1970 – 2020, Income, assets, inflation
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- Average annual reported inflation 1970 through 2020 4.03%.
- Average annual growth in U.S. Personal Income 5.51%
- Average annual growth in Median home prices 5.25%
- Average appreciation of S&P 500 8.63%
- Gold 9.81%
- 1970 -2020 average increase in Federal revenue per capita by 0.96% .
- Federal revenue per employed person by 0.50% .
- Annual growth in GDP per capita by 1.11%
- Annual growth in the GDP per employed person by 0.67%
- 2021 has a higher percentage of the population employed than 42 out of the last 52 years.
Personal income grew by an annual average of 5.51%% outpacing reported inflation by 1.48%.
$59,642 actual, up from $4,218 in 1970
$29,714 if pegged to reported inflation
Median home prices appreciated by an average of 5.25% outpacing reported inflation by 1.22%.
$336,950 actual, up from $26,693 in 1970
$192,671 if pegged to inflation
The S&P 500 appreciated by an average of 8.63% outpacing reported inflation by 4.83%.
4,063.04 actual, up from 95.99 in 1970
705.41 if pegged to inflation
Gold appreciated by an average of 9.81% outpacing reported inflation by 5.78%.
$1,867 actual, up from $35.96 in 1970
$314.93 if pegged to inflation
GDP per capita & per employed person
From 1970 through 2020 annual growth in GDP per capita outpaced inflation
by 1.11%, If pegged to inflation GDP per capita would have been $38,550.65 in 2020 versus $64,443.08,
Annual growth in GDP per employed person outpaced inflation by 0.67%, if pegged to inflation GDP would have been $108,189.90 in 2020 versus $151,102.75.
U.S. Employment
In March 2021 45.19% of the U.S. population was employed, a higher percentage than 42 out of the last 52 years, 45.19% is 1.60% from the 52 year high of 46.79% set in 2000 and 10.84% from the low set in 1971 of 34.35%. Yet the official unemployment rate in March 2021 was 6.10%, a 6.10 % unemployment rate is higher than 30 out of the last 52 years.
Federal revenue, per capita & per employed person
Over the last 52 years per capita average annul growth in Federal Income was 4.99% outpacing reported inflation by 0.96%, Federal revenue per capita if pegged to inflation would have been $7,159.71 in 2020 versus $10,319.60,
Growth in Federal revenue per employed person averaged 4.53% outpacing reported inflation by 0.50%, if Federal revenue per employed person was pegged to inflation it would have been $20,093 in 2020 versus $24,196.86,
Growth in personal income, homes, personal assets have all outpaced inflation, you’d think the quality of life for U.S. citizens would be at or near an all time high, that citizens would be able to retire debt, would have large post inflation gains on their homes and even greater post inflation gains in their portfolios.
Annual Federal revenue outpaced reported inflation by an average of 0.96% per capita and 0.50% per employed person.
A higher percentage of the U.S. population is employed and paying taxes now than 42 out of the last 52 years.
You’d assume with numbers like this the U.S. would be running budget surpluses, paying down debt and working towards restoring their credibility and AAA debt rating.
Unfortunately we all know this isn’t the case, the U.S. is consistently running record budget deficits and reported inflation by the BLS.GOV fictional.
Average reported Inflation 4.03%
Per capita annual growth in Federal revenue 4.99%
Per capita average annual growth in Federal spending 6.82%
Per capita Federal Revenue in 2020 $10,319
Per capita Federal spending in 2020 $22,879
Per employed person average annual growth in Federal revenue 4.53%
Per employed person annual growth in Federal spending 6.51%
Per employed person revenue in 2020 $24,196
Per employed person Federal spending in 2020 $53,647
Personal Income in 2020 $59,642
Ironic how from 1980 to 2020 inflation magically disappeared while Federal debt soared.
To appreciate the credibility of the BLS inflation numbers compare the cost of Roosevelt’s New Deal in the 1930’s to what the BLS tells us it would cost today.
Total cost of the New Deal was 41.70 billion in 1936 USD. According the the BLS.GOV the New Deal would cost 795.44 billion in 2021 or 10.42% of what the Federal government spent 2020.
What the New Deal funded
March 1933
The Civilian Conversation Corps, the CCC ultimately employs about three million men in conservation work planting trees, reducing erosion, and fighting fires.
March 1933
The Federal Emergency Relief Administration (FERA) provided work and cash relief for millions of Americans struggling to get through the Great Depression.
May 1933
Tennessee Valley Authority (TVA) was created to provide affordable power and flood control, which it still does to this day.
May 1933
Farm Credit Act, making credit more accessible to farmers, and with fairer terms than private sector lending (lower interest rates).
