We've all heard of the term "lying with statistics," and boy does the mainstream media get high honors for that practice. But today Ron Paul is going to cover "lying with government statistics". He discusses the myths that surround GDP, the misleading CPI, unemployment and more. Get the truth on today's Myth-Busters!
Be sure to visit http://www.ronpaullibertyreport.com for more libertarian commentary.
We've all heard of the term "lying with statistics," and boy does the mainstream media get high honors for that practice. But today Ron Paul is going to cover "lying with government statistics". He discusses the myths that surround GDP, the misleading CPI, unemployment and more. Get the truth on today's Myth-Busters!
Be sure to visit http://www.ronpaullibertyreport.com for more libertarian commentary.
This is the day we go over some of these fallacies that are floating around.
And the reason people do dumb things is because they've been taught some of the myths and say that it's economic law.
And we try to sort this out and say that economic laws are a little bit different and sound economic policies.
It's not conventional wisdom, especially the conventional wisdom coming out of our universities and coming from the liberal Keynesian type economists.
So what do you have for us today on our program?
Well, most people have heard of lying with statistics.
And I have to say the mainstream media is expert at it.
They deserve high praise for the charts that they put up and how they manipulate things.
But today we're going to talk about lying with government statistics.
Now, government is in the job, and it shouldn't be, of gathering all types of stats that can help it with its central planning.
So we'll start with the GDP, which is a big one that is always focused on.
And supposedly, it's supposed to tell us about the health of the economy.
But we libertarians think that it's a very poor measure because it counts government spending, which we consider a negative.
So Dr. Paul, if you could talk about GDP, and you could even throw in the F-35 into your story as well.
Well, there is the myth that the GDP has some relationship to our economic health, but that's what they want us to believe because they can fudge the figures.
And that's basically our program today.
We're going to be talking a lot about how government fudges the reports and deceives the people.
But the GDP is one of those things that work that way.
So if, you know, in Henry Hazlitt's book about the broken window and lesson one, economics in one lesson, he talks about the broken window, that somebody breaks a window and somebody has to repair it.
And he talks about who made the glass and who put it in.
And it was an economic benefit because all these people got their jobs and everybody took several layers of labor to put this together and say, see, breaking windows is an economic benefit.
But nobody's going to say, well, let's go out and break a bunch of windows.
But that's more or less the way they look at GDP, that if you just spend money.
But what they fail to do, and Henry Hazlitt, Kate mentioned, instead of what?
Yes, you spent money on repairing the window, but you just got back to neutral and you just got back to what you had.
And you have to do it.
Somebody might benefit because they have a job, but the total GDP doesn't go up.
The wealth of the country doesn't go up.
Because if that were the case, then you'd come up with silly ideas.
Matter of fact, we do have silly ideas.
Some of the Keynesians say that it's even beneficial if you can't get the economy going, hire a bunch of people to dig a hole and pay them to do it because then they'll spend the money and that'll stimulate the economy.
And then have somebody else come along and fill in the hole and pay them.
And that'll help stimulate the economy.
And they say that's a net increase.
It doesn't make any sense whatsoever because there's no net benefit.
What if that money had been spent on building a house?
What if it had been a real job coming out of the marketplace?
There could have been more jobs than these individuals, you know, building a house.
But just to spend money is a dilution and a distraction and very, very damaging.
So this idea that the GDP is going to answer our question.
And you mentioned in the opening about government spending.
Government spending is a big element in calculating the GDP, even though they'll say, well, that's 3% and 4%.
But there's a lot more than that and all the secondary expenditures that come from military spending.
But the biggest boondoggle I think that anybody has ever recognized, and there's been plenty throughout history on military, it has been our F-135.
It's been around for years now.
And nobody defends it.
It doesn't work.
The military doesn't like it, but the politicians do.
And the promoters of those who build it, they didn't build it in one state or one city and say, okay, you guys have had the benefits and we don't need the airplane.
We're going to cut you off.
No, they put some parts in every state, essentially.
So the politician, his job is to take care of his people.
And it's good for our economy and it helps our GDP.
But it's all distractions.
