The Great Western Revenue Crisis, Part I
Jeff Nielson: While some may argue my criticism of the insipid mainstream media is too extreme, my rebuttal is simple: “don’t shoot the messenger.” It’s not simply that these media drones are wrong consistently – indeed, almost unfailingly – but in many instances their reporting on issues is literally 180 degrees opposite to the facts.
There can be no more obvious example of the mainstream media’s inability to distinguish “black” from “white” than its utterly worthless reporting on the debt crisis sweeping across Western nations. Not only have they been unanimously incorrect in identifying any of the causes of this debt-crisis, but these dolts can’t even manage to describe the problem correctly.
In this case it is necessary to put the proverbial cart before the horse. First I’ll show people what the Western debt crisis is really all about. Then once the problem is clear it will be much easier to understand/accept the real causes.
Sadly, while is truly a “Western” problem it will have to be illustrated with U.S. data, due to the lack of availability of “real dollar” data for other Western economies. It is ironic that the U.S. – which has both pioneered and perfected lying-with-numbers with its official statistics – is now the only place to obtain realistic (i.e. “real dollar”) economic data in many important categories.
This is due entirely to the tireless efforts of John Williams of Shadowstats.com, as well as the efforts of less-visible sites and individuals who have built upon that body work. Williams produces the only data on U.S. inflation (and many other key statistics) using the same methodology for each year’s calculation.
Conversely, as I have explained on previous occasions the U.S. government is continually “moving the goalposts” with its statistical lies. It is continually changing the methodology of its calculations. Not only are these “changes” comprised of ever more dubious/absurd “adjustments” and “assumptions”, but this intentional deceit is compounded by refusing to update old data with the new methodology – the only possible means to produce consistent measurements.
Instead, the U.S. government’s statistical liars simply string together these disconnected series’ of calculations – thus literally comparing “apples” to “oranges”. We can see not only proof of the deceit, but a clear indication of the motives for these lies when we examine charts which include both the official government lies along side data produced from Williams consistent (and statistically valid) methodology.
The two charts below not only demonstrate unequivocally that the Western “debt crisis” is a revenue crisis (not a “spending crisis”), but we can clearly see the efforts of the U.S. government statisticians to hide the true nature of the crisis – by creating phony data to suggest we are experiencing a spending crisis instead.
It is truly unfortunate that we are forced to rely upon U.S. data to illustrate this revenue crisis. As the great Warmonger of the last half-century, the U.S. has devoted a much larger percentage of its government expenditures to military spending (by several multiples) than any other nation in the post-Industrial Revolution era. The Soviet Union tried to match the massive Reagan arms-race of the 1980’s – and was completely bankrupted in the effort. Thus the “curve” of the spending chart is severely distorted by huge (and well-documented) explosions in U.S. military spending.
Looking at the chart below, the green line represents Williams’ data (i.e the Truth). We see U.S. government spending surging in the latter half of the 1960’s (the Vietnam War). We see it accelerate again in the 1980’s (the Reagan arms-race). But note that in the last few years of the Reagan regime – while military spending was still recklessly accelerating – that actual spending had topped, and even began to decline slightly.
This marked the beginning of the era of declining government services (and real spending onpeople). Apart from a tiny up-tick in U.S. government spending in the early 1990’s (the first war against Iraq), total U.S. government spending (in real dollars) has been steadily declining since the late 1980’s.
When we look at the light-blue line (i.e. the official government lies), we see the myth that the U.S. government and its media minions have been trying to sell to the sheep: that the U.S. is in the grip of an out-of-control “spending crisis.” Coincidentally the producer of this chart chose the year 2000 as his “base” for assigning a nominal level to these numbers.
It is shortly after 2000 that we see government lies about a spending crisis being ramped-up at exactly the same time that the government’s lies about inflation were also increasing at a near exponential rate. The U.S. government has worked very hard at producing the myth that it has been spending too much (on its own people), when in fact that spending has been in steady (perpetual?) decline for several decades.
What is the only other exception to that trend? We see a dramatic spike in U.S. government spending to finance the hand-outs to Wall Street following their self-destruction in 2008. What is absent from this chart? There is not even a tiny up-tick in real U.S. government spending following the infamous “9/11”.
Since that time the U.S. government has spent $trillions invading-and-occupying Afghanistan in the War for Drugs. It’s spent $trillions invading-and-occupying Iraq in the War for Oil. And total spending for the Orwellian “Department of Homeland Security” (and all of its fascist apparatus) has also likely totaled in the $trillions. But much of what this modern-day Gestapo does is kept totally secret – supposedly as a matter of “national security” – and thus we must attempt to deduce its activities (see “The U.S. Prison-Cell Economy”).
Note what is relevant to this topic however, none of these $trillions on two wars and its own Secret Police was financed out of increased spending (in real dollars). As a matter of logic and arithmetic this means that all of this was funded by cutting what the government spends on its own people – trillions of dollars of cut-backs on social spending.
Already we are presented with several massive myths that have been gleefully propagated by the mainstream media. Let’s start with this one: the Afghanistan invasion and the Iraq invasion were wars in much “only a few Americans made sacrifices” (i.e. the soldiers and their families).
Obviously a lie. As the chart on spending clearly shows, in fact all ordinary Americans have been seriously impacted by massive cut-backs in government services. The truth is that only a few Americans did not have to make any “sacrifices” for those two wars.
