ALL BLOG POSTS AND COMMENTS COPYRIGHT (C) 2003-2018 VOX DAY. ALL RIGHTS RESERVED. REPRODUCTION WITHOUT WRITTEN PERMISSION IS EXPRESSLY PROHIBITED.

Thursday, July 26, 2018

No one knows anything (G edition)

The core problem with macroeconomics is that it is an abstraction piled upon fiction which is then used to set policies with material consequences. As I addressed in no little detail in The Return of the Great Depression, the margin of error observably involved in the reporting of economic statistics is greater than that required to know something as basic as if the economy is growing or contracting. That is why it matters very much indeed that over half of the government's spending data is wrong:
A new bipartisan Senate report revealed more than half of the government's public data on federal spending is wrong, as the website USAspending.gov is riddled with errors.

The Permanent Subcommittee on Investigations, led by chairman Rob Portman (R., Ohio) and ranking member Tom Carper (D., Del.), released a report Tuesday finding nearly every agency is failing to accurately report its spending as required by federal law.

The subcommittee reviewed over two dozen inspector general reports and determined 55 percent of the spending data submitted to USAspending.gov was inaccurate. The errors accounted for $240 billion in spending during the second quarter of 2017, according to the report.

The Digital Accountability and Transparency Act of 2014, or DATA Act, required federal spending to be easily accessible to the public through a searchable website, which became USAspending.gov. The website was revamped earlier this year, but agencies are not meeting their requirements to submit accurate, consistent, and reliable data on its spending.

The agency in charge of USAspending.gov—the Treasury Department—is among the worst culprits, as 96 percent of its own data is inaccurate.
To put this in perspective, $240 billion amounts to 1.3 percent of the $18.6 trillion US GDP. Since it was reported that GDP grew 3.1 percent in the first quarter of 2018 compared to the previous quarter, that means that actual GDP growth was either 4.4 or 1.8 percent that quarter, depending upon which way the error lies.

And since the last two quarters growth are reported at 0.7 and 0.5 percent, these government spending errors may mean that the US economy is already in a statistically hidden recession.

Labels:

43 Comments:

Blogger The Kurgan July 26, 2018 5:41 AM  

That is basically why I have essentially ignored economists en masse. Their math doesn’t even measure up to elementary school standards of reality testing.

Blogger Shimshon July 26, 2018 6:10 AM  

I thought your summary in last night's Darkstream was brilliant, though I don't expect libertardian purists to understand, since the concept of nations has eluded them until now.

The market serves the nation, and not the other way around. It was Real Americans who created the American National Market (such as it is). There is a body of decades of evidence for the kind of markets the various types of Fake Americans did (and would) create.

Blogger Azure Amaranthine July 26, 2018 6:20 AM  

It's almost as if, the closer you get to the economic and financial centers of government, the more fiscal errors there are.

It's almost as if the entire fiat system is a network of pure lies.

Blogger lannes July 26, 2018 6:27 AM  

Kunstler (James, not William) has been moaning about this for ages.

Blogger Jeff Wood July 26, 2018 6:30 AM  

@3

And of course, AA, the more confusion, the more scope for theft.

Blogger Duke Norfolk July 26, 2018 6:36 AM  

And this doesn't even touch on the black hole that is the DOD. Imagine all the opportunity for graft in this govt slush fund.

And that's on top of the supposedly legitimate spending that's funneling billions to politicians and their cronies. And I'm sure this problem has been rising exponentially as the non-white percentage of govt officials has risen.

Blogger Desillusionerad July 26, 2018 6:37 AM  

No the core problem is as soon as we 'understand' something we try to game that variable - leading to peoples behaviour changing.

Blogger bob kek mando - ( don't ask, "Who mentats the Mentats?", ask instead, "Who shitpoasts the Shitpoasters?" ) July 26, 2018 6:54 AM  

but, but, 'Muh Modern High Tech Economy requires Usury!'


VD
these government spending errors may mean that the US economy is already in a statistically hidden recession.



not seeing it in Indiana.

the Warsaw-Fort Wayne-Angola area is dying for CNC machinists and there are signs and billboards out for all types of jobs, everywhere.

