Polls consistently show that the economy is one of the most important issues, if not the most important, for American voters. Official government figures show low unemployment and falling price inflation, suggesting the Federal Reserve has engineered a “soft landing” that will lower inflation without causing a recession. Therefore, some people may find this strange. So why are there concerns about the economy? One reason for this is that more and more people are recognizing that government economic statistics hide the truth about the economy.
“The first recession since 2022: U.S. economic income and production have been in decline across the board for four years,” is a Brownstone Institute study by Heritage Foundation Research Fellow EJ Antoni, Ph.D., and Mises Research Fellow Peter St. Onge, Ph.D. This is a paper. Institute. The document details how the federal government underestimates inflation while making wages, benefits, and economic growth appear strong.
Dr. Antoni and Dr. St. Onge use inflation measurements that are more accurate than those used by governments to reveal the true state of the economy. According to their calculations, the US economy will be in recession starting in 2022. The government claims gross domestic product (GDP) increased by about 13.7 percent from 2019 to the first half of 2024. Using more accurate inflation rates, the results were as follows. GDP will decrease by 2.5%.
Federal government statistics also show that Americans' disposable income increased by 12.9% from 2019 to the first half of 2024. However, using a more accurate method of calculating price inflation, we find that Americans' disposable income fell by 2.3%. Dr. Antoni and Dr. St. Onge are not the first to expose how governments use doctored statistics to make the economy look stronger. John Williams' ShadowStats regularly shows how governments manipulate data to underreport unemployment and price inflation.
Government distortions of economic data mislead people about the true state of the economy. They also mislead Congress, the President, and perhaps even the Federal Reserve. Until the Fed audit bill becomes law, we won't know what data the central bank relies on. Basing economic policy decisions on flawed data allows politicians to ignore the dangers posed by Congress' refusal to cut federal spending.
Government spending puts pressure on the Federal Reserve to keep interest rates low. The dollar's status as the world's reserve currency ensures strong demand for the dollar, allowing the Federal Reserve to keep interest rates low. However, an increasing number of countries are looking for alternatives to the dollar. One reason for this is anger that the US government is using the dollar's status as the world's reserve currency to force other countries to comply with US demands. Saudi Arabia is moving away from using only dollars for oil trade. The “petrodollar” is the main reason why the dollar has been able to maintain its status as the world's reserve currency.
If the dollar loses its status as the world's reserve currency, America will face a major economic crisis. This crisis could lead to the collapse of the welfare war state and the fiat money system that enables it. The danger is that the displacement could become even worse, as fearful citizens turn to authoritarian promises of security in exchange for restrictions on freedom. But this collapse could also lead to a reorientation toward respect for the principles of freedom, limited government, free markets, and a foreign policy of peace and free trade. Those who know the truth must continue to educate their fellow citizens about the benefits of freedom.
Ron Paul is a former U.S. Congressman from Texas. This article originally appeared on the Ron Paul Institute for Peace and Prosperity and is reprinted here with permission.
