Ron Paul: The People Can Handle The Truth About Unemployment and Inflation

Ron Paul tells the Joint Economic Committee that the people can handle the truth about unemployment and inflation numbers. Real unemployment is at 22% and real inflation is at 6% according to the original method of measuring the CPI.

Date: 07/14/2010
Event: Joint Economic Committee Hearing


Ron Paul: I thank the Madam Chairman, and welcome Dr. Brummer[?]. I’m not very good at the partisan blame-game, but I am very interested in the business-cycle and why we have unemployment and actually I’m interested in the measurement of our problems. I think sometimes we deceive ourselves because following some free-market websites that measure unemployment somewhat differently than our government, they come up with a figure of 22% of unemployment. And also, even the way the Bureau of Labor Statistics measure it; they look at all the people who are not looking for work at the moment, that is 16%. So things are not very good. Also, the GDP is what we measure. If the GDP is going up, everybody is supposed to feel good. You know, if we spend a billion dollars on a missile and we blow it up, that’s counted as increase in the GDP, and it didn’t give us a house, and it didn’t give us a health care or education. So there is a big difference. And also the inflation rate is very important. If you go back and use the old CPI measurement of inflation, we have 6%, not 2%. So there is a lot of deception, and the people sense this. I think they’d rather here, you know, accurate information than to be bamboozled into believing things are just honkey dorey, when they know there is a lot of inflation out there.

The other thing that I have concerns about is in the measurement of the GDP. If you look at the GDP in a private way, if somebody had a $200,000 job and he lost his job and the family had 2 or 3 hundred thousand dollars of debt, for them to be told what they need is a million dollar loan and spend it, buy a house and buy a car and live high and their personal GDP goes up. But they never measured the debt. But when we go to the government we say the government’s in debt, they’re spending too much. What we need to do is spend, we need to borrow, and the GDP goes up. But if you measure the GDP that goes up because of borrowing, inflating and spending, and look at that with a better perspective, I would say that maybe the real GDP isn’t going up and maybe that’s why we’re not having real growth. There is a big difference between people working hard and paying their bills and actually saving some money. I think the biggest fallacy that we have because we don’t have a correction is we don’t understand how we got here. We had too much debt, too much mal-investment and we haven’t dealt with that. And when you get too much of it, you have to liquidate it. When you get in over your head and you can’t pay the bills, you either have to declare bankruptcy or work harder and take a new job. But we can see this as an individual or company, but evidently our economic theory now is the governments are exempt from those kinds of economic rules.

And I yield back the balance of my time.


  • BabyEagle4U

    Ron Paul and Judge Napolitano 2012 !!!

  • bohallor

    People are retarded. Conservative and liberal economics both work just as well if both are performed correctly. The biggest issue with capitalism is intelligent investments and faith in the economic system. After that it all becomes “economic theory.” You guys all point fingers so much nobody actually looks at, WITHOUT BIAS, the history of our nation and the economic ebb and flow.

  • dirtnbike

    its true. too bad most american are fat dumb and stupid

  • Dfens

    Ever since Ron Paul voted for China to have Most Favored Nation trading status our economy has limped along at a meager 3% growth or less, lost millions of jobs and factories, and the Chinese economy has soared to double digit growth. So clearly our problems are a result of the Fed? Have you people all lost your minds? And what is Ron Paul’s solution to the present crisis our nation faces in unemployment? He wants to unilaterally cut our market protecting tariffs to zero. This would be catastrophic. You’re like a bunch of lemmings running full tilt toward a cliff scoffing at anyone who would recommend you reconsider.

    • Joel

      buddy he wants to do more than deal with tarrifs, he wants to get ride of the IRS so no income tax plus reduce all other taxes and regulation. Can you really ask for a better stimulus than that?

      • fred the protectionist

        Sure, and the government can run on magic Libertarian dust.

    • Dfens

      So you think that if you no longer have to pay 35% in income tax to the government that will put you on a level playing field to trade with someone in Communist Red China whose labor costs are 1/5th to 1/8th of what they are here in the US? You think that will make up for the political prisoners they use as slave labor in Communist China? You think that will make up for the fact that we do our best not to use our environment as an open sewer while in China they dump their waste were ever it is convenient, in the air, on the land, or in the water supply?

