Whatever became of economists and the American economy?

According to the official economic fairy tale, the US economy has been in recovery since June 2009.

This fairy tale supports America’s image as the safe haven, an image that keeps the dollar up, the stock market up, and interest rates down. It is an image that causes the massive numbers of unemployed Americans to blame themselves and not the mishandled economy.

This fairy tale survives despite the fact that there is no economic information whatsoever that supports it.

Real median household income has not grown for years and is below the levels of the early 1970s.

There has been no growth in real retail sales for six years.

How does an economy dependent on consumer demand grow when real consumer incomes and real retail sales do not grow?

Not from business investment. Why invest when there is no sales growth? Industrial production, properly deflated, remains well below the pre-recession level.

Not from construction. The real value of total construction put in place declined sharply from 2006 through 2011 and has bounced around the 2011 bottom for the past three years.

How does an economy grow when the labor force is shrinking? The labor force participation rate has declined since 2007 as has the civilian employment to population ratio.

How can there be a recovery when nothing has recovered?

Do economists believe that the entire corpus of macroeconomics taught since the 1940s is simply incorrect? If not, how can economists possibly support the recovery fairy tale?

We see the same absence of economics in the policy response to the sovereign debt crisis in Europe. First of all, the only reason that there is a crisis is because instead of writing off that part of the debt that cannot be paid, as in the past, so that the rest of the debt could be paid, creditors have demanded the impossible–that all the debt be paid.

In an attempt to achieve the impossible, heavily indebted countries, such as Greece, have been forced to reduce old age pensions, fire government employees, reduce social services such as health care and education, reduce wages, and sell-off public property such as ports, municipal water companies, and the state lottery. These austerity packages deprive the government of revenues and the population of spending power. Consequently, consumption, investment, and government spending all fall, and the economy sinks lower. As the economy sinks, the existing debt becomes a larger percentage of the GDP and becomes even more unserviceable.

Economists have known this ever since John Maynard Keynes taught it to them in the 1930s. Yet there is no sign of this foundational economics in the policy approach to the sovereign debt crisis.

Economists it appears have simply vanished from the earth. Or, if some are still present, they have lost their voices and do not speak.

Consider “globalism.” Every country has been convinced that globalism is imperative and that not to be part of the “global economy” means economic death. In fact, to be part of the global economy means death.

Understand the economic destruction that globalism has wreaked on the United States. Millions of middle class factory jobs and professional skill jobs such as software engineering and Information Technology have been taken away from the American middle class and given to people in Asia. In the short-run this drops labor costs and benefits the profits of the US corporations that offshore the jobs, but the consequence is to destroy the domestic consumer market as jobs that permit the formation of households are replaced with lowly paid part-time jobs that do not.

If households cannot form, the demand for housing, home appliances and furnishings declines. College graduates return home to live with their parents.

Part-time jobs hurt the ability to save. People are only able to purchase cars because they can get 100 percent financing, and more in order to pay off an existing car loan that exceeds the vehicle’s trade-in value, in a six-year loan. These loans are possible, because those who make the loans sell them. The loans are then securitized and sold as investments to those desperate for yield in a zero interest rate world. Derivatives are spun off these “investments,” and a new bubble is put in place.

When manufacturing jobs are offshored, the US plants are closed, and the tax base of state and local governments declines. When the governments have trouble servicing their accumulated debt, the tendency is not to meet their pension obligations. This reduces retiree incomes, incomes already reduced by zero or negative interest rates.

This unraveling of consumer demand, the basis for our economy, was entirely obvious at the very beginning. Yet junk economists or hired corporate mouthpieces promised Americans a “New Economy” that would provide them with better, higher paying, cleaner jobs to take the place of the jobs moved abroad. As I have pointed out for more than a decade, there is no sign of these jobs anywhere in the economy.

Why did economists make no protest as the US economy was shipped abroad and deep-sixed at home?

Globalism also devastates “emerging economies.” Self-sufficient agricultural communities are destroyed by the introduction of large-scale monoculture agriculture. The uprooted peoples relocate to cities where they become a drain on social services and a source of political instability.

Globalism, like neoliberal economics, is an instrument of economic imperialism. Labor is exploited, while peoples, cultures, and environments are destroyed. Yet the propaganda is so powerful that people partake of their own destruction.

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West and How America Was Lost.

  • Alan Joseph Secrève

    This phenomenon is part and parcel of financial capitalism that took off in the period 1850 – 1930, when banks – due to their lending power – started acting as a node in a spider’s web. Bankers were offered positions on director’s boards in non-banking companies simply because they bankrolled them, while in reality being completely ignorant of the true mission of the company itself. Their ideal was to increase profitability for the sake of the bank itself, often at the expense of the company.

