How Economists & Policymakers Murdered Our Economy

“Capitalist greed aided and abetted by economists and policymakers will have destroyed America.”

The economy has been debilitated by the offshoring of middle class jobs for the benefit of corporate profits and by the Federal Reserve’s policy of Quantitative Easing in order to support a few oversized banks that the government protects from market discipline. Not only does QE distort bond and stock markets, it threatens the value of the dollar and has resulted in manipulation of the gold price.

When US corporations send jobs offshore, the GDP, consumer income, tax base, and careers associated with the jobs go abroad with the jobs. Corporations gain the additional profits at large costs to the economy in terms of less employment, less economic growth, reduced state, local and federal tax revenues, wider deficits, and impairments of social services.

When policymakers permitted banks to become independent of market discipline, they made the banks an unresolved burden on the economy. Authorities have provided no honest report on the condition of the banks. It remains to be seen if the Federal Reserve can create enough money to monetize enough debt to rescue the banks without collapsing the US dollar. It would have been far cheaper to let the banks fail and be reorganized.

US policymakers and their echo chamber in the economics profession have let the country down badly. They claimed that there was a “New Economy” to take the place of the “old economy” jobs that were moved offshore. As I have pointed out for a decade, US jobs statistics show no sign of the promised “New Economy.”

The same policymakers and economists who told us that “markets are self-regulating” and that the financial sector could safely be deregulated also confused jobs offshoring with free trade. Hyped “studies” were put together designed to prove that jobs offshoring was good for the US economy. It is difficult to fathom how such destructive errors could consistently be made by policymakers and economists for more than a decade. Were these mistakes or cover for a narrow and selfish agenda?

In June, 2009 happy talk appeared about “the recovery,” now 4.5 years old. As John Williams ( has made clear, “the recovery” is entirely the artifact of the understated measure of inflation used to deflate nominal GDP. By under-measuring inflation, the government can show low, but positive, rates of real GDP growth. No other indicator supports the claim of economic recovery.

John Williams writes that consumer inflation, if properly measured, is running around 9%, far above the 2% figure that is the Fed’s target and more in line with what consumers are actually experiencing. We have just had a 6.5% annual increase in the cost of a postage stamp.

The Fed’s target inflation rate is said to be low, but Simon Black points out that the result of a lifetime of 2% annual inflation is the loss of 75% of the purchasing power of the currency. He uses the cost of sending a postcard to illustrate the decline in the purchasing power of median household income today compared to 1951. That year it cost one cent to send a post card. As household income was $4,237, the household could send 423,700 postcards. Today the comparable income figure is $51,017. As it costs 34 cents to send one postcard, today’s household can only afford to send 150,050 postcards. Nominal income rose 12 times, and the cost of sending a postcard rose 34 times.

Just as the American people know that there is more inflation than is reported, they know that there is no recovery. The Gallup Poll reported this month that only 28% of Americans are satisfied with the economy.

From hard experience, Americans have also caught on that “free trade agreements” are nothing but vehicles for moving their jobs abroad. The latest effort by the corporations to loot and defraud the public is known as the “Trans-Pacific Partnership.” “Fast-tracking” the bill allowed the corporations to write the bill in secret without congressional input. Some research shows that 90% of Americans will suffer income losses under TPP, while wealth becomes even more concentrated at the top.

TPP affects every aspect of our lives from what we eat to the Internet to the environment. According to Kevin Zeese in Alternet, “the leak of the [TPP] Intellectual Property Chapter revealed that it created a path to patent everything imaginable, including plants and animals, to turn everything into a commodity for profit.”

The secretly drafted TPP also creates authority for the executive branch to change existing US law to make the laws that were not passed in secret compatible with the secretly written trade bill. Buy American requirements and any attempt to curtail jobs offshoring would become illegal “restraints on trade.”

If the House and Senate are willing to turn over their legislative function to the executive branch, they might as well abolish themselves.

The financial media has been helping the Federal Reserve and the banks to cover up festering problems with rosy hype, but realization that there are serious unresolved problems might be spreading. Last week interest rates on 30-day T-bills turned negative. That means people were paying more for a bond than it would return at maturity. Dave Kranzler sees this as a sign of rising uncertainty about banks. Reminiscent of the Cyprus banks’ limits on withdrawals, last Friday (January 24) the BBC reported that the large UK bank HSBC is preventing customers from withdrawing cash from their accounts in excess of several thousand pounds.