Zimmer Biomet could hire more than a hundred people in Warsaw ( pop. < 15,000 ) right now:
http://www.zimmer.com/careers/search/jobs.html?page=job-details.html&ID=QCVFK026203F3VBQBV7V47VNG&LOV2=8543&LOV3=8583&Resultsperpage=50&lg=EN&mask=zimextus&pagenum=1&option=52&sort=DESC

as i pointed out a while back, GDP subtracts Imports from the total GDP number.

therefore, in a nation which runs continuous Trade Deficits ( + 50 years now, i think? ) the simplest and most straightforward policy boost to the 'economic numbers' anyone could make would be shutting ALL international trade down.

for 2016 ( if you believe the .gov numbers ), the US economy would have been $500 Billion larger had we done this, which is twice as large as the reported error.

now, we can discuss how absolutely retarded using GDP as a metric is if you want
...
but the fact is that the Bankstas who run the economy are using a tool which practically demands, not the Trade War which Trump is instigating, but the complete elimination of Trade altogether.

Blogger Robert Coble July 26, 2018 7:08 AM  

Economists seem to be a special target of NN Taleb's wrath.

Blogger tuberman July 26, 2018 7:33 AM  

The thing is, these "inaccuracies" are likely not arbitrary. Inaccuracies are committed by the Deep State type people.

So, inaccuracies in the BHO administration and before would tend to make things look better than they actually were, while inaccuracies during the Trump administration would tend (unless the people involved are covering their butt) to make this administration look worse than it actually is now.

There are people behind these inaccuracies, and they often have a number of agendas, and among those are political agendas.

Blogger Resident Moron™ July 26, 2018 7:48 AM  

... and since government spending is counted in the GDP number, and subject to some mystic greenspanian hedonic regression factor, the actual GDP (assuming there is such a thing) could be as low as 15 trillion and the erroneous percentages correspondingly higher?

Blogger Cloom Glue July 26, 2018 7:53 AM  

I think a distinction has to be made of debt for consumption versus debt for creating a capital good that produces income, because debt for investment is real wealth creation similar to direct equity ownership investment except the risk is assigned differently. Money has a time value, interest, and the complaint about usury should not be directed at all kinds of debt.

Our distorted economy has debt for consumption and debt for malinvestment, per ponzi finance, and ponzi wealth. Complaints about fiat and usury and a not gold standard, are too broad and lead to incorrect understanding.

Blogger Stilicho July 26, 2018 7:53 AM  

Regardless of the direction of the error, the solution is obvious: the Fed must lower rates and print more money while the govt spends more money and issues more debt.

That way, you see, the error becomes statistically less significant!

No wonder leftist politicians keep telling us 2 plus 2 equals purple cow. In their little petri dish it does!

Blogger tuberman July 26, 2018 8:02 AM  

"... and since government spending is counted in the GDP number, and subject to some mystic greenspanian hedonic regression factor,..."

One thing that seems likely is that anyone pushing GDP numbers to the forefront is often backing the parasite/globalist statistics/economics. I need to read up on both Keen and Sundance on this again to get this down tight.

Blogger Peaceful Poster July 26, 2018 8:03 AM  

Blasphemy! GDP is gonna soon have a 5 handle thanks to the GE.

Blogger VD July 26, 2018 8:17 AM  

I think a distinction has to be made of debt for consumption versus debt for creating a capital good that produces income, because debt for investment is real wealth creation similar to direct equity ownership investment except the risk is assigned differently. Money has a time value, interest, and the complaint about usury should not be directed at all kinds of debt.

No. You're absolutely wrong. All debt counts equally with regards to wealth calculation.

Blogger VD July 26, 2018 8:18 AM  

Blasphemy! GDP is gonna soon have a 5 handle thanks to the GE.

I didn't say which way the error went. I don't know.

Blogger Avalanche July 26, 2018 8:30 AM  

@6 And this doesn't even touch on the black hole that is the DOD. Imagine all the opportunity for graft in this govt slush fund.