It's taking money from one thing and giving it to another.
So people should always question the fact when they see the GDP going up on what it really means.
When I think GDP is a reflection of government spending, it's doing the opposite.
So instead of adding that in, I think you should subtract it because it's taking it out of the economy.
And yet, why couldn't you have perfect growth?
And some people would agree.
Why shouldn't the government just spend, and that argument is going on right now, the government should spend a lot more money on infrastructure?
Well, maybe they should and maybe they could, but if it's coming out of the thin air by printing money and claiming that every project is going to be beneficial that government makes, because there may be one highway that is beneficial, but for the most part, most of that will be political.
Most of it will be a lot of waste.
It will be satisfying the special interest and it'll be a long way from the project and that's why so many of those things should be done close to home.
But this whole idea that if government just spent more money, the GDP would go up and the number will go up.
But it's also the reason why there's a disconnect with these favorable economic indicators in the GDP and the people who are unhappy.
And it also is a reflection of what we're facing today.
The millions of people who are out of work and unhappy and inflation is bothering them.
So they suffer from this and yet the government said, well, the GDP is doing okay, but actually even with government statistics, not doing that well, but it's a lot worse than they try to tell us.
Next, let's move to the CPI, the Consumer Price Index.
And like yourself, Dr. Paul, I'm an American citizen.
I pay bills, electric bills, gas bills, groceries.
And I can tell you that they go in one direction, and that's upwards.
Never do I get a letter telling me, great news, because we have sound money and increased productivity, we're going to cut your prices.
That never happens.
It's always upwards.
But the government and the Federal Reserve want me to close my eyes to the reality of life.
And they tell me that their CPI says that there's barely no inflation.
In fact, some of them claim that it's too low.
So please explain the nefariousness of the consumer price index.
Yeah, and it's obvious that the prices are going up a lot more than they would admit.
And it is rather ironic that they want to make prices go up faster, 2% at least.
Of course, if it hits 2%, it's going to hit 4% and 6% and 8, and they won't have any control of it.
But they think prices going up is healthy to the economy.
The truth is, if you really have a healthy, vibrant economy with sound money, what goes up is the purchasing power of your dollar.
And that's what's wonderful.
You know, the nominal rate of wages may be not automatically escalating.
Today, it has to escalate to try to keep up with the cost of living.
But they try to tell you that the CPI is not going up.
It's going up way less than 2%.
And if we could only get it up to 2%, this would be a reflection of a healthy, growing economy, which is total nonsense.
When governments mess up and causes booms and then there's a recession, actually what you want to do is see prices come down.
But in the depression of the 30s, they were hysterical about that.
They wouldn't allow the price of food and farm products to Codon because we had to protect the farmers.
At the same time, they kept prices up by getting rid of and plowing crops under and saying, well, the prices will go up and everybody's going to be happy.
And so they look at prices and prices are very secondary to it.
But inflation, price inflation are different for different people.
Chris, your inflation rate might be different than Donald Trump's.
Do you think Donald Trump sits around and worries about the cost of a loaf of bread?
And a lot of people do.
And they have to contend with this.
So if you're retired and they say there's no cost of living increases, you're on a fixed income, but your prices are going up for food and medical care and travel and all these kind of things, your CPI is much, much different.
And the other thing the government does, just to further deceive us, is if it does move up like it did in the 70s and the 80s, they'll change the way they calculate it.
So we have a basket we're looking at, so they change the way we calculate it, and then it doesn't look so bad.
But, you know, Walter Williams, John Williams, who measures this stuff from a free market viewpoint, shows that even today, if he measures it the old-fashioned way, that the Fed should be very happy.
Prices are going up 4%.
But they are in denial.
They change it, and it's all for the benefit of propagandizing what the government is doing.
You know, I have a couple rent houses here in the Texas area, and we had a problem with a flood here recently, and one of my houses got water in it, and I had to change the carpet out.
Well, it was not good because I had changed it out four years ago.
But so I went to the same person again, and the prices, the prices went up.
I said, well, I just put this in there and I paid such and such.
He says, yeah, but there's inflation.