If and when uncertainty spreads to the dollar, the real crisis will arrive, likely followed by high inflation, exchange controls, pension confiscations, and resurrected illegality of owning gold and silver. Capitalist greed aided and abetted by economists and policymakers will have destroyed America.

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Paul Craig Roberts, Boiling Frogs Post contributing author, is a former Assistant Secretary of the US Treasury and former associate editor of the Wall Street Journal. He has been reporting on executive branch and cases of prosecutorial abuse for two decades. He has written or co-written eight books, contributed chapters to numerous books, and has published many articles in journals of scholarship. Mr. Roberts has testified before congressional committees on 30 occasions on issues of economic policy, and has been a critic of both Democratic and Republican administrations. You can visit his website here.


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  1. Mitchell Bupp says:

    Thank You Dr. Roberts, The only economy we have today is trickle down chump change where national sovereignty and markets are being collected into a New World Order ruled by fascists worldwide.

  2. I could not think of a place to put this but felt compelled to put it somewhere, so I am putting it here for some reason. I guess I could not find a better place.

    I just had a thought. Usually when economists argue that a welfare state is not supportable they tend to used the false dichotomy of unproductive public sector and productive private sector. There is a problem with this.

    I must here define real wealth. Real wealth is a product that makes one’s life better and does not reduce the availability of life bettering products/services. A service is a product by the way. With this definition I hope to address an issue that I saw brought up in an article I read. The issue is that destroyed wealth, in that case a broken window, does not create wealth by being replaced. It simply causes effort to be expended to replace the window. This is great for the window man as he can now by more stuff, but the man who had to pay the window man is now poorer, and the industrial system as a whole is poorer as that effort could have been expended on something that added to people’s lives instead of just replacing what was already adding to people’s lives. The effort required to make that window could have been used to make something else, so destroying it only missapropriated effort from having something more to having something replaced.

    Let us say you have a teacher (an actual one, not some common core fool). This teacher is a productive force as this teacher produces many students who can use the knowledge and understanding this teacher provides to create real wealth in the form of contructing and designing.

    This teacher is a government funded entity in most cases. But the sector she is in is of little importance (supposing she is allowed to actually be effective by the system she is in). Regardless of whether she is public or private, she adds wealth to the economy.

    Now suppose you have a smart phone. Then one day you see another smart phone. It has more ram, more cpu power, more battery life too maybe. Although it is technically improved over your current model, does this new, slightly improved smart phone really improve your life? Probably not. Slightly better graphics and battery life are not really all that beneficial. Now, if this smart phone was drastically better, such as in it could have vastly improved graphicing power, communication capabilities, and maybe it could even replace your PC, it would really improve the enjoyment of your life, as much as a phone could do so anyway. The problem comes when you waste money on that slightly better smart phone. You could have saved your money and waited for a much better phone. The maker of this phone likley could make a much better phone but is holding back to get you to buy more phones in order to make more money, and instead of enticing you with something substantial, is enticing you with marketing nonsense. But is it productive to make this incrementally improved phone and is it productive for people to buy it? No. It is a situation similar to the window situation described above. You are throwing away the old phone to buy a new one that does not really add any value to your life other than a fancy new case or other similarly worthless feature. This becomes even worse in the form of programs and hardware that become outdated for no good reason. One may need a new phone that can handle the program necessary to access a website that has now added some stupid flash animation you do not give an F about, or to handle higher encryption capabilities thanks to cyber criminals, or to handle all the spyware the government and corporations are putting on it. That stupid flash animation is not going to spur the production of life bettering stuff, it just satisfies the desires of some moronic marketing executive. Had those stupid cyber thieves never existed, money and resources could have been spent on something other than encryption. If amazon did not have a desire to charge one more based on other purchases and searches one has made (which reduces the likely hood that one will buy something IMO) leading them to load you up with cookies and to waste money on creating the foundation of this marketing scam, and if the NSA had no need to engage in criminal acts, efforts which more than likely lead to more waste, for example, in the form of more war, that money and effort could have been spent on life bettering products and that processing power could have been expended on something productive. Planned obsolescence, pointless obsolescence, wastefully spent processing power and power spent on processing stupid crap are all wealth destroying activites. Even though they are produced things they do not add value to life as they are either directly wasteful or produced to impede wasteful activites and therefore still part of distraction from life improving activities.