That would be the tiny group which the Occupy Wall Street movement likes to label “the top-1%”. While ordinary Americans have faced substantial hardship as a direct consequence of those two invasions (and the $trillions squandered on Homeland Security), the top-1% were literally being showered with money – the even more infamous “Bush tax-cuts”.
Government apologists will argue that my analysis “can’t be right”, even though (real) statistics don’t lie (unlike the U.S. government). They will insist that even if there has been a cut-back in the level of government services that it can’t account for all of those $trillions spent on wars.
The apologists are actually partially correct. The suffering inflicted upon the American people by its own government to pay for its wars has not come entirely out of declining services. It has also come from cheating its senior citizens and its own employees in what it pays them.
As I note on a regular basis, lying about inflation is a deceit which pays endless “dividends” to governments – which explains why devious U.S. statisticians come up with new lies about inflation on a regular basis. It’s utterly simple to show how those lies end up cheating its seniors.
Social Security (and several other seniors benefits programs) supposedly have COLA clauses (“cost of living adjustments”). However, when the U.S. government lies and says that annual inflation is roughly 2%, while John Williams honestly calculates U.S. inflation at 10+%, then each and every year it is actually cutting benefits to seniors by approximately 8%. Now that’s “austerity”! It is yet more irony that the same senior citizens who most gleefully support the wars of the U.S. government (at the ballot box) are the segment of the U.S. population being most adversely affected by the “guns-not-butter” spending policies of the U.S. government.
It’s only slightly more difficult to illustrate how the U.S. government has also been “squeezing” its own workers – contrary to another even more popular mainstream myth that government workers are ridiculously over-paid. Regular readers will recognize the chart below, the one showing the greater-than-50% decline in the wages of the average U.S. worker over the past 40 years.
Government and media propagandists would have us believe that all through those 40 years that ordinary government workers have been getting fattened-up with year after year of large wageincreases. Can anyone see any sign of those “wage increases” in the chart above?
Note that over these 40 years that the U.S.’s private sector Oligarchs have been relentlessly hacking-and-slashing employment while the government has been loading up on more workers (while not spending any more money in wages). This means the overall percentage of government workers in the workforce has never been higher.
Now here’s an IQ test for all the idiot-drones in the media. If average wages for all workers have been plummeting lower (by more than 50%) while government workers have been supposedly getting year after year of raises, then what are we to believe? Are private sector workers are now making less-than-zero wages (i.e. paying their employers for the privilege of being their slaves)?
Here’s Part II of the IQ test: if the U.S. government has been adding lots of workers in recent years, while real spending has been flat (despite two, hugely expensive wars), then where are the dollars for those mythical wage increases? You can’t pay more workers, more wages withless money. Any close examination of the data shows that as a matter of simple arithmetic that wages for U.S. government workers (in real dollars) are also steadily falling – not rising.
What has been the result of a decade of (secret) “austerity” for the American people? The same as Greece: the deficits have simply gotten larger and larger – topping out (at the moment) at roughly $1.5 trillion, or 10% GDP. Meanwhile, the U.S. debt-to-GDP ratio is now 100% as the $15 trillion national debt matches the (alleged) $15 trillion of U.S. GDP. Either one of those statistics comprise a full-fledged debt-crisis. Both together signify a level of insolvency at least as severe as any of the Euro debt-sinners.
Let’s summarize all of this media mythology about supposed government over-spending:
1) Spending on government social programs (in real dollars) has been steadily falling not rising.
2) Wages for government workers (in real dollars) have been falling not rising.
3) With our economies now already totally hollowed-out (from 40 years of “genocide” directed at the Middle Class), so-called “austerity” causes deficits to get larger, not smaller.
It is entirely regrettable that in analyzing our revenue crisis that is has been necessary for readers (and myself) to wade through four pages just to briefly dissect government and media lies about an alleged “spending crisis”. Again, don’t shoot the messenger.
A decade of extreme government/media brainwashing about a mythical spending-crisis requires a detailed rebuttal. Our governments are taxing too little, not spending too much. Government workers (like all other ordinary Western workers) are being squeezed by perpetually declining wages, not getting year after year of exorbitant increases - like the Oligarchs themselves. And “austerity” only increases deficits (and cripples economies).
When media drones tell us (again and again and again) that governments need to “cut spending” (even more), cut the wages of government workers (even more), and always keep inflicting ever more-punishing “austerity” on ordinary people they are not writing a prescription for economic health. Instead, as has been starkly illustrated by Greece (in the most economically brutal manner possible), the media mythology about our debt crisis is nothing but a certain recipe for economic suicide.
When a herd of lemmings stampedes off a cliff it is nothing but an accident of fate, as they arbitrarily chose the wrong direction. Not so with the lemmings of the mainstream media. Their ability to spot “cliffs” – and then charge full-speed in that direction – is a “gift” only equaled by our political leaders.
In Part II of this series I can finally begin to discuss the revenue crisis itself, and the real causes of the (real) crisis.
Related: S&P 500 Index (INDEXSP:.INX), SPDR S&P 500 ETF (NYSEARCA:SPY).
Jeff Nielson is from Canada and is a writer/editor for Bullion Bulls Canada www.bullionbullscanada.com. He has a personal background in law and economics. Bullion Bulls Canada provides general macro-economic and political commentary, since the precious metals markets are among the most complex (and misunderstood) in the world.
Bullion Bulls Canada also provides basic coverage of Canadian precious metals mining companies. Canada is the global leader in mining exploration, and Canadian-listed mining companies (on the Toronto Stock Exchange and Venture Exchange) are responsible for the majority of the world’s most-promising discoveries.