The Missing RecoveryPaul Craig Roberts The recovery exists only in the official measure of real GDP, which is deflated by an understated measure of inflation, and in the U.3 measure of the unemployment rate, which is declining because it does not count discouraged job seekers who have given up looking for a job. No other data series indicates an economic recovery. Neither real retail sales nor housing starts, consumer confidence, payroll employment, or average weekly earnings indicate economic recovery. Neither does the Federal Reserves monetary policy. The Feds expansive monetary policy of bond purchases to maintain negative real interest rates continues 3.5 years into the recovery. Of course, the reason for the Feds negative interest rates is not to boost the economy but to boost asset values on the books of banks too big to fail. The low interest rates raise the prices of the mortgage-backed derivatives and other debt-related assets on the banks balance sheets at the expense of interest income for retirees on their savings accounts, money market funds, and Treasury bonds. Despite recoverys absence and the lack of job opportunities for Americans, Republicans in Congress are sponsoring bills to enlarge the number of foreigners that corporations can bring in on work visas. The large corporations claim that they cannot find enough skilled Americans. This is one of the most transparent of the constant stream of lies that we are told. As I have reported on numerous occasions for many years, neither the payroll jobs statistics nor the Bureau of Labor Statistics job projections show job opportunities for university graduates. But this doesnt stop Congress from helping US corporations get rid of their American employees in exchange for campaign donations. There was a time not that long ago when US corporations accepted that they had obligations to their employees, customers, suppliers, the communities in which they were located, and to their shareholders. Today they only acknowledge obligations to shareholders. Everyone else has been thrown to the wolves in order to maximize profits and, thereby, shareholders capital gains and executive bonuses. By focusing on the bottom line at all costs, corporations are destroying the US consumer market. Offshoring jobs reduces labor costs and raises profits, but it also reduces domestic consumer income, thus reducing the domestic market for the corporations products. For awhile the reduction in consumer income can be filled by the expansion of consumer debt, but when consumers reach their debt limit sales cannot continue to rise. The consequence of jobs offshoring is the ruination of the domestic consumer market. Today the stock market is high not from profits from expanding sales revenues, but from labor cost savings. US economic policy has been focused away from the real problems and onto a consequence of those problemsthe large US budget deficit. As no interest group wants to be gored, Congress has been unable to deal with the trillion dollar plus annual budget deficit, the continuation of which raises the specter of dollar collapse and inflation. John Maynard Keynes made it clear long ago, as has Greece today, that trying to reduce the ratio of debt to GDP by austerity measures doesnt work. Among the countries in the world the US is in a unique position. It not only has its own central bank to provide the money necessary to finance the governments deficit, but also the money that is provided, the US dollar, is the worlds reserve currency used to settle international accounts among all nations and, thus, always in demand. The dollar thus serves as the worlds transaction currency and also as a store of value for countries with trade surpluses who invest their surpluses in US Treasury bonds and other dollar-denominated assets. Without the support that the reserve currency status gives to the dollars exchange value (its price in foreign currencies), the enormous expansion in the quantity of dollars produced by the Feds years of quantitative easing would have resulted in a drop in the dollars exchange value, a rise in interest rates, and a rise in inflation. Since my time in government, the US has become an export-dependent economy, and export-dependent economies are subject to domestic inflation when the currency loses exchange value. This situation is untenable. Sooner or later something will pop these bubbles, and the consequences will be horrendous. This article first appeared at Paul Craig Roberts new website Institute For Political Economy. 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. 