    On that note if some tard had not come up with auto correct to replace spell checking I could actually use spell checking to check my spelling instead of having simply and only a choice between having my words replaced with words not even close to what I was trying to type or not having my spelling checked at all. Some innovations really are lame and wasteful.

    There are more problems.

    I read another article recently that spoke of resources, not just oil, being harder to extract. The more of them that are used the more effort that is required to extract them. This reduces the efficiency of the economy, and decreases the value of any effort done, which decreases what people get in return for their effort, which decreases their buying power. The only way to fix it is to increase efficiency of use or extraction. [At least before you get to the point where the resource is so rare and desirable that it matters not how easy it is to get, but that there is simply so little of it that industry reliant on it can no longer function. Such a resource would then be a mere novelty and therefore it would be wasteful to expend effort on obtaining it regardless of ease of access.]

    Now, with this in mind I come to another realization. The purchase of that slightly improved cell phone not only took resources away from the production of something more important, but it also reduced the efficiency and productivity of the economy by reducing the efficiency of access to more materials therefore compounding the reduction in life bettering products created by the production of this slightly better phone.

    From this I am forced to conclude that it is the discernment of those guiding the market that matters, not the sector, pubilc or private, that it comes from. From the public sector we obtained outright, or improvements on, many of the various technologies that we so enjoy today including the internet, space flight, and computer and communication systems. We also got bombs, war mongers, and the military paranoia complex and other nonsense that destroy wealth on such a massive scale that it makes me wonder how far that much destruction, and the political and industrial distraction that go with it and form it, has set humanity back. On the other hand through the private sector many wonders such as electricity, the automobile, television, and automation, have been created. But on the other hand the public sector has also produced such wonders as fat people watching rich people frolic with a ball on a rectangle, planned obsolescence aka “make it fall apart sooner than it has to to make more money”, tracking cookies and other spyware that hogs up our processing power, and the ridiculously large and/or loud gas guzzling vehicle that may or may not make up for the size of its owner’s penis.

    The point is that if one wishes to have an effective and productive economy then a much greater level of discernment must be instilled in those who guide that economy, whether those people are private or public sector, so that its productive capacity is not squandered and reduced for the sake of nonsense. Hard work is not the producer of wealth. It can actually destroy wealth by misusing resources and needlessly driving up their cost. Wise work is the producer of wealth. This will become increasingly undeniable as the value of hard work is reduced through automation and virtual intelligence, and the value of wisdom is increased through the increased need to properly direct this more potent than ever manufacturing force.

    Now how is that greater discernment to be created? That goes back to the educational system, including the education one recieves outside of “school”, and the values of the society that guides it. As long as bullshit and the infantile mindset that causes people to value bullshit so highly reign supreme, the efforts of humanity will have increasingly, and perhaps terminally, entropic effects. Welfare and charity take many forms. It is just as much a charitable, if not altruistic act, to waste money for the sake of a wooden phone case as it is to waste money on feeding that homeless guy who lost his job so that some slave in a prison camp in China could help corporate masters decrease the price slightly and increase the profitibility greatly of that same phone case. Instead of the profit from that case going to the previously employed and now homeless man, and thereby to all the needs and interests of that man, who for all we know could have used the money from that now outsourced job to invent some low cost highly useful gadget, it is now going to a twat yacht. Ayn Rand was partly right. Selfishness can be good. But when the selfishness is that of an undiscerning moron who is easily wowed by shiny rocks, augmented prostitutes, and silly boats, that selfishness, empowered by money, simply causes productivity and resources to be wasted on nonsense. Quigley was also partly right. Direction requires a a driving force, but that force is not provided by a person, but by a cause, although a person may be the avatar of that cause. When we allow resources to be allocated so foolishly to visionless people, or even liars and con artists, such as those people who are employed for the purpose of making such great things as glyphosate, or various financial instruments aka money shuffling bullshit devices, we detract from the wealth of the economy and from ourselves. The charity can go either to the hobo or the yacht for a tard. With one you improve the life of a hobo and allow him to be productive, with the other you waste resources on a yacht tard. In such cases the true values and intelligence of a civilization can become unpleasantly apparent. Why waste money on a boat when you can waste those same resouces used for that stupid boat on something that will acutally add value to the economy? A $100,000,000 used to purchase a dumb yacht could instead be used to buy a great deal of cheap houses. It makes me wonder what the yacht tard gets out of buying the yacht instead of the houses. Giving away those cheap houses could be used to take financial burden off of many families, perhaps allowing opportunities for the creation of some new invention from one of the inhabitants of one of those houses, and allowing the resources that would have been allocated to the boat palace to instead be allocated to, for example, the invention of a solid state vermin control device for the use of farmers whose customers are weary of pesticide use. Of course, the reverse is true too. That corprate master could be a driven person, and his employees a bunch of dullards who buy fishing boats so they can get drunk and stare at the fish that may or may not be there. An undiscerning power class, whether oligarch or bureaucrat, is a liability, as well as is an undiscerning public who supports these undiscerning oligarchs and bureaucrats.

