QUOTE (32): What has taken place over the last generation is a highly complicated merger of crime and policy, of stealing and government. Far from taking care of the rest of us, the financial leaders of America and their political servants have seemingly reached the cynical conclusion that our society is not work saving and have taken on a new mission that involved not creating wealth for us all, but simply absconding with whatever wealth remains in our hollowed out economy. They don’t feed us, we feed them.
Paul Craig Roberts
Institute for Political Economy, October 16, 2012
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.
In the early years of the 21st century, the Federal Reserve substituted a rise in consumer debt to drive the economy in place of the missing rise in consumer incomes. Low interest rates drove up housing prices, and people refinanced their mortgages and spent the equity. The Federal Reserve kept the economy alive by loading up consumers with debt that housing prices and consumer incomes would soon be unable to support.
When debt and real estate prices reached unsustainable levels, the bubble popped, and the ongoing financial crisis was upon us.
The cause of all of the problems is the offshoring of Americans’ jobs. When jobs are moved offshore, consumers’ careers and incomes, and the GDP and payroll and income tax base associated with those jobs, go with them. When the goods and services produced for American markets by offshored labor are brought into the US to be sold, the trade deficit rises, and downward pressure is put on the dollar, pushing up domestic inflation. (On October 12, statistician John Williams (shadowstats.com) reported that “third-quarter wholesale inflation jumped to an annualized 6.2%.”)
Phi Beta Iota: We are compelled to emphasize that it is the self-corruption of Congress, shaking down the private sector for its standard 5%, that is the root of the problem, NOT the private sector that is to blame. All the checks and balances are gone.