May 1933
The Public Works Administration (PWA). During 10 years the PWA funds tens of thousands of infrastructure projects all across the nation including the construction of 32 navel vessels many of which play key roles during World War 2.
October 1933
Federal Surplus Commodities Corporation, the agency provides millions of tons of food, medicine and blankets to those in need.
October 1933
Public Buildings Branch (PBB). The PBB utilizes funding from the Public Works Administration (PWA) and emergency relief appropriations to build and repair thousands Federal buildings, schools, post offices, courthouses, and hospitals.
October 1933
Fort Peck Dam, one of the many large projects made possible with New Deal funding
November 1933
The Civil Works Administration (CWA) employs over 4 million formerly-jobless Americans. During the program, over $800 million (1933 USD) will be spent employing men to build 44,000 miles of new roads, install 1,000 miles of new water mains, construct or improve over 4,000 schools, and much more.
December 1933
The Public Works of Art Project (PWAP) Unemployed artists are hired to create nearly 16,000 works of art for public buildings and parks.
January 1934
Committee on Wildlife Restoration consisting of ecologist Aldo Leopold, conservationist Jay Darling and publisher Thomas Beck, who issue a report in February calling from the government to purchase millions of acres of abused land for wildlife refuges.
March 1934
President Roosevelt declares 1934 the Year of the National Park. He would go on to sign congressional legislation creating eight new National Parks over the course of his presidency, including Shendandoah, Everglades and Olympic NPs.
March 1934
Migratory Bird Hunting and Conservation Stamp Act created for the acquisition of marginal farm and ranch land for federal wildlife refuges. Nearly 100 new refuges would be established by 1940 and another 50 by 1945.
June, 1934
Indian Reorganization Act, a law that returns or adds tribal land, spurs the development of tribal business, creates a system of credit, and promotes tribal self-governance.
June 1934
National Housing Act to facilitate greater lending for home construction, home purchasing, and home improvements. The law also creates the Federal Housing Administration (FHA).
August 1934
Construction of the All-American Canal begins in California. The canal is a U.S. Bureau of Reclamation project and one of the many Bureau water delivery projects , the canal still provides irrigation water for hundreds of thousands of acres and also produces hydroelectric power.
October 1934
The Treasury Section of Painting and Sculpture. Between 1933 and 1943, this art program creates over 1,000 murals and over 260 sculptures for federal buildings, schools, post offices, hospitals.
April 1935
Soil Conservation Service (SCS). This new agency helps preserve America’s agricultural land from erosion and overuse. The SCS remains active for the next fifty years and helps facilitate the creation of thousands of state-level soil conservation districts, which still operate today.
May 1935
Works Progress Administration (WPA) This program is created to provide jobs for unemployed Americans and to improve the nation’s infrastructure. The WPA employs over 8.5 million jobless Americans during its 8 years of operation.
May 1935
Rural Electrification Administration (REA). The REA brought electric power to rural areas, where private companies avoided doing business.
May 1935
The U.S. Supreme Court rules Title I, Section 3 of the National Industrial Recovery Act as an unconstitutional restraint of interstate commerce. The offending section of the law had imposed a system of codes on American businesses, controlling things such as production and wages.
June 1935
National Youth Administration (NYA) under authority of the Emergency Relief Appropriation Act of 1935 this program provides work, education, and job training for unemployed young men and women. It employs 4.7 million young Americans over its eight year life.
August, 1935
The Treasury Relief Art Project (TRAP) is established to hire unemployed artists to create art for public places eventually creating 10,000 easel paintings, 89 murals, and 43 sculptures.
August 1935
The Social Security Act the law creates an old age pension system and other social safety net programs.
Aug. & Sept. 1935
Federal Project Number One is established. Eventually, it will contain the Federal Art Project (FAP), Federal Music Project (FMP), Federal Writers’ Project (FWP), Federal Theatre Project (FTP), and Historical Records Survey (HRS) Collectively, these programs created hundreds of thousands of artworks, performances, books, plays and historical inventories.
December 1935:
The Federal Emergency Relief Administration (FERA) between 1933 and 1935 grants $3 billion to states for various types of work and cash relief for the needy, and kept many cities from going bankrupt.
January 1936
In United States v. Butler, the U.S. Supreme Court finds the Agricultural Adjustment Act of 1933 unconstitutional, ruling that the control of agriculture is a state function, not a federal one.
June 1936
The Robinson-Patman Act (or “Anti-Price Discrimination Act”). The law attempts to curtail monopolistic control and discriminatory pricing in industry and business.
