Paul Craig Roberts Warns "The US Economy Is A House Of Cards"

Tyler Durden's picture

Authored by Paul Craig Roberts,

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.

Capitalism has been transformed by powerful private interests whose control over governments, courts, and regulatory agencies has turned capitalism into a looting mechanism. Wall Street no longer performs any positive function. Wall Street is a looting mechanism, a deadweight loss to society. Wall Street makes profits by front-running trades with fast computers, by selling fraudulent financial instruments that it is betting against as investment grade securities, by leveraging equity to unprecedented heights, making bets that cannot be covered, and by rigging all commodity markets.

The Federal Reserve and the US Treasury’s “Plunge Protection Team” aid the looting by supporting the stock market with purchases of stock futures, and protect the dollar from the extraordinary money-printing by selling naked shorts into the Comex gold futures market.

The US economy no longer is based on education, hard work, free market prices and the accountability that real free markets impose. Instead, the US economy is based on manipulation of prices, speculative control of commodities, support of the dollar by Washington’s puppet states, manipulated and falsified official statistics, propaganda from the financial media, and inertia by countries, such as Russia and China, who are directly harmed, both economically and politically, by the dollar payments system.

As the governments in most of the rest of the world are incompetent, Washington’s incompetence doesn’t stand out, and this is Washington’s salvation.

But it is not a salvation for Americans who live under Washington’s rule. As all statistical evidence makes completely clear, the share of income and wealth going to the bulk of the US population is declining. This decline means the end of the consumer market that has been the mainstay of the US economy. Now that the mega-rich have even more disproportionate shares of the income and wealth, what happens to an economy based on selling imports and off-shored production of goods and services to a domestic consumer market? How do the vast majority of Americans purchase more when their incomes have not grown for years and have even declined and they are too impoverished to borrow more from banks that won’t lend?

The America in which I grew up was self-sufficient. Foreign trade was a small part of the economy. When I was Assistant Secretary of the Treasury, the US still had a trade surplus except for oil. Offshoring of America’s jobs had not begun, and US earnings on its foreign investments exceeded foreign earnings on US investments. Therefore, America’s earnings abroad covered its energy deficit in its balance of trade.

The economic stability achieved during the Reagan administration was shattered by Wall Street greed. Wall Street threatened corporations with takeovers if the corporations did not produce higher profits by relocating their production of goods and services for American markets abroad. The lower labor costs boosted earnings and stock prices and satisfied Wall Street’s cravings for ever more earnings, but brought an end to the rise in US living standards except for the mega-rich. Financial deregulation loaded the economy with the risks of asset bubbles.

Americans are an amazingly insouciant people. By now any other people would have burnt Wall Street to the ground.

Washington has unique subjects. Americans will take endless abuse and blame some outside government for their predicament–Iraq, Afghanistan, Libya, China, Russia. Such an insouciant and passive people are ideal targets for looting, and their economy, hollowed-out by looting, is a house of cards.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
stant's picture

I got this piece of paper with a picture of a yanky general on it. That folks in a town that used to be in Maryland says is worth 50 of something I will use it to wager he is right. Any takers?

Chris Jusset's picture

Paul Craig Roberts writes:

The US economy is based on manipulation of prices, speculative control of commodities, support of the dollar by Washington’s puppet states, manipulated and falsified official statistics, & propaganda from the financial media ...

Yes ... testify, brother!

hobopants's picture

Dr Roberts sees right through the bullshit for sure, wish he was still in kicking ass in DC.

Plus you should see him coach baseball.



max2205's picture

I'll take SPY for 1,000 shares  at market Alex......

rubiconsolutions's picture

PCR states the obvious to most of us. If every single dollar created since 1913 is based on debt than the entire thing is a sham. Or scam. All wealth in the US is merely an illusion. All banks, especially the central one, are engaged in a massive skimming operation designed from inception to rob the people while providing just enough creature comforts and distractions so that they don't know they are victims of the largest fraud in human history. 

duo's picture

I'll x-post my comment from Naked Capitalism re: the DJIA (or should it be the Dow Jones Post-Industrial Average)

"Dow Jones “Industrial” index? Let’s see… McDonalds manufactures hamburgers, GS and JPM manufacture fraud, Visa and WMT manufacture human misery, and KO (Coca-cola) manufactures customers for Merck, Pfizer, etc."

fonzannoon's picture

Michael Snyder should take some notes. this is how u rant without some gay list that makes everyone roll their eyes. 

rubiconsolutions's picture

Brilliant, simply brilliant.

