In a recent article at Portfolio.com, Megan Barnett comments on discrepancies between financial/economic data publicly available in reports from the Fed, and statements to the contrary, made by Fed Chairman Bernanke and Treasury Secretary Paulson, in recent months, and wants to know if Paulson and Bernanke Are Lying to Us.

There are … inconsistencies between what Bernanke stated to Congress in late October about consumer credit with the data made available by his own organization in the same month. So, what gives? Celent [a consulting firm] concludes that one of two scenarios is possible: 1) Bernanke and Paulson have access to far more data than is made available publicly and that data is painting a far more grim picture of the state of bank lending. “However, it is hard to see why the Federal Reserve Bank itself would publish and continue to publish information that it knows is misleading at best, and simply wrong at worst,” the report notes.

Why would Bernanke, Paulson, et al. continue to publish misleading or deceptive information?

For the same reason that governments in general, and central bankers specifically, always rely on misdirection, deception, and outright lies. Trust in fiat money is important to the central bank, and trust in the central bank is of paramount import to the State in general, without which its power over the population is vastly diminished, or can be exercised only with open and notorious acts of violence, the likes of which rarely go unpunished.

Without fear of anarchy, government ceases to be tolerated by the populace. For this reason, those in power continue to spread the lie, that government is both necessary and benevolent, despite thousands of contrarian data points. Without continuing trust in central bank fiat money, the economic system that concentrates benefits among those in power (i.e., banks in particular, but from a broader perspective, big businesses and governments) would grind to an immediate halt.

The report also suggests an alternative:

2) The Feds are reacting to a situation at a particular set of businesses and banks and are incorrectly generalizing these to the whole economy, which would mean that the policy tools they are using are the wrong ones.

Well, this wouldn’t be terribly surprising. Just because the State has a tremendous amount of power and influence, doesn’t mean that it is capable of using those instruments effectively. And it wouldn’t be the first time that “the policy tools they are using are the wrong ones,” either.

But of course, that depends how you judge the adequacy of the policy in the first place. It’s very likely that the policies being privately pursued by the government are inconsistent and/or incompatible with the policies they claim to pursue in the interest of the public welfare. In this particular case, the government’s public goal is to “fix the economy.”

It’s entirely possible that the government’s definition of “fix” is not the same as yours, in which case they are lying. Or, they have no idea what they’re doing, in which case they’re incompetent.

Neither a liar or an imbecile is fit to wield <em>any</em> control over other people’s lives, let alone, play marionette with the structure of the economy.