Dear John: As a retired state auditor, I can vouch for the fact that statistics put out by the government are sometimes phony, not because of incompetence but for other reasons.
For example, the New York State Department of Social Services developed a quality-control audit program that consistently produced data based on flawed surveys and home visits that showed welfare recipient fraud was always under 5 percent.
This was a phony statistic and everyone knew it, including the auditors.
The reason the state had to produce that phony number is that if the error rate went above 5 percent, the state would be penalized by the Department of Health and Human Services, and would have to return money to the feds.
That never happened, since New York was in the business of “gaming the system” so that it could maximize federal reimbursements — in other words, screw the federal government.
That’s how the state remains the welfare capital, representing 25 percent of all Medicaid expenditures nationally.
Trust me, there is a method in Janet Yellen’s need to raise the Fed fund rate in December and the Labor Department’s phony unemployment and inflation numbers.
Yellen has to raise the rates so the Fed can lower them when the economy weakens even more.
By keeping the core inflation below 2 percent, which excludes food and energy costs, the Labor Department screws Social Security recipients by reducing the cost of living adjustment each year.
The bureaucrats do the bidding of the politicians. They are not incompetent but are willfully putting out phony statistics for political reasons or to benefit their agency financially.
That goes for Yellen as well! A.A.
Dear A.A.: Very interesting.
And I hope that you cooperate when the US Attorney’s Office in New York reads this and wants to investigate.
I won’t release your name without your permission. And I’ve even changed your initials so nobody can guess who you are. And thanks for being a responsible person who won’t condone fraud.
Dear John: How will the Federal Reserve “unwind” all the bonds it bought and money it spent trying to get out of the last recession? Your article on the Fed and its bloated balance sheet struck a chord and produced a couple of random associations.
In one of Douglas Adams’ “Hitchhiker’s Guide to the Galaxy” books, there is the quote, “A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.”
Ben Bernanke created fiat money out of thin air in his quantitative easing scheme. What could go wrong with that?
To wit, in a later book in the series, a group of incompetent intergalactic refugees (financial planners, economists and bureaucrats) land on Earth and set up housekeeping. They also set up an economy — “Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich.”
Later they admitted to rampant inflation and were getting ready to set a forest fire to tamp it down. Needless to say, that did not end well.
It would have been fitting if the character’s names were Admirals Bernanke and Yellen, since there are indications that Yellen will follow the game plan of the series. A.Z.
Dear A.Z.: I think the Fed’s more suited to a cartoon.