Oliver Klozoff's picture

Double dipper - are you a teacher?

duo's picture

the sig pic  is Pashha aka Strelnikov from "Dr. Zhivago".  No, I'm a lowly engineer.

Seer's picture

If 1913 didn't happen it would have, in order, that is, for the Ponzi (perpetual growth on a finite planet) to continue.

All Risk No Reward's picture

We have one that can see!


The more company I have the more the misery is spread around.  ;-)

Haole's picture

Yeah, yeah, we know.


How the hell does one get a Happy Ending around here?

I am Jobe's picture

When the dollar collapses , Happy ending

Chris Jusset's picture

Q: "How the hell does one get a Happy Ending around here?"


A: When Obama, Congress, the Fed, and Wall Street are done destroying America.

kchrisc's picture

"When Obama, Congress, the Fed, and Wall Street are done destroying America."

You forgot prior offenders.

When all the guilty pols and crats, banksters and Wall Street execs, prior or current, are split to ground and basket, then and only then will there possibly be a "happy ending."

sleigher's picture

If so many, and more each day, are becoming aware that the US/global economy is going to fail and bring about a SHTF scenario, how come there isn't a movement among liberty lovers or even ZH'ers about what to do AFTER the failure.  How are the people of the world going to keep this synagogue of satan from grabbing control and doing it all over again?  Am I a naive idealist?  Maybe a dollar failure is a happy ending, but it should be a BEGINNING.   

F0ster's picture

"How are the people of the world going to keep this synagogue of satan from grabbing control and doing it all over again?"

Good point. I'm no racist but we have to start addressing today's 'Jewish' problem. Jews through out history have evolved to survive in other peoples countries by sticking together and jointly undermining the society's they inhabit in order to dominate, control and enrich themselves. The ultimate Jews in history, the Rothschilds, Warburgs, Lehmans etc created this evil banking system. Their system has enslaved us by making us work for their fake currency's. The Jews have been persecuted through out history because they unfairly tip the balance of power into their favor (using their religion as the glue to be loyal to each other and screw all others) and suck the blood out every state they inhabit. Now they have Israel and their autodidactic survival schemes are infecting the entire planet. The Jew has become a very serious problem, and we can't fight this problem because they have taken over all forms of power, media, banks politics etc.

Yeah, I said it!!

Optimusprime's picture

Thanks for taking the trouble.  The Tylers have expelled many for raising, or even hinting at, such realities.  But facts are indeed stubborn things, and even the ADL and AIPAC cannot hide them forever.

jbvtme's picture

"has become a serious problem"?  they've always been a problem.  read what Cicero, Thomas Aquinas, Martin Luther, Francis Bacon, George Washington, Ben Franklin, Thomas Jefferson, Mencken, Shaw, Fitzgerald, Emerson, Twain have said about the jews.

LasVegasDave's picture

They are successful in everything they do.  And they are hated for it.  As a tiny percentage of the population, their contributions to society are unmatched.


But concur; the wall street and hollywood big Yids are a particularly evil bunch and Ill shed no tears when the long knives come out for them.

sleigher's picture

I don't agree that people hate them for being successful.  People may hate them for how they became successful though.  

jbvtme's picture

"The Jews belong to a dark and repulsive force. One knows how numerous this clique is, how they stick together and what power they exercise through their unions. They are a nation of rascals and deceivers." Cicero

jbvtme's picture

"The Jews should not be allowed to keep what they have obtained from others by usury; it were best that they were compelled to worked so that they could earn their living instead of doing nothing but becoming avaricious."

Thomas Aquinas

jbvtme's picture

"The day will come when all nations amidst which the Jews are dwelling will have to raise the question of their wholesale expulsion, a question which will be one of life or death, good health or chronic disease, peaceful existence or perpetual social fever." Franz Liszt

SeattleBruce's picture

And if we can't scapegoat the Jews, we would/will scapegoat another group, as what they do, and what we do is all part of the same human nature - corrupt, frail - separated biologically by only .5% of the genetic code. Those are the facts boys and girls. Hard to face the truth, or look your critique square in the eye - in the mirror - isn't it?