July 1937
Bankhead-Jones Farm Tenant Act, which opens up credit to tenant farmers and sharecroppers for the purchase of farming land.
August 1937
Bonneville Project Act becomes law, it facilitates the creation of the Bonneville Power Administration (BPA). To this day, the BPA supplies power to millions of Americans in the Pacific Northwest and surrounding areas.
September 1937
United States Housing Act of 1937 (the “Wagner-Steagall Act”) becomes law, creating the United States Housing Authority (USHA). Over the course of several years, the USHA makes loans to help construct hundreds of affordable housing developments and thousands of homes.
June 1938
President Roosevelt signs the Civil Aeronautics Act of 1938. The law improves air commerce, mail delivery, airplane safety, and national defense. It also leads to the creation of the Federal Aviation Administration (FAA).
June 1938
During a Fireside Chat in support of the Fair Labor Standards Act, Roosevelt said to the American People: “Do not let any calamity-howling executive with an income of $1,000 a week, tell you that a wage of $11 a week is going to have a disastrous effect on all American industry.”
June 1938
Fair Labor Standards Act. The law establishes a minimum wage, a standard work week, overtime pay, and also prohibits certain types of child labor, these rules still pertain today.
During 1938:
The New Deal sputters, due to a reduction in public works spending and an attempt by President Roosevelt to balance the budget – the so-called “Roosevelt Recession.” The unemployment rate rises to 12.5% (up from 9.1% in 1937), gross domestic product drops 6.1% from 1937, but the Dow Jones Industrial Average rises to 154 (from 122 in 1937), and there are 74 bank failures – compared to 14,807 bank failures from 1921 through 1933.
During 1939:
President Roosevelt and his New Deal policymakers return to public works spending. The unemployment rate drops from 12.5% to 11.3%, gross domestic product rises 7% from 1938, the Dow Jones Industrial Average drops slightly from 154 to 150, and there are 60 bank failures – compared to 14,807 bank failures from 1921 through 1933.
Or the actual Fiscal Cost of World War 2 to what the BLS says it would cost today.
61 countries participated in World War 2 to free the world from Hitler’s Socialist agenda, Mussolini’s Fascist and Hirohito’s aristocratic oligarchy.
The U.S.’s participation from 1941 to 1945, fiscal cost, 291.18 billion dollars
According to the BLS.GOV 291.18 billion USD in 1942 translates into 4,912.54 billion today. According to the BLS the total fiscal cost of World War 2 could be fought for 64.37% of what the Federal Government spent last year.
It’s been obvious to me for a long time the Federal Government has consistently massaged reported inflation lower, lower inflation equates to trillions in contained costs on all Federal expenditures pegged to inflation a few examples, Social Security, Medicare and Debt Service Cost.
Example; Federal debt service cost
From 1970 through 2020 Federal debt increased by 8,098.94% from $380.91 billion to $26,880.92 billion.
Federal debt service cost increased from $34.644 billion to $538.45 billion up 1,454.25%.
From 2008 through 2020 Federal debt increased from $8,950.75 billion to $26,880.92 up 200.32% while annual debt service cost increased from $411.21 billion to $538.45 billion up 30.91%. It’s the same scenerio with every other Federal Expenditure whose increase is pegged to inflation.
Total Federal Revenue is now a mere 11.16% of total Federal Debt.
This drop in annual Federal Revenue from 60.24% of total debt in 1981 to 11.16% of total total debt in 2020 shouldn’t come as a surprise to anyone, average annual Federal spending from 1970 through 2020 averaged 130.75% of total annual Federal revenue and 219.23% during 2020 and 2021.
The U.S. economy is now terminal, a Federal Revenue to total Federal debt ratio of 11.16% it makes it impossible for the United States to accurately report inflation or normalize yields on Treasuries that will attract buyers.
Treasury rates
Economic misrepresentations by the Federal Government don’t stop with inflation deception.
Who would buy
Money created
Any aditional stimuls paid for with money that is created from and backed by nothing
Unwinding of U.S. Treasuries by foreign investors next financial crisis and excuse to create trillions more from and baced by nothing
Hike in Long-term gains
In 2021 premeditated debt monetazation has already fully engaged.
M1
Reported Federal Spending Versus actual
From 1971 through 2020 Federal debt grew by 26.50 trillion dollars while reported budget deficits totaled only 17.85 trillion.
Reported Federal deficits do not include expenditures politicians do not get to vote on like Social Security, Medicare and Medicaid. Because these expenditures are not included growth in Federal debt will always outpace reported deficits,
From 1970 through 2020 reported budget deficits totaled 17.854 trillion dollars while total Federal debt during the same period increased by 26.515 trillion, the cumulative difference 8.661 trillion dollars.
