Paul Craig Roberts explains: "... The loss of American jobs and the compression of consumer income by low wages has removed consumer demand as the driving force of the economy. This is the reason expansionary monetary and fiscal policies are having no effect.
The latest jobs report issued today shows that America’s transformation into a third world economy continues. The economy lost 95,000 jobs in September, mainly due to cuts in local education and federal employment. Part of the loss of 159,000 government jobs was offset by 64,000 new private sector jobs.
Where are the new jobs? They are in nontradable lowly paid domestic services: 32,000 were in health care and social services, and 33,900 were in food services and drinking places.
There you have it. That is America’s “New Economy.” --
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Comment: The earlier boon of being the producer of the global reserve currency has turned into a curse. The position of the US as the country which emits the dollar as a global means of payment undermines the mechanisms that are otherwise in place that a country cannot go on almost indefinetely with a current account deficit. In the case of the US, decades of trade deficits have not only brought about an unsutainable mountain of debt, they also have destroyed the manufacturing base of the US economy through imports.
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