The Diminishing American Economy

By Paul Craig Roberts

June 25, 2019 “Information Clearing House” –  Since June 2009 Americans have lived in the false reality of a recovered economy.  Various fake news and manipulated statistics have been used to create this false impression.  However, indicators that really count have not supported the false picture and were ignored.

For example, it is normal in a recovering or expanding economy for the labor force participation rate to rise as people enter the work force to take advantage of the job opportunities.  During the decade of the long recovery, from June 2009 through May 2019, the labor force participation rate consistently fell from 65.7 to 62.8 percent.  https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm

Another characteristic of a long expansion is high and rising business investment. However, American corporations have used their profits not for expansion, but to reduce their market capitalization by buying back their stock.  Moreover, many have gone further and borrowed money in order to repurchase their shares, thus indebting their companies as they reduced their capitalization!  That boards, executives, and shareholders chose to loot their own companies indicates that the executives and owners do not perceive an economy that warrants new investment.

How is the alleged 10-year boom reconcilled with an economy in which corporations see no investment opportunities?

Over the course of the alleged recovery, real retail sales growth has declined, standing today at 1.3%. https://www.multpl.com/us-real-retail-sales-growth  This figure is an overstatement, because the measurement of inflation has been revised in ways that understate inflation. As an example, the consumer price index, which formerly measured the cost of a constant standard of living, now measures the cost of a  variable standard of living.  If the cost of an item in the index rises, the item is replaced by a lower cost alternative, thus reducing the measured rate of inflation. Other price increases are redefined as quality improvements, and their impact on inflation is neutralized.

Real retail sales cannot grow when “for most U.S. workers, real wages have barely budged in decades.”  https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

For full-time employed men real wages have fallen 4.4% since 1973. https://www.businessinsider.com/record-median-household-income-is-hiding-a-chilling-fact-2017-9

Economic shills explain away the facts.  For example, they argue that people are working more hours, so their real earnings are up although their real wages are not.

Others argue that the declining labor force participation rate reflects baby boomer retirements.  Of course, if you look around in Home Depot and Walmart, you will see many retirees working to supplement their Social Security pensions that have been denied cost of living adjustments by the undermeasurement of inflation.

Other economic shills say that the low unemployment rate means there is a labor shortage and that everyone who wants a job has one.  They don’t tell you that  unemployment has been defined so as to exclude millions of discouraged workers who could not find jobs and gave up looking.  If you have not looked for a job in the past 4 weeks, you are no longer considered to be in the work force.  Thus, your unemployment does not count.

It is expensive to look for employment.  Scarce money has to be spent on appearance and transportation, and after awhile the money runs out.  It is emotionally expensive as well.  Constant rejections hardly build confidence or hope.  People turn to cash odd jobs in order to survive.  It turns out that many of the homeless have jobs, but do not earn enough to cover rent.  Therefore, they live on the streets.

The propagandistic 3.5% unemployment rate (U3) does not include any of the millions of discouraged workers who cannot find jobs.  The government does have a seldom reported U6 measure of unemployment that includes short-term discouraged workers.  As of last month this rate stood at 7.1%, more than double the 3.5% rate. John Williams of shadowstats.com continues to estimate the long-term discouraged workers, as the government formerly did.  He finds the actual US rate of unemployment to be 21%.

The 21% rate makes sense in light of Census Bureau reports that one-third of Americans age 18-34 live at home with parents because they can’t earn enough to supprt an independent existence.https://www.cnsnews.com/news/article/terence-p-jeffrey/census-more-americans-18-34-now-live-parents-spouse

According to Federal Reserve reports, 40 % of American households cannot raise $400 cash.https://www.cnbc.com/2018/05/22/fed-survey-40-percent-of-adults-cant-cover-400-emergency-expense.html

The US economy was put into decline by short-sighted capitalist greed.  When the Soviet Union collapsed in the last decade of the 20th century, India and China opened their economies to the Western countries.  Corporations saw in the low cost of Chinese and Indian labor opportunities to increase their profits and share prices by producing offshore the goods and services for their domestic markets.  Those hesitant to desert their home towns and work forces were pushed offshore by Wall Street’s threats to finance takeovers unless they increased their profits.