Promethus's picture

I think anti-Semitism is a good tell that you are dealing with a hard core member of the tin foil hat crowd.  Burn any good books lately?

sleigher's picture

It isn't anti-semitism if they aren't semites.  Dig just a little deeper...

kchrisc's picture

Fantastic and well articulated comment.

It also highlights why more of big government is not the answer in dislodging them, as they will just co-opt that government as well, or have it killed off.

The answer is to get rid of their instrument of destruction, big government.

All Risk No Reward's picture

Somehow lumping my very efficient Jerwish neighbor who runs an efficient auto body shop with the Rothschild head honchos seems to on the far side of absurd.

If only people weren't so simple minded and craved the desire to over generalize to the point beyond irrationality.

Maretin Luther King was right - this is an issue of content of character.

All freedom loving Jewish people that thirst for liberty are on my team.

You see, value systems are important to me, not superficial, simple minded groupings.

The average Jewish person in Israel can't stand their government as evidenced by 500k people hitting the streets and protesting their corrupt Jewish government back in 2009.

Since most people can't seem to wrap their mind around it, with or without some help, this is about the oligarchs vs the rabble.

The non oligarch Jewish person is haviong their home foreclosed upon legal paperwork, too.

The oligarchs financed Hitler and his little campaigns of eugenics extermination.

Are the Rockefellers Jewish?

The ignorance, it burns.

An ancient Roman once observed that different tribes would fail to unite against a common enemy even if it meant all the tribes were eventually extinguished by the common enemy.

The oligarchs understand this, hence, they do all they can to divide us into tribes.

I respect organization and hard work when it is ethically performed.

When one is at the top of the pyramid, though, and is organized and hard working in trying to achieve their evil, well, then I don't respect that, regardless off whatever irrelevant characteristic the irrational masses want to pin on the bad guys that only covers up the real problem - a psycho/sociopathic evil pathology...  or, if you will, a lack of character.

It is that simple.  It is not complex.



hobopants's picture

I really think it's a dangerous distraction as well, look at the person not the group...I know I would be ashamed as hell if somebody judged me by what my dumbass country does.

Zoomorph's picture

ZH needs to publish a series of moral arguments first, because I strongly doubt that we should agree on what to do following a SHTF scenario.

For example, you would want to eliminate the power game from life, get rid of those "evil satanic rules" and convert humanity in a herd of happy, peaceful, nihilistic sheep. Some others would want to replace the current powers that be with something more powerful, rather than something more degenerate.

Dr. Destructo's picture

"how come there isn't a movement among liberty lovers or even ZH'ers about what to do AFTER the failure."

I'm glad you asked that question, as it is one that I have oftentimes asked as well. I firmly believe that the core of any new beginning comes from our food; controlling your food by growing your own organic garden AND TEACHING OTHERS HOW TO DO SO is a very powerful act of defiance. I have worked hard by learning sustainable agriculture, volunteering at my local farm, learning permaculture, intentional community building from those who have lived in them, and animal husbandry (along with survival skills) so that when the SHTF there will be some embers left that will create a society that empowers the individual while promoting cooperation.

Let's face it: If we are to break free from tyranny we will need to learn how to think in terms of community rather than in terms of me, myself, and I. Our government wants us to divide us into groups and pit us all against one another; it's their sick definition of "diversity". However we are able to unite since we all face the same problems of a proxy government that serves the rich, while leaving us with a fascist regime that revokes more freedoms with each passing day. Everyone faces this, but the word needs to get out that there is an alternative to what we have today, and even though we cannot build one system that makes everyone happy we could at least empower as many as we can to make their own little enclaves while we use sound economics to increase cooperation with one another.

For those who are helping out as many as they can in order to weather the coming storm I applaud you. By helping and enlightening others to what is truly happening you're actually speeding up the demise of the Empire.

Normalcy Bias's picture

Dollar Collapse => Martial Law. That's not going to be a joyful release for a vast majority, I suspect.

daveO's picture

Martial law leads to seccession. Happy ending. Lincoln nearly broke the northern union last time with his greenback printing. There'll be no way for DC to fund a war against it's people this time. It'll probably go down like the USSR in '91. 