The cost went up 30% in about four years.
That's a pretty good thing, but that is not going to be reflected in the cost of living.
Also, they look at prices of houses if the housing prices aren't going up a whole lot, but if the housing, if rent's going up, they might exclude the rent.
And right now, rents are very, very high.
So CPI is done just for mischief.
And they say that's a measurement of inflation.
Unemployment Numbers Misleading?00:04:31
Well, I'm very careful on this because everybody thinks that's what it is.
That's a reflection of inflation.
I do talk about price inflation, the rate that prices are going up, but that is not inflation.
And Mises addresses this in Human Action.
He says, I think I used to argue with myself and say, well, this is just semantics because he says inflation is the increase in the supply of money.
But he said, no, it's more than that.
It's done deliberately.
Because if you say that the results of your problem came from monetary policy and the Federal Reserve, that's a different story.
But if you deal with prices, then you can blame the businessman or the oil producers or something else.
But it's never the Federal Reserve and printing money.
So there's a mischief in this thing of making people think of price increases rather than thinking about what the Fed is doing to us.
Yes, next let's cover the unemployment number.
And it seems like no matter how difficult or challenging things become in the real world here, government's always there to tell you how great things are.
And they can point to their unemployment number.
And once again, just speaking in my limited sphere of influence, I can see how hard it is to get a job and the types of jobs that people are trying to get.
And sometimes they need two or three of them.
So it's very difficult.
Yet government can point to its unemployment number, but it doesn't really show the true picture.
Can you please talk about that, Dr. Paul?
Yeah, deception, once again.
Can you believe that?
You know, the Department of Labor and the Fed doesn't even agree on the definition of these things.
But there is something put out by the Department of Labor called U3, which is what you hear about on the news all the time.
And they say that that unemployment rate is 4.7.
Well, that's fantastic.
But they don't talk about the 94 million people who aren't counted anymore.
And every year there's more people just dropping out of the workforce.
It's easier to do that, and nobody worries about it because we still have an ability to further debase the currency by printing more money and giving welfare checks.
In the old days, they would be visible, be waiting in lines to get some food to live on.
Well, see, that's a good system.
They're taking care of the poor people.
Yeah, but it doesn't last, and that's why we're facing up to this.
But even the government admits that there's another thing, the one that's 4.7 is called U3, but there's something called U6.
And the government does count more people, some that are marginally employed or part-time workers.
And that unemployment rate is 9.7.
That's much closer to what the real unemployment rate is.
But then we get even more confusion because when we talk about this on John Williams, who does this shadow stats in private individuals calculating this, he claims that the unemployment rate, if you were measuring it like we used to back in the Depression day, he claims it's 24%.
And that's astounding.
But it would also explain why so many people are so unhappy and angry.
And then you come along also and add on to that the people whose wages have been stagnant, who are just barely making it.
So you have this unemployment, which is real, but you have the jobs that aren't paying off, all a reflection of what the government's doing in debasing the currency and making people much poorer and the government not willing to admit it because this way, you know, even the conservatives say, well, all we have to do is lower taxes and regulations, which I'm all for.
But they don't address the subject of where does the business cycle come from?
Can you do that?
Will it work if you don't liquidate bad debt and liquidate the malinvestment?
And these other things don't work.
And that's why the Keynesians don't, our arguments don't work either.
They say in the past it would give a boost to the economy, lower interest rates, and that gives a benefit to some people, and also spend more money and run up the debt.
But it's all done because we're ending this.
The system doesn't work anymore.
Just as the European Union doesn't work anymore, our system here at home of economic policy doesn't work.
And the people will catch on and find out the government just haven't been very straightforward with us.
Yes, and we'll end along those lines on commissions.
Investigating The FBI's Failings00:02:48
This isn't necessarily statistics, but commissions are like when government sets up groups of people to investigate itself.
And I'm always have a crooked eye when I hear about that.
One example recently is in Afghanistan when the United States bombed the Doctors Without Borders hospital, killed a bunch of people.
And the U.S. says, no, we're going to investigate it ourselves, even though the foreigners wanted an independent investigation.