    Think, for example, of what would happen if we took all the money wasted on sports and put it toward a legitimate space and technology charity. We would have no more obese people sitting about watching rich men frolic with a ball on a rectangle, but we would be a more advanced society with more access to resources. But no, people like watching rich frolicking men frolick in billion dollar stadiums, shiny rocks, and penis enlarging, money burning, constantly falling apart automobiles, war, false dichotomies, fric a frac, pointless prisons, lick it and stick it politics………….. The entropic desires of humanity are far too strong.

    It is not so much that communism, capitalism, socialism, or any other ism is overall crap, although one may be better for this particular situation and the other better for that particular situation. It is the corruption that a stupid or malicious source of power and consent provides, whether this source is made of the many or the few, as they are all responsible, that is the cause of systemic failure. You can experiment with any system you want, but at best that system will only buy time against its own failure. No system can resist corruption whether that corruption stems from stupidity or malice.

  3. Oh, and as to what type of fix could be applied to the world economy.

    All economies are crap. Therefore the individual must liberate himself from it. A independent mini-facturing agrarian type organization could work. But how would people get out of the factory and the factory into the home, and out of the city onto the land again?

  4. I think this design would allow for more equitable allocation of necessarily reduced manufacuring/sowing hours. If the centralized mega factory, centralized mega farming, and centralized mega research paradigm continue it will lead to an undesirable class structure with the relative few working longer hours to support the many who cannot find work as is happening in places like Greece. Distributing the responsibilities of these megas via mini facturing and small farming will allow those who would otherwise be unable to find work claim work and end prole-litude and welfare-itude by providing would be proles and dependents with access to the means to produce and therefore work. Overall hours spent designing may go up and overall ratio of hours per person spent manufacturing/sowing will be reduced no matter what. But the decentralization of these activites would allow for more even distribution of manufacturing/sowing hours and lead to decreased class hatred and division and therefore more stability throughout all social realms.

    These last two posts should have been part of that argument I first posted.

  5. But how do we get to this

    I have no idea.

    Help please!

    This should be the last addition to my argument.

  6. I just thought of something.

    Roberts, if you read this and if you feel compelled, please weigh the argument I created and also address another issue in relation to it. The burden that is wall street and the money that is wasted on “money shuffling BS devices” and how much this detracts from the rest of the economy. I have long thought that financial instruments are just nonsense that allow brokers and bankers to make money off of pointlessly shuffling money about. My, uneducated, theory is that the only value of such devices lay in peoples perception of the validity of all the technical and academic nonsense that backs them. And that nonsense really is nonsense.

  7. Oh, and I wasnt just applying that view to derivatives but likely most financial instruments.

  8. Oh, and here is a wonderful bit of honesty from an ABC news article…

    “The most difficult part of the transition may be translating one’s military experience into terms that are meaningful to civilian employers. These men and women have skills and experience that are in demand, but they just don’t know how to describe them in a way that non-military recruiters understand. Luckily, there are a growing number of programs and services that help with this and there has been a concerted effort among the nation’s employers to hire former military,” he added.

    Well, there is a simple way to “fix” this problem: start more wars, which considering the current situation in Syria, is about to materialize.”

    Aint that just swell. More debt, more war, more jobs. Wooha!

    Lets get people to work by destorying wealth. Gives a whole new meaning to the term busy work.

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