US Economy Is A House Of Cards
Paul Craig Roberts
May 1, 2014
The US economy is a house of cards. Every aspect of it is fraudulent, and the illusion of recovery is created with fraudulent statistics.
American capitalism itself is an illusion. All financial markets are rigged. Massive liquidity poured into financial markets by the Federal Reserve’s Quantitative Easing inflates stock and bond prices and drives interest rates, which are supposed to be a measure of the cost of capital, to zero or negative, with the implication that capital is so abundant that its cost is zero and can be had for free. Large enterprises, such as mega-banks and auto manufacturers, that go bankrupt are not permitted to fail. Instead, public debt and money creation are used to cover private losses and keep corporations “too big to fail” afloat at the expense not of shareholders but of people who do not own the shares of the corporations.
Profits are no longer a measure that social welfare is being served by capitalism’s efficient use of resources when profits are achieved by substituting cheaper foreign labor for domestic labor, with resultant decline in consumer purchasing power and rise in income and wealth inequality. In the 21st century, the era of jobs offshoring, the US has experienced an unprecedented explosion in income and wealth inequality. I have made reference to this hard evidence of the failure of capitalism to provide for the social welfare in the traditional economic sense in my book, The Failure of Laissez Faire Capitalism, and Thomas Piketty’s just published book, Capital in the 21st Century, has brought an alarming picture of reality to insouciant economists, such as Paul Krugman. As worrisome as Piketty’s picture is of inequality, I agree with Michael Hudson that the situation is worse than Piketty describes.http://michael-hudson.com/2014/04/pikettys-wealth-gap-wake-up/