The US Economy Has Not Recovered and Will Not Recover

Written on February 21st, 2016 in politics Comments Off

Published on Counterpunch, by PAUL CRAIG ROBERTS, Feb 19, 2016.

The US economy died when middle class jobs were offshored and when the financial system was deregulated … //

… The Federal Reserve’s zero interest rate policy was designed to support the balance sheets of the mega-banks and denied Americans interest income on their savings. This policy decreased the incomes of retirees and forced the elderly to reduce their consumption and/or draw down their savings more rapidly, leaving no safety net for heirs.

Using the smoke and mirrors of under-reported inflation and unemployment, the US government kept alive the appearance of economic recovery. Foreigners fooled by the deception continue to support the US dollar by holding US financial instruments.

The official inflation measures were “reformed” during the Clinton era in order to dramatically understate inflation. The measures do this in two ways. One way is to discard from the weighted basket of goods that comprises the inflation index those goods whose price rises. In their place, inferior lower-priced goods are substituted.

For example, if the price of New York strip steak rises, round steak is substituted in its place. The former official inflation index measured the cost of a constant standard of living. The “reformed” index measures the cost of a falling standard of living … //

… As an economist, it is a mystery to me how any economist can think that a population that does not produce the larger part of the goods that it consumes can afford to purchase the goods that it consumes. Where does the income come from to pay for imports when imports are swollen by the products of offshored production?

We were told that the income would come from better-paid replacement jobs provided by the “New Economy,” but neither the payroll jobs reports nor the US Labor Departments’s projections of future jobs show any sign of this mythical “New Economy.”

There is no “New Economy.” The “New Economy” is like the neoconservatives promise that the Iraq war would be a six-week “cake walk” paid for by Iraqi oil revenues, not a $3 trillion dollar expense to American taxpayers (according to Joseph Stiglitz and Linda Bilmes) and a war that has lasted the entirely of the 21st century to date, and is getting more dangerous.

The American “New Economy” is the American Third World economy in which the only jobs created are low productivity, low paid nontradable domestic service jobs incapable of producing export earnings with which to pay for the goods and services produced offshore for US consumption ,,, //

… I remember when mortgage service was restricted to one-quarter of household income. Today mortgage service can eat up half of household income. This extraordinary growth crowds out the production of goods and services as less of household income is available for other purchases.

Michael Hudson and I bring a total indictment of the neoliberal economics profession, “junk economists” as Hudson calls them.

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related to Junk Economist:

Links:

Primaires américaines: la Caroline du Sud et le Nevada votent à leur tour, Clinton tremble, dans rtbf.be, le 20 févr 2016;

Italy mourns literary giant Umberto Eco, dead at 84, on The Malay Mail Online, Deb 20, 2016;

Ottawa signals increase to benefits for low-income seniors, on The Globe And Mail, by Bill Curry, Feb 17, 2016;

Im uncutnews.ch Kanal:
Die Doppelmoral der Geostrategischen Interessen in Syrien – Dirk Müller, 2.03 min, 16. Feb 2016 … bei Markus Lanz;
Zum Syrien-Krieg – es gibt Dinge, die auffallen – Gabriele Krone-Schmalz, 3.31 min, 14. Feb 2016 … bei Anne Will;

Angeblicher Thyran aus Syrien spricht …, 14.24 min, im blo job Kanal, Jan 7, 2016;

… and this:

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