The "Fat Leonard" corruption investigation has expanded to include more than 60 admirals and hundreds of other U.S. Navy officers under scrutiny for their contacts with a defense contractor in Asia who systematically bribed sailors with sex, liquor and other temptations, according to the Navy.

{and:}
The defendants face various charges including bribery, conspiracy to commit bribery, honest services fraud and obstruction of justice and making false statements to federal investigators when confronted about their actions. Two defendants – Shedd and Herrera - are active duty; the others are recently retired.

The indictment is a veritable 78-page list of allegations in which Francis spent tens of thousands of dollars on bribing the defendants and the actions the officers took to reciprocate. Francis plied the officers with things like foie gras terrine, duck leg confit, ox-tail soup, $2,000 boxes of cigars and $2,000 bottles of rare cognac, plus wild sex parties in fancy hotels.

Blogger VD July 26, 2018 8:47 AM  

No doubt the Russians and Chinese are TERRIFIED of fighting the US Navy these days. All they have to do is bribe them to stand down.

Blogger JaimeInTexas July 26, 2018 8:48 AM  

The book 1984 comes to mind.

Blogger Darwinite July 26, 2018 9:23 AM  

Vox, I’ve seen this error before, and respectfully you are overstating the case. $240 billion in reported data on USAspending.gov has issues, such as missing documentation or unreported spending. $240B is not the size of the errors in the accounts, but the size of the accounts not reported correctly to the website.

Blogger Johnny July 26, 2018 9:38 AM  

I wonder what happens to these agencies if they go over budget. Given we are coming off the Obama administration maybe they just get more money. In which case they would all lead toward overspending along with not showing it at first. If it is something like that it would be highly undesirable but predictable.

Blogger SemiSpook37 July 26, 2018 9:52 AM  

Part of DoD's problem is that a lot of their processes and initiatives are severely out of date. There's still a good majority of folks, both in the acquisition corps and their contracting counterparts that are extremely resistant to any sort of change to that particular doctrine. I've found that the further away you get from DC, the more impact these changes have because the folks doing the actual work see the benefits of those attempts to identify efficiencies and reduce redundancy. The other side of the coin is those folks in those lower tier positions (the glut of those at the GS-5 to GS-9 layer) for the majority of their careers that are either unable or unwilling to change. Couple that with those GS-14/15 types (and maybe a good swath of the Level 1 SES corps) who are just collecting paychecks to maximize their high-3 pay ahead of their retirement date, and there's already a hell of a lot of overhead that could be cut with the right initiatives. The key here is getting the culture to embrace the idea that cutting the administrative glut is worth the effort; right now, and probably for the foreseeable future, it won't be.

Blogger tuberman July 26, 2018 9:59 AM  

Before Trump arrived, and for at least three decades, all the legislation and all of the lobbying was done for the Wall Street interests, as these people were the drafters of all legislation...the politicians did none of it. The whole economy was based on paper scuffling, and stuff like puts, hedges, and derivatives, and much being negative for anything real, such as making things. All this paper shuffling was to get around the older rules, which were based on stuff like manufacturing and actual goods (and real people, especially the middle class).


The amount of money spent lobbying politicians and other law makers between 1986 - 2016 went up to 50 times as much ($113.7 thousand to $5.8 million per).

Blogger tuberman July 26, 2018 10:05 AM  

24. tuberman

And wealth creation is centered around deal making in that parasite culture, whether the deals have meaning or not.

So, now we have one of the greatest deal makers in charge, who know the other great deal makers, and he wants to bring manufacturing and main street economics back.

Next is getting the Fed under control.

Blogger Cloom Glue July 26, 2018 10:12 AM  

VD wrote:I think a distinction has to be made of debt for consumption versus debt for creating a capital good that produces income, because debt for investment is real wealth creation similar to direct equity ownership investment except the risk is assigned differently. Money has a time value, interest, and the complaint about usury should not be directed at all kinds of debt.

No. You're absolutely wrong. All debt counts equally with regards to wealth calculation.


Wealth calculation? That is not possible and I carefully avoided that phrase. For example, if a man forgoes consumption to create a capital good instead of a consumption good then the wealth of that capital good is not known.