      I mean, maybe you are that delusional. Ron Paul is. I’m not. I am quite sure that they only way you’re going to get a level field with which to trade with your buddies the commies is going to be to turn the US into China. You’re going to destroy our middle class by wiping out their wages. You’re going to destroy our environment. You’re going to destroy our freedom in the name of Libertarianism. And for what? If you’re so damn in love with Communist Red China, move there. Don’t let the door hit you on the butt on the way out. Why turn this country into China when your heaven on earth already exists? Just get the hell out.

  • Libertarian777

    I love how neo-Keynsian economists like to keep re-iterating that $1 of stimulus = $1.67 of GDP growth.

    Ok so what happens when
    a. that $1 of stimulus is taxed away from someone? -$1.67 in GDP growth (multiplier effect works both ways, as Lehman brothers, LTCM, AIG, Citibank et al discovered)
    b. that $1 of stimulus is borrowed. ($1 + interest) x -1.67 = negative GDP growth when that borrowed $1 is paid back.

    of course, there are the federal agents (IRS etc) hired to enforce/administer the stimulus… so that actual multiplier effect is affected ($1 taxed = net $0.70 going into the economy x 1.67 = $1.169; but the full $1 is taxed from someone else =

  • charlie8575

    6% inflation and 22% unemployment is more believable based on empirical evidence than the nonsense Washington spews.

    I’m curious, does anyone know when the method of measuring inflation changed? I always thought the numbers coming out were a little optimistic, but this helps answer it. What are they now using in place of the Consumer Price Index?

    • Dfens

      I found this article with regard to the unemployment statistics:

      Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%.

      The Clinton administration also reduced monthly household sampling from 60,000 to about 50,000, eliminating significant surveying in the inner cities. Despite claims of corrective statistical adjustments, reported unemployment among people of color declined sharply, and the piggybacked poverty survey showed a remarkable reversal in decades of worsening poverty trends.

      Somehow, the Clinton administration successfully set into motion reestablishing the full 60,000 survey for the benefit of the current Bush administration’s monthly household survey. –

      I assume things are probably the same now as during the Bush adminstration, but I still have to wonder how these statistics can be skewed by more than 200%. You’d think at this point the so called justice department would have to step in and do a criminal investigation, but I doubt any such thing will happen as long as the picture looks much rosier than it is in reality.

      • AJ

        Nice post Dfens.

        There is no more a potent magnifying galss on a President’s performance than the INFLATION RATE and the UNEMPLOYMENT rate. Historically these two numbers have raked presidents over the political coals more than any other numbers.

        So, no wonder that these two numbers have been lied about and corrupted more than any other matematical calculation in the history of statistics.

        What amazes me is that economists can sit there and suck their thumbs watching these numbers on the news every night. What drugs are they on?


    • AJ

      Hey Charlie,

      Nice Post! check out VERY interesting!!

      My observation over the last 30 years is that prices have increased 10x (1000%). I don’t think you can increase prices 1000% with a 3% inflation rate. My guess is 10-12%.

      Since 1980 – See if these figures aren’t correct

      My salary is 3x
      Housing is 10X
      Gasoline (Energy) is 10X
      Sales Tax is 10X
      College Tuition is 10X

      I want to see the calculation that inflation is 3.5 % !!

      Presidential administrations do not want to be branded as ushering in a recession, and certainly not for many quarters in a row. So the calculation of the inflation rate has been modified and corrupted in order to mathematically eliminate a recession. Each administration has f*’d with the calculation so that now, the inflation rate is a scam. Even changing the inflation rate .1% will avoid 3 consecutive quarters of decline and call off a recession.

      And then the tricks they play! Housing (one of the highest inflation factors) is eliminated from inflation calculations because housing is “officially” an INVESTMENT not a commodity. Hmm, how convenient. And energy costs have been removed from the “CORE” inflation rate? Could someone please explain that one to me??

      And we hear these f*cked numbers day after day on the news until we actually believe them.
      I say the average inflation rate has been 10-12%.

      There’s a great website called shadow statistics that is fascinating. Check it out.


  • Citizen

    Dr Paul is one again spot on…
    The original CPI has been radically modified to cover the Government’s profligate spend thrift policies. The real rate is much closer to 10%-12%, just go get an Outback steak, you’ll pay 15% more over a year ago.

    LIBERTARIANS don’t swallow the lies of Keynes economics.
    We prefer the Truth of the Austrian School, LVM

    • fred the protectionist

      Australian Economics vs Kenyan Economics round commences.

      • Libertarian777

        no it doesn’t.
        Australian economics IS Keysian economics, as they proved with their 40% super profits tax on mining companies that resulted in Mr Rudd resigning from office.

        • fred the protectionist

          Nobody cares about Libertarians redefining terms for propaganda purposes, like straight from 1984.