    • Don Corleone

      So the Rothschilds just get richer by the day & yet people tell us the Vatican runs the US & EU.

      • Alan Joseph Secrève

        They are all part of the conspiracy. If you see one side of the pyramid you can’t see the others. The three independent city states, the London Banking sector, the Vatican and Washington DC provide the financial, spiritual and military power to foment the New World Order. They obviously have to hide their true motives and realise it’s going to take very long to reach their goals, but they remain dedicated..

        • Don Corleone

          Come, let us speak about what we do know, not allegations & assumptions.

          The Rothschilds single handedly run the world from the safety of most
          major protestant european capitals.

          Other than conspiracy sites based in the protestant / zionist US,
          Where is the proof that the Vatican have any hand ?

          If anything Rome & the Vatican oppose these imperialists.

          It is not the Vatican that is occupying most Arab rich countries for oil & other resources which is what this is all about ultimately.

          The americans & Israelis did try to scare their greatest opposition (The pope & Vatican) a while back but he also said that the Radical Arabs are not planning on attacking the Vatican & should stop scare mongering.

          • Alan Joseph Secrève

            What do John Brennan, David Petraeus Leon Panetta (directors and former directors of the CIA) and Herman van Rompuy, Barrosso, Mario Monti (heads of the EU) have in common?
            Hint: their boss is the Black Pope.

          • Don Corleone

            I lived in america in the past.
            “America” answers to cartels & corporates, “the firm” is a mere dept of state which ensures its smooth running.

          • anti_banker

            Many, many, many Popes were jewish over the centuries and the Catholic Jesuits were founded by a Jew according to the first Jewish prime minister of England, Benjamin Disraeli, who wrote in his book Coninsby the following: “‘You never observe a great intellectual movement in Europe in which the
            Jews do not greatly participate. The first Jesuits were Jews; that
            mysterious Russian Diplomacy which so alarms Western Europe is organised
            and principally carried on by Jews; that mighty revolution which is at
            this moment preparing in Germany, and which will be, in fact, a second and
            greater Reformation, and of which so little is as yet known in England, is
            entirely developing under the auspices of Jews, who almost monopolise the
            professorial chairs of Germany. Neander, the founder of Spiritual
            Christianity, and who is Regius Professor of Divinity in the University of
            Berlin, is a Jew. Benary, equally famous, and in the same University, is a
            Jew. Wehl, the Arabic Professor of Heidelberg, is a Jew”- source: Coningsby: http://www.gutenberg.org/files/7412/7412-h/7412-h.htm

        • anti_banker

          Not long at all, they are almos there already. See my comment above.

      • Marli

        Make no mistake the Vatican and Rothschilds are on the same Satanist NWO team, no matter who or what you are you will be welcome there if the need you. They are the Satanist Illuminati cult that rules the word, go google Henry Makow PhD.

        • anti_banker

          You are right, they are now the same team, although the Illuminati is far more powerful. The Vatican (Catholic church) = first beast of revelation (with seven heads and ten horns, and whose head was fatally wounded in the prophesy).

          Some say Rome was build on seven hills, although there are a few theories, but most most to the Roman Catholic Church.
          The zionist bankers (Illuminati freemasonry) = second beast of Revelations (which is described in the prophesy as having 2 horns) and having healed the wound of the first beast. The ‘two horns’ are London and New York – the two financial capitals of the world today. This second beast with two horns helped bring Catholicism back to life and today is using it’s recently gained control over the protestant churches to merge them back with the Catholic church and other world religions via interfaith movements.
          Revelations prophesies a day when all the worlds riches (paper money scams) will “come to naught in one hour” (hyperinflation) and the traders will all be crying. Babylon (New York) will be thrown into the sea like a mllstone the prophesy states. Many expect it to happen to California due to it’s history of earthquakes and the massive San Andrea fault line below it, but it wil actually be New York that this will happen to.

  • Johann Theron

    Saw this report on why Germany should leave the Eurozone because they are more productive. In other words, Germany should lend more of their wealth to other Eurozone poor countries, or import from them iso selling to them. Somewhere economists are screwing up, by becoming illogical. Maybe iso of one world economy, there should be regional economies where some would be allowed to operate at higher/lower levels. But now it becomes a moral issue that needs to be regulated ie proper immigration control. foreignpolicy.com/2015/02/20/its-time-to-kick-germany-out-of-the-eurozone/ …

    • Guest

      According to FT report today Germany has issued five-year bond with negative interest. People tend to forget that the foundation of the modern finance is built on the “time value of the money” and capital being a scarce resource. The negative interest rate indicates the beginning of the unraveling of the modern financial economic system. Such trend, if protracted, will lead to profound social changes.

  • anti_banker

    Every leader of America and Europe is bought and paid for by Israel.