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Would the government lie about inflation if it was 10%?

*Dow Theory Letters, Richard Russell, July 17, 2007

“Housing is in the dumps, and subprime lenders are flat on their backs. So the last thing Bernanke wants to do is raise US short rates, since that would put even more pressure on the demoralized real estate sector.

What, no rate increases, but how about inflation? Well, the Labor Department’s inflation figures are a dastardly lie, and what’s worse, everybody knows it. The lies are so flagrant the I hear that Bernanke wants to “do something” about the ridiculous “core inflation” statistics, which leave out food and energy. So c’mon, what is the real rate of inflation? Those who track inflation privately or outside the government, swear inflation is running around 10% or even above 10%.

Bernanke has kids in school, he eats in restaurants, he fills his car with gas. In his heart of heart, Bernanke knows that’s the real rate of inflation is close to 10%, so what’s he going to do? My guess — he’ll continue to lie about the real rate of inflation while at the same time warn that he’s “worried about inflation.” But Dr. Ben won’t rase rates. And so the charade goes on — and on and on.

Aside from the phoney inflation data, what about the “the missing” M-3 money supply data? The Fed won’t let us see it. But never fear, private analysts will not be denied. Just hit Google and latch on to John Williams’ Shadow Government Statistics. Seems like M-3 is rising at around a 12% annual rate.

So we have a surging money supply, we have negative interest rates (rates below the inflation rate), and we have at least 10% inflation. Is it any wonder that sophisticated investors are moving to swap dollars for anything tangible — diamonds, gold, art, a beach house, a second house, a rare book, anything that is likely to hold its value over time.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.