Blogger John Calla July 26, 2018 10:22 AM  

In the past couple of weeks I've noticed a few articles saying that recession is coming for 2019/2020. Shortly after that Trump complained about interest rates going up.

Blogger Ominous Cowherd July 26, 2018 10:33 AM  

@18: Avalanche, would a war-ready 300+ ship navy even have 60 admirals? I think the number of officers is inversely correlated to combat ability.

Blogger Francis Parker Yockey July 26, 2018 10:43 AM  

I think a distinction has to be made of debt for consumption versus debt for creating a capital good that produces income, because debt for investment is real wealth creation similar to direct equity ownership investment except the risk is assigned differently

What about debt for creating asset bubbles?

Blogger Doug Cranmer July 26, 2018 10:45 AM  

I think the US did that with at least one of the Iraq invasions.

Blogger Looking Glass July 26, 2018 10:46 AM  

tuberman wrote:24. tuberman

And wealth creation is centered around deal making in that parasite culture, whether the deals have meaning or not.

So, now we have one of the greatest deal makers in charge, who know the other great deal makers, and he wants to bring manufacturing and main street economics back.

Next is getting the Fed under control.


Apparently, Trump will have appointed 6 of 7 on the Fed Board by the end of the year. Not joking. The board has all of 3 of 7 permanent members right now. Open Market Committee includes 5 others, which Trump will have mostly influenced the replacement of by the end of 8 years.

Anyone else note that the Obama Admin did jack-all, minus the Iran Deal, from 2012 to 2016?

Blogger Cloom Glue July 26, 2018 11:11 AM  

@29 Debt could be for ponzi investment. A ponzi investment is made if somebody over estimates the future cash flow, likely because of the asset bubble/credit bubble.

Blogger Ryan G July 26, 2018 1:50 PM  

This is why discussions of debt, spending, and other statistics issued by the gov't make my blood boil. There seems to be no limit to the number of tricks, tweaks, and omissions that can be used to make the numbers say whatever you want them to say. If your error margin is sufficiently wide that there is no certainty whether we're in a recession or in a good economy, then something is very wrong with how you are measuring things. It's like a system of weighing ships that can't differentiate between a tugboat and a super-tanker.

Blogger DonReynolds July 26, 2018 2:18 PM  

The great German statesman, Otto von Bismark, said that those who like laws and sausages, should never watch them being made. To that I add, government statistics...and more particular, government accounting. Government accounting of spending violates probably every principle of basic accounting. Yes, it is entirely complex and the level of complexity expands to include the cosmos when taxes are added to the mix. None of it is accurate.

While we are on the subject, I would add also the state surveys of manufacturers, which are usually a big thick book of manufacturing facilities (by county). It is an impressive tome unless you actually have to use it. In which case, I would suggest you head over to certain libraries of phone books that the telephone services have. Yes, the phone book is better than the State Directory of Manufacturers. If all else fails, you might check with the State Fire Marshal office or EPA. (The Fire Marshal often gets a copy of every building permit issued in the state by local governments.)

Blogger Haxo Angmark July 26, 2018 4:04 PM  

no statistic from the jew.gov is to be taken seriously: #'s re spending, debt and deficits, unemployment, price inflation, illegal invasives, crime, etc. are all (((self-serving))) fabrications.

it's all a Ponzi: moral, political, and economic.

Blogger Attila is my bro July 26, 2018 5:43 PM  

I knew Bill's wife after his death (never met him). I guess being a commie didn't pay much back in those days because she had to go try to make an honest bourgeoisie living to support her multimillion dollar home on Gay Street (I shit you not!). She didn't fare too well. Her work was riddled with errors and she was one of those "nasty women" - entitled and full of crap. I wanted to fire her for performance reasons. I wanted to give her an all expenses paid helicopter ride after visiting her office full of Bill's commie memorabilia.

Blogger Francis Parker Yockey July 26, 2018 11:07 PM  

@35
it's all a Ponzi: moral, political, and economic.

And mass non-white immigration is a demographic Ponzi scheme.