The shift of millions of high productivity, high value-added American jobs to Asia wrecked the careers and prospects of millions of Americans and severely impacted state and local budgets and pension funds. The external costs of jobs offshoring were extremely high. The cost to the economy far exceeded the profits gained by jobs offshoring. Almost overnight prosperous American cities, once a source of manufacturing and industrial strength, became economic ruins.https://www.claritypress.com/product/the-failure-of-laissez-faire-capitalism/  The “trade war” with China is an orchestration to cover up the fact that America’s economic problems are the result of its own corporations and Wall Street moving American jobs offshore and because the US government did nothing to stop the deconstruction of the economy.

The Reagan administration’s supply-side economic policy, always misrepresented and wrongly described, cured stagflation, the malaise of rising inflation and unemployment described at the time as worsening “Phillips curve” trade-offs between inflation and unemployment.  No one has seen a Phillips curve since the Reagan administration got rid of it.  The Federal Reserve hasn’t even been able to resurrect it with years of money printing.  The Reagan administration had the economy poised for long-run non-inflationary growth, a prospect that was foiled by the rise of jobs offshoring.

Normally a government would be protective of jobs as the government wants to take in tax revenues rather than to pay out unemployment and social welfare benefits.  Politicians want economic success, not economic failure.  But greed overcame judgment, and the economy’s prospects were sacrificed to short-term corporate and Wall Street greed.

The profits from jobs offshoring are short-term, because jobs offshoring is based on the fallacy of composition—the assumption that what is true for a part is true for the whole.  An individual corporation, indeed a number of corporations, can benefit by abandoning its domestic work force and producing abroad for its domestic market. But when many firms do the same, the impact on domestic consumer income is severe. As Walmart jobs don’t pay manufacturing wages, aggregate consumer demand takes a hit from declining incomes, and there is less demand for the offshoring firms’ products. Economic growth falters.  When this happened, the solution of Alan Greenspan, the Federal Reserve Chairman at the time, was to substitute an expansion of consumer debt for the missing growth in consumer income.  The problem with his solution is that the growth of consumer debt is limited by consumer income.  When the debt can’t be serviced, it can’t grow. Moreover, debt service drains income into interest and fee charges, further reducing consumer purchasing power. Thus, the offshoring of jobs has limited the expansion of aggregate consumer demand.  As corporations are buying back their stock instead of investing, there is nothing to drive the economy.  The economic growth figures we have been seeing are illusions produced by the understatement of inflation.

Much of America’s post-World War II prosperity and most of its power are due to the US dollar’s role as world reserve currency.  This role guarantees a worldwide demand for dollars, and this demand for dollars means that the world finances US budget and trade deficits by purchasing US debt.  The world gives us goods and services in exchange for our paper money.  In other words, being the reserve currency allows a country to pay its bills by printing money.

A person would think that a government would be protective of such an advantage and not encourage foreigners to abandon dollars.  But the US government, reckless in its arrogance, hubris, and utter ignorance, has done all in its power to cause flight from the dollar.  The US government uses the dollar-based financial system to coerce other countries to accommodate American interests at their expense.  Sanctions on other countries, threats of sanctions, asset freezes and confiscations, and so forth have driven large chunks of the world—Russia, China, India, Iran—into non-dollar transactions that reduce the demand for dollars. Threats against Europeans for purchasing Russian energy and Chinese technology products are alienating elements of Washington’s European empire.  A country with the massive indebtedness of the US government would quickly be reduced to Third World status if the value of the dollar collapsed from lack of demand.

There are many countries in the world that have bad leadership, but US leadership is the worst of all.  Never very good, US leadership went into precipitous and continuous decline with the advent of the Clintons, continuing through Bush, Obama, and Trump.  American credibility is at a low point. Fools like John Bolton and Pompeo think they can restore credibility by blowing up countries.  Unless the dangerous fools are fired, we will all have to experience how wrong they are.