This 8.661 trillion in new debt not disclosed in annual Federal budget deficits is more than the total debt of Australia, Canada, Russia, Greece, Switzerland, Spain, Norway, South Korea, Taiwan, Argentina, and Mexico combined.
Adding to the current debt crisis is the fact the Federal Government has borrowed the majority of all reserves out every Government Trust replacing these reserves with “special issue securities” these securities are non marketable, earn a non competitive rate with duration between 1 to 15 years ensuring a guaranteed loss in buying power for the beneficiaries of these Government Trusts.
Federal Debt Held by Agencies and Trusts
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- The Social Security Trust Fund receives payroll taxes, pays out benefits, and invests any surplus in “special issue” government securities.
- These securities earn interest and are backed by the full faith and credibility of the U.S. government.
- Despite more money being paid into this trust fund than any other time in history it will stop running a surplus in 2021, at which time it will need to repackage existing debt currently in special issue securities to pay benefits to retiring “baby boomers”
- The 2020 Social Security Trustees Report shows that retirement/survivor and disability funds will be entirely depleted on or before 2035, medicare by 2026.
Excessive Federal spending coupled with the release of fictional inflation rate by the BLS.GOV led to two debt downgrades
The U.S. now has the worst debt rating in it’s history, 12 countries are rated higher the the US’s AA+, AA+ is the same rating as Finland and Hong Kong.
Annual Federal revenue in 1971 was 45.85% of total Federal debt, in 2021 annual Federal revenue is 11.16% of total Federal debt.
From 1971 through 2007 the average U.S. Treasury rate was 8.70%, 3.99% above reported inflation. From 2008 – 2020 2.67%, 0.94% above reported inflation.
I’ve been a professional trader for nearly 30 years, my primary objectives are preservation and enhancement of family wealth.
Looking at the increases reported inflation relative to the increases in personal income, Federal revenue per capita and per employed person and Federal spending per capita and per employed person the only conclusion I can draw is BLS.GOV inflation releases are purely functional.
To support my conclusion.
Increases in all Federal government expenditures are are governed by reported inflation.
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- Federal debt service cost
- Social Security
- Government employee and military pensions
- Medicare
- Government contracts
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Containing reported inflation has saved the Federal government literately trillions of dollars in debt service cost alone. If Treasury rates returned to the 1970 through 2007 average of 8.70% it would consume 68.99% of total annual Federal revenue.
1990 total Federal debt 3.206 trillion, debt service cost 298 billion
2020 total federal debt 26.880 trillion, debt service cost 538 billion
Flight to quality is now a thing of the past, it’s nothing more than a footnote in history, inflation and real rates of return disappeared with fiscal responsibility.
From 1971 through 2007 annual Federal spending averaged 21.91% more than annual revenue.
From 2008 through 2021 54.12% more
2020 and 2021 119.23% more.
With new policies trade deficits have started to escalate, so have purchases of U.S. treasuries by foreign investors
Trade defiects
Foreign buying for US Treasureis
Monetization has fully engaged
GDP per capita versus inflation
Unfunded liability
Employment
Inability to pay a competitive rate
Fictitious inflation
Growth in income has outpaced inflation
Home prices
Investments
Federal Revenue per capita
Federal spending per capita
To show you how fictitious BLS.Gov
New deal
World War 2
Debt downgrades
Federal Government’s inability to borrow on the open market
Fed’s creation of money
Per taxpayer debt escalated from to , per capita debt
Rest of the world’s debt per capita
resulting in two debt down grades in 2013 the latest in 2013, currently U.S. Federal Debt shares the same credit rating as Finland and Hong Kong.
Can you justify this? The Federal Government spent $53,647 on every employed person in the U.S equivalent to 89.95% of average personal income.
In 2021 it’s running at 84.71% of personal income (this is without the 4 Trillion in additional “stimulus” or $27,480 on every employed person.
Assets and income priced in gold
Top 20 stocks over the last 20 years
Have to watch monetization
Massive stock sales prior to the hike in long-term capital gains
Long-term bond holders are going to hemorrhage
Massive foreign liquidation
Higher corporate taxation, more regulation and a hike in minimum wage will will make U.S. corporations relocate offshore, Federal corporate tax revenue will decline.
High net worth individuals will move assets and income offshore further reducing Federal tax revenue
Trade deficits will escalates
The Federal Government will be unable to borrow enough money to sustain it’s budget and unable to satisfy unfunded liabilities
Trillions more money will b e created
On deck an inflationary depression
You can let these fundamentals work you or you can work them
Being on the right side of economic change.