    • Forest

      Citizen Says: “The real rate is much closer to 10%-12%, just go get an Outback steak, you’ll pay 15% more over a year ago.”

      Wow, quite possibly the stupidest, least educated statement I have ever heard regarding ‘proof’ that the national rate of inflation is ‘10%-12%’. I don’t even know where to begin with that train wreck of idiocy.

      Well, how about this, Outback is hiring Dishwashers, you may be qualified.

  • IhateNEOconservatism

    He’s one of the most sensible people I’ve ever seen.

  • Citizen

    Ron Paul has the courage to say it like it is…
    Govern Chris Christie (NJ has a 37% deficit budget) and he too is also such a truth crusader for fiscal restraint.

    As compared to the Paul Krugman crowd… Kool-Aid drinking mantra of, spend and spend more, and when it really begins hurting triple your spending.

    Obama must have been altered by that book Hugo Chavez gave him a year ago? Clearly Barrack has become infected with the same deranged vision of a Utopian Socialists State Republic, USSR Oh wait …. hasn’t that been tried somewhere? Just keep drinking that Paul Krugman Kool-Aid


  • askwhatifdotorg

    Anyone notice the “Fully Republican Controlled Congress” sign behind him with huge negative figures? I am sure this is what he is referring to when he says “I don’t get into these partisan issues”… because most Republicans are just as clueless about economics as the Dems. You go, Dr. Paul!

  • pretorious700

    I’m not in the states anymore, but I have contact with a lot of my ex colleagues. To a man, (and woman) they tell me business in our discipline (civil engineering related to land development, construction, and environmental issues) is the worst they have ever seen. In some states 80% of private firms have completely folded in the last 2 years. The government numbers for unemployment are a joke.

  • RyanB0011

    I am a Canadian and I have to say Ron Paul is America’s only hope in 2012 to avoid a total collapse of your monetary system. Lets just hope it won’t be too late by 2012, because I certainly do fear that will be the case for your country.

  • staceyvitale

    You gotta love this guy. Why on earth won’t more people listen to him????????????? He should be the rock star of politics, but the “media” doesn’t seem to like common sense…too boring I guess?

    • Shawn

      It’s because the mainstream media is bought a paid for by our current two party system. Dr. Paul could do some real good and give the power back to the people. Our current two party system views Dr. Paul as a real threat as he tries to buck the status quo. More and more people are starting to realize what is going on but they have to quit listening to the mainstream media like it is the truth. Common sense is not so common anymore if you haven’t noticed.

      Have you ever watched the ’08 primaries and the questions they asked Dr. Paul that had nothing to do with the current debate? There were many. The media keeps trying to find dirt on him and they haven’t found any yet because he actually is who is he says he is. Without any dirt on him, they threw him really messed up questions, questions they didn’t ask anyone else btw, and did their best at trying to make him look bad. It was quite disgusting to say the least.

      • fred the protectionist

        Libertarians don’t represent “the people”, Libertarian represent the interests of foreign international corporations and socialist governments around the world like China.

  • kvltizt

    This guy is a badass.

  • Karmiangod

    He has a point, unemployment checks will not boost the real economy; it’ll just boost this phony economy which is a drug with dangerous side effects. Don’t extend unemployment benefits, it’ll just; in the long run, it’ll screw up everything and we’ll become an anarchy.

  • adgmirza

    Ron Paul 2012!!!!!t WAKE UP…wake up means stop just following the crowd and the bs media you get…research why the last ten years have been the downfall of our once great country….google Judge Napolitano!!!!

  • defexorcist

    Here in the US, we do not always like to hear the truth. Most of us want to still live in our fantasy worlds where the truth is conveniently labeled as extreme. We better listen to Ron Paul because the train seems to have no brakes and we are running out of track. Disaster lies ahead…


    Integrity is telling myself the truth. And honesty is telling the truth to other people, Cheers Ron Paul

  • iforgotization

    Ron Paul is the man!

    • fred the protectionist

      He’s one of “the man”s responsible for unemployment, he’s a globalist free trader.

  • okturus

    This man comes from another generation another era…I just hope my generation can produce someone with even half as much integrity as Ron Paul. Instead everywhere I turn, my peers are looking and sounding and behaving increasingly more stupid. This man would NEVER EVER be our president….he’s not a political prostitute. We like our Presidents nice and packaged and spoon fed. Say AHHHHH America……MMMMMM….Don’t ask, just eat it and enjoy it. Its for your own good.