About

Adding Up The Facts (AUTF) is a collection of facts, data and information that will ultimately lead the reader to a greater depth of knowledge and understanding in the economics of today.  John F. Haettich, the founder of this site is a Tax Consultant with experience in state and local tax representation in 46 states, and an independent student of economics.  Over the last 10 years, John noticed crisis after crisis in the financial world and sought out experts who have consistently and accurately been able to predict these downturns before they happened.  These experts, while not being right all of the time, have impressive track records and have two things in common,  #1-they link our economic problems back to worldwide monetary policy primarily in the United States, and #2-they unanimously agree that governments worldwide are not accurately reporting CPI, GDP, or Unemployment numbers to the public.  At the same time, many solutions are offered  via various sources to assist in navigating through these difficult times- another purpose of this site.  In addition, in order to understand our current problems, it is always beneficial to know and understand history.  We have made an effort in this site to provide resources to enable the reader to learn about the history of money and banking, as well as providing access to documented cases of currency collapse, inflation, and hyperinflation.

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Given the current economic climate, we feel an obligation to provide unconventional education to the public on the reality of our economic situation, and the possible ramifications of the actions of our government leaders and the Federal Reserve.  The recent TARP and Quantitative Easing programs initiated by the Federal Reserve have robbed the wealth of the average American through the devaluing of our currency.  Our savings is being taxed by loss of purchasing power.  At the same time, our governments are operating so far over budget posting $1.7 trillion deficits and debts of over $14.5 trillion, that the Federal Reserve has no choice but to either continue QE programs or raise interest rates, both carrying drastic consequences.  It is our belief that the American people have been set up for a huge decrease in standard of living, and a transfer of wealth/depletion of the middle class.  Based on economics, we can draw the following conclusions.

ADDING UP THE FACTS- CONCLUSIONS:

#1- Gross Domestic Product:

Our government issues a GDP percentage regularly indicating the growth of the US Economy.  GDP has been manipulated and inflated by the government using several methods of hedonics, and by using consumer purchases on credit in its calculation.  President Lyndon B. Johnson was the first President to have a reputation for manipulating GNP/GDP.  If the Department of Commerce gave him a number he didn’t like, he just sent it back repeatedly until they “got it right”.  Johnson was also credited with gimmicking the accounting that hides most of today’s federal deficit.  Currently, true GDP remains in the negative as our economy is in reality shrinking, not growing.

#2- Unemployment:

The Unemployment Rate has been manipulated by government ever since John F. Kennedy.  During his administration, he removed “Discouraged Workers” and “PT Workers looking for FT Work” from the unemployment count.  Real unemployment as measured during the Great Depression is sitting in the 22-24% range.  The all time high for unemployment during the Great Depression was 25%.

#3- Inflation:

CPI, also known as Consumer Price Index, also known as our inflation rate has been manipulated and fails to reflect true inflation.  The first commission to study CPI was the Stigler Commission in 1961 which analyzed price indices across the board.  In 1995, a second commission formed, the Boskin Commission, which established a system where CPI could be manipulated.  CPI no longer reflects a fixed basket of goods, but rather the government is changing the basket of goods all of the time.  Through methods of geometric weighting, again hedonics, and subsitution effects, our government can issue a CPI that looks far lower than it actually is.  Looking to current commodities prices, showing increases of anywhere from 5% to 120% over last year, a 3.2% inflation rate issued by our government is completely inaccurate as our cost of living has been rising significantly more than indicated.

#4- The US Dollar:

Commodity price increases are not an indication of an increase in value, but rather they indicate a decrease in value of paper currencies.  The US Dollar has lost to most major currencies almost daily, ever since the initiation of TARP, the Bail Outs, QE1 and QE2.  This free printing of money has devalued our currency, and in essence has devalued our savings and the purchasing power of our dollars.  Continued QE programs will only prove to push prices of goods higher and higher.

