in America work,s for me not a pleasant thought !!! I am going to tell you that my "official" rate of inflation is 2% so you will all get a 2% wage rise this year, OK?. I know that the real rate of inflation is far higher and is actually closer to 5% by telling you it is only 2% I save myself a payment of 3%, so I have a good motive to lie about the real inflation rate IT SAVES ME MONEY.

When the GDP is calculated a "deflator" is used to represent the rate of inflation,for example if the economy is growing at 3% a year but real inflation is also growing at 3% a year then there is NO GROWTH. The problem is that the GDP is inflated by way of "hedonics" and the inflation rate is reduced by using "reverse hedonics" which means that growth is being booked THAT DOES NOT EXIST. Farce?

It all makes the GDP look far larger than it really is and the rate of growth far higher than it really is. This makes it easier to keep floating on the market new bond issues and keep the interest payments far lower than they should be because potential bond investors look at the "figures" and see that the GDP is large and growing so the ratio of debt to GDP is acceptable, and that inflation is quite low, so lets buy some bonds.

It always amuses me that countries use the GDP/Debt ratio when most GDP,s are an extremely unreliable measure. A far better measure would be to use the TOTAL TAX COLLECTION/ Debt ratio, is the government really going to repay the nations debt with hedonically adjusted computers?

Unfortuantly Debt will be repaid out of what the Goverment receive from taxing the people. The people are the collateral for all the bonds or IOU,s issued

The total tax take or put another way GOVERMENT INCOME for 2006 is $2.228 Trillion Dollars and the national debt is approximatly $8.5 trillion dollars the interest payment on this debt will be just over $400 billion dollars annually or approximately 4.7%.

What we can immediately see is that the debt is approximately 400% of the total tax take and that 17% of the total tax take is spent servicing the interest on this debt. The amount of $400 billion is similar to the total amount spent on the American military. It also shows that the Goverment CANNOT ALLOW INTEREST RATES TO RISE very much as the leverage built into there debt is now very large, at bond rollover times the interest payments would soar.

This is a hard statistic as it measures the total debt in relation to the total money that the government have available to service this debt.

http://www.publicdebt.treas.gov/opd/opd.htm

http://www.whitehouse.gov/omb/budget/fy2007/pdf/07msr.pdf