When I turned on my computer and saw that equity traders had quickly driven S&P futures sharply higher in Sunday night trading on the heels of today's Fannie Mae-Freddie Mac "rescue," I immediately thought of the following Bertrand Russell quote:

The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.

Regardless, since most of the financial blogosphere is already providing blanket coverage of the fraud being perpretated on taxpayers by the Wall Street-Washington nexus, I thought it would be interesting to highlight a few of the other scams our "leadership" is currently involved with (which stock market investors, of course, blindly accept as the unvarnished truth).

Below is a Financial Times commentary by Rob Arnott, chairman of Research Affiliates, "Government Lies and Squishy Ethics," that gives it straight.

“There are three kinds of lies: lies, damned lies, and statistics.” Benjamin Disraeli, later popularised by Mark Twain.

Let’s drill down to examine three sets of government-issued lies, or should I say statistics, that shape our perceptions of the economy, and hence our investment opportunity set: “off balance sheet” (OBS) spending, deceptions in the inflation statistics and the pretence that we’re perhaps avoiding a recession.

What’s the expected US fiscal deficit in the coming year? $500bn (£283bn, €350bn)? Guess again. With the accrual of future obligations for Social Security, Medicare and Medicaid, and with the cost of the war in Iraq and Afghanistan – all of which are off balance sheet – the true deficit is roughly $1,000bn.

Regardless of one’s political views on Iraq and Afghanistan, most of us would reject the notion these wars are cost-free. They are taken “off balance sheet” because they are “temporary” – five to seven years into these respective conflicts. Similarly, the US counts Social Security, Medicare and Medicaid only as the money is spent.

If a corporate management team chose to count pension and post-retirement medical spending in their P&L – while ignoring the accrual of new obligations – that management team would quickly be spirited off. But the administration and legislature are complicit in this self-same deception.

What about the current rate of inflation? Through June the one-year GDP deflator (a measure of the difference between real gross domestic product and nominal GDP) is an absurdly low 2.0 per cent, and through July core one-year inflation is 2.5 per cent, if we ignore the inconvenient run-up in food and energy costs. Top-line inflation as measured by the consumer price index (CPI) is far higher at 5.7 per cent. But if our methodology had not been changed radically in 1992 (see shadowstats.com), CPI would now be approaching 9 per cent.