Normalcy Bias's picture

I applaud your optimism. DC has unimaginable treasure and weaponry stockpiled, and with the advent of robotics/drones/other tech, they wouldn't even have to do much of the dirty work themselves...

I hope you're right.

bigkahuna's picture

NB - you are correct.

In law enforcement they have what is called a "thin line". There are only so many cops that can respond to crime at any prticular time. The thin line works becauce of organization and force. 

The same is true of any enforcement organization wether it is lawful or not. Organization is key and Force is the next important factor.

In the US - the DoD has both Organization and Force.

The DoD has been in a fruitless war which is now beginning to unwind. There has been no overall victory and it is safe to say that people in the DoD are upset with that.

The politicians continue to find ways to "employ" the DoD in unwinnable scenarios.

What you may see in the end game is that our own politicans/media foment a civil type of conflict over here. People think because they have a rifle or a pistol and some ammo that they will be able to win a shooting conflict or at least maintain some type of defense. Yes, it is true - people can win or defend against an adversary which is similiarly or less well equipped. What people cannot win against are drone fired missiles, gps munitions, large artillary type rounds,and things of this nature.

My point is this: The DC tyrants are trying to start a civil war which they will then put down with an angry DoD. There is no force in the US that is capable of standing against the DoD. We all need to make sure that we do not follow our crazy politicians into a civil war. If we DO - it is the Agenda 21 depopulation that we will be helping along.

nightshiftsucks's picture

Nonsense,they need infastructure to use those weapons.Where you are wrong is that you assume that all of the DOD would be on the govt side and I don't think that's true.What do you think the sheep will do when they realize the dollar has no value and that they won't be getting their pensions? What will the govt have that they just couldn't take ?

bigkahuna's picture

They've been walking rounds in on unfortunate targets for centuries - with no gps required. 

The DoD has its own infrastructure and logistics. If the USD fails, they will be the first to get the new fiat. The NWOs only other option away from dividing and conqering in order to achieve Agenda 21 population goals is to release some type of virus. 

I am guessing that the DoD and their co-horts would be easier to control though.

Eternal Complainer's picture

"....and that they won't be getting their pensions?..."

This would be the proverbial 'straw' that breaks the camel's back IMO.
That will be the flash point that ignites the powder keg.

lasvegaspersona's picture

if the dollar collapses who will feed and shelter and transport the DoD stooges? If supermarkets close if there a special program to feed the soldiers and Homeland Security forces? Do you think the majority of unpreparred folks will rush to supply an occupying army?

Or do you see government workers walking off the job (as they did in the USSR) when they realize the dollar gig is up?

If something happens quickly there could be a few days of martial law...then 'no law' I would guess.

What is left of the government would have to respond to basic needs in a hurry or it would have no authority. The hungry masses will not tolerate usless leaders then.

Dr. Destructo's picture

"if the dollar collapses who will feed and shelter and transport the DoD stooges? If supermarkets close if there a special program to feed the soldiers and Homeland Security forces? Do you think the majority of unpreparred folks will rush to supply an occupying army?"

People who depend on the system will do whatever it takes to perpetuate it. The military in general relies on indoctrinating their people in being loyal to the organization, and many people within will do whatever it takes to defend and perpetuate the organization and support those within. You also gotta take into account that many people within the military are in it because they got a family to feed, and that just adds to the fealty. The military only tells their people what they need to know to complete the mission -nothing more. Some will defect (we need to build an underground railroad of sorts to facilitate that), but many will remain.

Yes people will supply an occupying army because people are being conditioned to believe that the military/law enforcement are protectors from the cradle on up. People don't wanna rock the boat because they have hope that things will get better and will ignore any logic that says otherwise. Terror keeps people in line, and they will tolerate tyrants if they perceive that the alternative is much worse.

1stepcloser's picture

When you pay for happy endings with a mercury dime..

realWhiteNight123129's picture

Well just ending will make me happy even if it is painful short term.

TheFourthStooge-ing's picture


How the hell does one get a Happy Ending around here?

Happy Ending: when the cursed earth known as Vichy DC is cleansed by fire.

WhyDoesItHurtWhen iPee's picture

I too was once "insouciant" and naked in my shorts.  Now I just don't give a fuck.

Comte d'herblay's picture

The last naked short I attempted was buying TZA at 90, after two years of reading the posts of this blog.

That was indeed careless.