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>Bruce, what is the goverments reason for doing this? Do they offer some
>justification?
>I am shocked, it totaly throughs off the true money flow numbers.
>
There is no "official" reason that I know of, but my best guess is simple
politics. Congressmen like to justify protectionist policies for their
local constituencies, and showing a supposedly big trade deficit helps.
Sometimes their attempts are really sad. Over the past year we've all heard
how our trade gap with China has "exploded" and is now bigger than our gap
with Japan. What they didn't bother to tell anyone was that the deficit
number we had with Hong Kong is now added to China's (because of the
reunification, obviously). In the spirit of pointing out absurdity by being
absurd, I guess this means our trade deficit with Hong Kong has now
"plunged" to zero!
Andrew, if you can find someone in the government to give you a straight
answer, see if you can get the following explained:
Why did the government implement significant changes as to how the consumer
price index was calculated over the past year, but NOT BACK-ADJUST THE
DATA? This has made the recent figures useless in trying to compare them to
previous years.
Why does the government include capital gains taxes paid, but not capital
gains earned, in calculating the national savings rate? This makes the
savings number completely bogus and useless.
Why does the government keep releasing M3 money supply statistics to the
public without adjusting the figures for the net outflow of dollars to other
nations? This makes domestic M3 appear to be growing at an alarming rate
when it really isn't.
If somebody can get the answers to these absurdities, please let me know,
because I've got about a dozen more...
Bruce
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