So the U.S. investigated and found out that they were not at fault.
So, Dr. Paul, please share your thoughts on commissions.
And specifically, you were on a commission.
It was called the Gold Commission back in the 19 early 80s with the Carter and Reagan administration.
Please draw on that experience as well.
It's pretty commonplace for the people who committed the crime to investigate it.
Justice Department does it, and other bureaucracies in Washington do it.
And Congress always investigating itself, but not much beneficial comes of all this.
But there's been a lot of commissions.
I understand that in history books, they still argue about the investigations after Kennedy was assassinated.
Lincoln, I'm saying, Lincoln's assassination, still a lot of questions.
Did one individual do it?
And of course, in recent history, one that the American people don't believe at all, 80% of American people don't believe the commission of the Kennedy assassination.
And because they think that the government just doesn't tell the truth.
My theory is that the governments have commissions to investigate, but it's never to get the truth out.
That is not their goal.
Their goal is to cover themselves and make sure that they don't get blamed, put the blame somewhere else.
So some people argue, well, they create these problems and then they cover up.
Maybe sometimes, but I think basically problems happen, and then it's their goal is to make sure that how inept they were is not revealed.
Right now, there's this challenge about has the FBI messed up on their investigations to make us safe and secure.
And the answer is, oh, no, they need more money and they need more lists of people, put us on lists, and more violations of our civil liberties.
So it's always going in the wrong direction.
They say they use these problems to justify even more government.
But the 9-11 Commission, right now we've been struggling with the help of several members of Congress to get the 28 pages from the Senate Commission report and find out what they said.
And of course, there's information there about our close ally, you know, our civil libertarians over in Saudi Arabia.
And they don't want that revealed.
9-11 Commission Secrets00:03:06
And I remember so clearly right after 9-11, I couldn't get home.
I couldn't get on an airplane from Washington.
But believe me, it was in the news that the bin Laden family, of which there were many, was ushered out without questioning the FBI asking them any questions.
But the 9-11 Commission investigates this but didn't find anything.
And now we're still struggling to even find out what the 9-11 Commission did find and what it means.
But you mentioned the Gold Commission.
This is another example.
You know, Brent Woods broke down in 1971, and they got me really involved in economic policy and the reason, one of the reasons, you know, I ran for Congress.
So I was very much involved in monetary policy.
But that was hectic.
Gold went from $35 an ounce up to $800 a month.
And it was a miserable economic decade.
So at the end of the decade, Carter was in.
The economy was lousy.
Reagan was running.
And so Jesse Helms and I got together and we had a bill to create the Gold Commission, figuring out one commission that is legitimate.
But as usual, it didn't work out so well for our position because, yes, they appointed people.
They appointed people from the Federal Reserve and Treasury.
A couple congressmen that were, I remember Henry Royce hated gold, and he was a chairman of the bank committee.
So he got himself on there.
So I was in the Congress from Washington.
I was the only one.
There were a couple civilian appointees, and Lou Lehriman was appointed.
He was very sympathetic to gold.
So it turned out there were 15 people that said gold was stupid and two people that thought it had, you know, was worthwhile thinking about.
But the goal was supposed to be: what should the role of government, what should the role of gold be in the national, our monetary system, and international system?
And obviously, the conclusion was none after having a decade of total failure with fiat money and a total failure of the Bretton Woods.
But that was an attack on government power because as long as they had ability and the people would accept the printing press and the control of this by people doing it in secret, they weren't about to let the country know that maybe we ought to go in a different direction.
What I am impressed with is today's conditions are getting more people in the regular media talking about, you know, maybe we should be talking about the gold standard.
And especially with the chaos in the breakup of the European Union and Brexit, gold has been a fantastic protection against that.
Gold benefited twice as much as the dollar.
Even though the dollar is a reserve currency and people went to buy dollars, a lot more people went to buy gold.
So the protection was much greater in the gold standard or actually owning gold.
But anyway, Chris, thank you for being with us today.
Thank you, Dr. Paul.
Good.
And I want to thank our audience for joining us today on this program called Mythbusters.