#5- Safety:

In this environment, there will always be volatility in the market due to world events, speculators, and corrections.  That being said, the safest places to put your money in the environment created by our government and the Federal Reserve present day is in Precious Metals, Commodities in general (especially Agricultural), Energy Investments (except for Green Energy), stable Foreign Currencies including the Australian Dollar and Swiss Francs, and bonds in stable emerging economies.  Despite occasional standard corrections, these recommended investments in the long term will soar under the current monetary policy enacted by the Federal Reserve.

#6- End of QE2:

As QE2 winds down in June of 2011, we will be seeing a drop in the stock market that will trigger an initiation of QE3, or a raise in interest rates to draw new treasury buyers.  The failure of our government to balance the budget has led to the Federal Reserve purchasing 70% of new treasuries via QE2, this money printing program.  The government will still require loans after QE2 reaches its conclusion, leaving only these two choices.  All viable choices on the table will lead to higher unemployment in the second half of 2011 and beyond.

Update 9/1/2011: After QE2 ended, the stock market dropped again as predicted by addingupthefacts.com and the Fed decided that instead of announcing a QE3 officially, they would announce that they will keep interest rates artificially low at 0% until 2013.  Understand that in order for the Federal Reserve to maintain a 0% interest rate, they must create currency and continue buying treasuries from banks.  If they would not do this, interest rates would automatically rise to attract new buyers to treasuries.  Without saying QE3, they continue to create more dollars.  They may announce an official QE3 over the next few months to stimulate the stock market, but all of these actions only lead to higher cost of living, soaring commodity prices, and devalued savings.

#7- High Risk:

The highest risk asset you can own presently is the US Dollar.  Due to these easy money policies, US Dollars will continue to lose value on a daily basis with corrections from time to time.  If you hold dollars, you will be losing purchasing power in your savings as long as QE continues.  This means also that Treasuries and municipal bonds are a place of danger, along with stocks backed by US Dollars.  If Dollars are bad, why would you want to own a piece of paper promising you US Dollars in the future?

THE GOLD/U.S. DOLLAR RELATIONSHIP:  Please realize the relationship between currency and gold.  When currencies are strong and monetary policy is tight, gold prices remain low historically.  When the U.S. was on the gold standard prior to 1971, every single dollar printed was backed by gold, keeping the price of gold fairly consistant with small adjustments from time to time.  When the U.S. left the gold standard in 1971, the Federal Reserve was given the go ahead to print as many dollars as needed to allow the economy to “boom”.  The dollar was no longer tied to anything, or backed by anything.  At this point, the U.S. Dollar became what is called a “Fiat Currency”.  Ever since 1971, the price of gold was permitted to float, as it was no longer pegged to the U.S. Dollar.  You will notice, the more dollars that were printed, the higher the price of gold.  Why is this?  We have a relatively consistent amount of gold in the market at any given time, just like any other commodity.  It is a limited resource. At the same time upon leaving the Gold Standard, we had an unlimited amount of U.S. Dollars being printed and flooding the market.  Any time in the history of the world- when you have a quickly increasing amount of fiat currency chasing after the same amount of goods, prices go up.  This is what we have been seeing in our markets since 1971.  Inflation has creeped in over the years, and is now at risk of spiraling out of control.  Let’s compare the U.S. Dollar and Gold over the last 10 years.  I think you will see the relationship clearly.

Any time you hear the terms:  “stimulus”, “quantitative easing”, “asset relief program”, or even “the Fed is keeping interest rates artificially low”, you must realize that all of these “programs” require the creation of massive amounts of currency both printed and electronic.  Along with these programs come higher prices for commodities, and precious metals.

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Comments
  1. Zackary says:

    I want to say thanks so much for your job you have made in writing this post. I am hoping the same perfect job by you later on also.

  2. Francisco says:

    All roads lead to Rome.

  3. Margurite says:

    There’s no place like home.

  4. Mira says:

    Knocked my socks off with knowldege!

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