Blogger Paul M July 26, 2018 11:48 PM  

AFAIK, the only nation that uses standard double-entry bookkeeping for the government is New Zealand. The current system most governments use was invented by kings so that they could dip into the public treasury.

Blogger DonReynolds July 27, 2018 1:07 PM  

VD wrote:No doubt the Russians and Chinese are TERRIFIED of fighting the US Navy these days. All they have to do is bribe them to stand down.

Not even difficult, Vox.
Just capture a patrol boat and hold the crew hostage. As the recent event in Iranian waters demonstrated, the US Navy seems to have standing orders not to fight or resist with force and once a dozen or so sailors are captured, the rest of the US Navy will stand down. (The old US Navy had rather lose a ship and every member of the crew rather than surrender to ANYBODY.)

Remember the USS Pueblo? 83 crew members, one killed during the capture, held by North Korea for 11 months. The ship itself is still parked at a dock in Pyongyang, North Korea. Fifty years ago, last January. I wonder if the North Koreans sell tickets for tours. Still the only US Navy commissioned vessel held captive.

Blogger Dirk Manly July 28, 2018 2:23 AM  

@26

"Wealth calculation? That is not possible and I carefully avoided that phrase. For example, if a man forgoes consumption to create a capital good instead of a consumption good then the wealth of that capital good is not known."

You're not getting it.
Money is fungible.

It matters not if you bought your house in cash, and took out a loan to start your business, or if you started your business with cash, and your house was financed with a mortgage.

What matter is:
How much $$$ do you owe, and what do you have to earn the $$$ to pay back the loan.

AFTER the money has already been spent, it doesn't matter precisely what it was that you paying for in cash and what you paid for with a loan -- the point is, that's all in the past.

Now, when contemplating FUTURE purchasing, yes, it makes a great deal of difference between getting a loan to finance a party, and getting a loan to start a business -- the business has the possibility of repaying the loan -- A bunch of food and booze, not so much.

Blogger Dirk Manly July 28, 2018 2:27 AM  

@31

"Anyone else note that the Obama Admin did jack-all, minus the Iran Deal, from 2012 to 2016?"

They sure did throw a lot of parties, and take a lot of expensive vacations.

Absolutely amazing -- the EXACT same behavior as the post-Civil War, primarily black state legislatures in the South, in which the profligate "party! party! party!" spending was the CAUSE of the creation of the Ku Klux Klan.

Blogger Dirk Manly July 28, 2018 2:29 AM  

@33

" If your error margin is sufficiently wide that there is no certainty whether we're in a recession or in a good economy, then something is very wrong with how you are measuring things."

We DO have such a measure, but it's ignored by most people -- long-haul trucking. It's a leading indicator of the economy. When trucking drops, a recession soon follows. When trucking rises, a recovery soon follows.

Blogger Dirk Manly July 28, 2018 2:42 AM  

@39

"Remember the USS Pueblo? 83 crew members, one killed during the capture, held by North Korea for 11 months. The ship itself is still parked at a dock in Pyongyang, North Korea. Fifty years ago, last January. I wonder if the North Koreans sell tickets for tours. Still the only US Navy commissioned vessel held captive."

It was a set-up. EVERYONE on board was a reservist -- the ship was SUPPOSED to be captured. It was an intel op. Some crypto gear was loaded with non-operational keys. The intel guys PRETENDED to be trying to destroy it (hitting with sledge hammers -- as if that would even dent the casing on a 1960's military teletype). It was known that the Chinese would be allowed to inspect the boat. Bogus traffic of "secret" but international significance was sent using the false key, which would then be "intercepted" by the Chinese. The question was -- would this "intel" get passed from the Chinese to the Soviets, and show up on Soviet diplomatic traffic? If Yes, then PRC and USSR should be regarded as close buddies; if not, then the PRC and USSR are not of one accord.

The purpose was to figure out if Nixon should go to China or not.

Post a Comment

Rules of the blog
Please do not comment as "Anonymous". Comments by "Anonymous" will be spammed.

<< Home

Newer Posts Older Posts