Profit From Government Lying

| August 10, 2009 | 0 Comments

I love it when hypocrites get caught telling lies, don’t you?  The look of fear in their eyes when the web of deceit comes tumbling down.  I know I shouldn’t, but I do get a bit of pleasure out of the whole thing.

Just last week, the Wall Street Journal highlighted a huge lie.

Believe it or not, it came from our esteemed leaders in Congress.  They’re spending like drunken sailors on shore leave.  Then they turn around and hand the good taxpayers (you and me) the bill.

Nancy Pelosi and crew just allocated half a billion dollars for new luxury jets for Congress.  This comes just months after tarring and feathering CEOs for using private jets to attend Congressional hearings.

Seems kind of two-sided, don’t you think?

Here’s where the lies start… our members of Congress all claim to support fiscal responsibility.  But, they sure don’t act like it.  The Defense Department says they don’t need these new jets.  Since when is spending $550 million on something you don’t need fiscally responsible?  I call that a lie.

Now before you get all upset, realize every member of Congress, regardless of political party, is a liar.  Republicans and Democrats alike.

Here’s the crazy thing… These lies don’t stop.  They happen all over the world in every type of government, at every level.

Just look at the European Central Bank (ECB).

The ECB is just like the US Federal Reserve.  The ECB controls monetary policy and interest rates for the entire EuroZone.  They have a huge impact on the growth of Europe’s economy.  They influence interest rates, and indirectly, the banking industry.

To ignore them would be dangerous.

Lately, economic news from around the world has been positive.  Even in the EuroZone.  Recent business surveys are positive.  Businesses are starting to emerge from a recession funk.  Corporate executives see rays of hope emerging in the economy.

Economic statistics are starting to turn the corner.  The EuroZone economy is clearly improving.

EuroZone PPI numbers are good.  German factory orders are up.  And, consumer confidence numbers are improving.

Then, the ECB works up a giant LIE.

They crush all hope by saying economic growth won’t resume until 2010.

Meanwhile, economic indicators are improving and many private economists see a recovery starting in the 3rd and 4th quarter of 2009. Where’s this disconnect?

Why would they lie?

It just keeps climbing higher and higher.

That’s what happens when Europe’s economy starts to improve.

But it also presents a problem.  It makes exports more expensive. Suddenly, European businesses are less competitive on the global stage. Their product prices start moving higher because of the exchange rate.

If EuroZone companies can’t sell overseas, their sales will suffer and profits will fall.  That means slower growth.  And slow growth in the business sector means a weak economy.  It’s a big risk to the EuroZone… and the ECB knows it.

So what do they do?  They lie to the public.

They say things aren’t going as well as they could be.  They downplay positive news.  They say growth is still a long way off.  They dismiss positive economic data and put on a sour face when addressing the public.
And talk like that scares currency traders.

They start wondering what the ECB sees that they don’t.  It never occurs to them the ECB might be lying.

So what can we learn from these big lies?

I take them to mean the EuroZone economy is doing better than expected.  It also means the recession is starting to fade and growth can’t be far behind.  It also means the euro should start moving higher.

This week, the US Federal Reserve is meeting.  They’ll review all the economic data available then determine the direction of interest rates.  It makes me wonder what lies they’ll be telling this time around.

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Category: Currency Trading

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The Dynamic Wealth Report works with a number of staff writers and guest experts who specialize in everything from penny stocks to ETFs to options trading. These guest analysts post under the 'staff writer' moniker for ease of use.

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