Shadow Stats: Still Very, Very, Very Wrong
Shadow Stats is frackin’ wrong. No doubt about it. Shadow stats is wrong, even if Zero Hedge thinks they might be right. And yet gullible John Malloy sees fit to report this crappy data on CNBC.
1 +U.S. Treasury Rates = (1 + inflation) * ( 1 + real rates)
We know what the Treasury Rate is with a high degree of certainty for points on the Yield Curve for the next 5 years, because they are traded in a highly liquid market. The real rate is what investors really make after you take into account inflation.
So rearrange this equation to find out how much investors are really making by investing in U.S. Debt:
(1 + U.S. Treasury rates )/ (1 + Inflation) = ( 1+ real rates)
If we use 10% inflation and plug in the latest 6 month T-Bill Rate, we can see how much investors are making.
The 6 month T-Bill rate is 0.11% Shadow Stats says we have 10% inflation. So using grade school math, investors in 6 month T-Bills are losing 8.99% per year due to inflation!
Wow – those investors are really stupid or really worried! Or maybe, just maybe, John Williams is wrong. Which one could it possibly be? Who can know?
Can you believe that this BS gets reported in the major media, by a guy who works for CNBC and used to work for Bloomberg? He must be a smart guy – every Bloomberg guy I’ve ever talked too has been whipsmart, and to go on CNBC is another huge step. So how can he not know this?
[Update: Here it is on the Front page of CNBC. We’re getting less informed by this “news.”]
[Update 2: Google “Shadowstats is wrong”, and TC comes up #3. Slowly, we’re getting traction.]
[Update 3 4/19/2011 Getting even more traction debunking Shadow Government Statistics. We’ve made the front page on the simple search term Shadowstats. For a complete roundup on why Shadowstats is wrong, and who is silly enough to promote this nonsense, see here, here, and here. ]