UK GDP: It’s not a Recession but a Depression

I have wrote, blogged and re-blogged about market manipulation, I believe with conviction that all markets are manipulated and statistics on inflation, GDP and employment are not representative or true. If they were, inflation would be 6% plus, unemployment would be double and GDP numbers would prove we are in a depression.

Cui bono? Our illustrious leaders of course, if George Gidion Osborne, David ‘Never worked a full day in my life’ Cameron and William ‘War Criminal’ Hague had to stand in front of the British public with representative statistics, heads would roll…literally. Not forgetting that the wealth transfer, happening through quantitative easing, would end and the banks would fail due to being completely insolvent. Courtesy of Money Week:

I wrote here a few weeks ago about the oddly opaque manner in which the government figures out what inflation-adjusted GDP growth in the UK is. It doesn’t use the RPI or the CPI as a representative of inflation – as you might think they would – instead, it uses its own deflator. I have no idea how that is calculated, and I strongly suspect that almost no one else does either. The key point to note is that until 2010 the RPI and the deflator were much of a muchness. But in the last few years, they have suddenly (and to my mind inexplicably) parted ways. James Ferguson at MacroStrategy Partners has kindly picked this point up for me and produced this chart:

Real GDP vs NGDP adjusted for RPI

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If you assume that the Office for National Statistics’ occult calculations for the deflator are entirely reasonable and correct, the UK has avoided a double dip recession (hooray!). If, on the other hand, you note that the deflator and the RPI have rarely diverged in the past, and so think that using the RPI to deflate nominal GDP continues to make perfect sense, it turns out that the real economy has been contracting since 2008 (boo!).

That’s not a double dip. It is a depression.

Currency Wars…and the winner is Gold

The Chinese, Indians and Russians have been importing gold on a monumental scale for the past few years as the currency wars intensify. They are betting on that gold will be the new standard when the fiat currency experiment comes to an end. These currency wars have been going on since 2010 and a good read which covers this is ‘Currency Wars’ by Jim Rickards. Currency wars happen when one country devalues their currency to make exports cheaper/imports more expensive and is managed through various means such as money printing and interest rates. It’s essentially a race to the bottom and one of the reasons why we have quantitative easing and nearing 0% interest rates. What does a currency war look like?

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It’s all fun and games till someone gets hurt. So China have been importing gold and producing gold internally on an epic scale and this data does not contain all imports.

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It is claimed that China’s gold reserves are much closer to 4000 tonnes than what is reported. They haven’t updated the markets since 2009.

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So is there a point to any of this? Well I hope so. The point being that the BRICS countries are betting on a collapse in fiat currency, meaning that it will be worth less than the value of the paper it’s printed on. Why? The only thing that gives fiat currency value is confidence in the value of the currency itself, it has no intrinsic value. The BRICS will then back their currencies with gold like its been done for thousands of years.

The US and UK are complicit in this wealth transfer and have been selling their gold like its going out of fashion. Just look at what happened when Germany asked for their gold back from the Fed and the hassle they went through just to see some of their gold. It’s just not there anymore, the US have nowhere near 8000 tonnes, the vaults at Fort Knox are empty and its all been heading East. Gordon Brown got rid of most of the UKs gold holdings at rock bottom prices. I think the pic below sums up what’s going on.

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