Formerly the Federal Reserve conducted monetary policy with the purpose of minimizing inflation and unemployment, but today and for the past decade the Federal Reserve conducts monetary policy for the purpose of protecting the balance sheets of the banks that are “too big to fail” and other favored financial institutions.  Therefore, it is problematic to expect the same results.

Today it is possible to have a recession and to maintain high prices of financial instruments due to Fed support of the instruments. Today it is possible for the Fed to prevent a stock market decline by purchasing S&P futures, and to prevent a gold price rise by having its agents dump naked gold shorts in the gold futures market.  Such things as these were not done when I was in the Treasury.  This type of intervention originated in the plunge protection team created by the Bush people in the last year of the Reagan administration.  Once the Fed learned how to use these instruments, it has done so more aggressively.

Market watchers who go by past trends overlook that today market manipulation by central authorities plays a larger role than in the past. They mistakenly expect trends established by market forces to hold in a manipulated economic environment.

Dr. 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. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the WestHow America Was Lost, and The Neoconservative Threat to World OrderDonate and support Dr, Roberts Work.

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See Also

Watch: The Men Who Stole the World: Inside the 2008 Financial Crisis: A look at how top executives on Wall Street helped trigger a global financial crisis – and how it may happen again.

Stocks Move Lower on Economic Data, Powell Remarks

Watch: The Men Who Stole the World: Inside the 2008 Financial Crisis: A look at how top executives on Wall Street helped trigger a global financial crisis – and how it may happen again.

The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of Information Clearing House.

Hacker News: OpenSSH Now Encrypts Secret Keys in Memory Against Side-Channel Attacks

June 22, 2019     

openssh side channel vulnerability

 

In recent years, several groups of cybersecurity researchers have disclosed dozens of memory side-channel vulnerabilities in modern processors and DRAMs, like RowhammerRAMBleedSpectre, and Meltdown.

Have you ever noticed they all had at least one thing in common?

That’s OpenSSH.

As a proof-of-concept, many researchers demonstrated their side-channel attacks against OpenSSH application installed on a targeted computer, where an unprivileged attacker-owned process exploits memory read vulnerabilities to steal secret SSH private keys from the restricted memory regions of the system.

That’s possible because OpenSSH has an agent that keeps a copy of your SSH key in the memory so that you don’t have to type your passphrase every time you want to connect to the same remote server.

However, modern operating systems by default store sensitive data, including encryption keys and passwords, in the kernel memory which can not be accessed by user-level privileged processes.

But since these SSH keys live on the RAM or CPU memory in plaintext format, the feature is susceptible to hacking attempts when the attacks involve memory read vulnerabilities.

OpenSSH Now Stores Only Encrypted Keys in the Memory

Here’s good news — it’s not the case anymore.

The latest update from the OpenSSH developers resolves this issue by introducing a new security feature that encrypts private keys before storing them into the system memory, protecting it against almost all types of side-channel attacks.

According to OpenSSH developer Damien Miller, a new patch to OpenSSH now “encrypts private keys when they are not in use with a symmetric key that is derived from a relatively large “prekey” consisting of random data (currently 16KB).”

“Attackers must recover the entire prekey with high accuracy before they can attempt to decrypt the shielded private key, but the current generation of attacks have bit error rates that, when applied cumulatively to the entire prekey, make this unlikely,” Miller explains.

 

“Implementation-wise, keys are encrypted ‘shielded’ when loaded and then automatically and transparently unshielded when used for signatures or when being saved/serialized.”

It should be noted that this patch just mitigates the threat and is not a permanent solution. Miller says OpenSSH will remove this protection against side-channel attacks in a few years when computer architecture becomes less unsafe.

The real freedom is freedom from any ideology. Can’t you simply live without any ideology? Is an ideology needed? Why is an ideology needed so much? It is needed because it helps you to remain stupid, it is needed because it helps you to remain unintelligent. It is needed because it supplies you readymade answers and you need not find them on your own.

The real man of intelligence will not cling to any ideology — for what? He will not carry a load of readymade answers. He knows that he has enough intelligence so that whatever situation arises, he will be able to respond to it. Why carry an unnecessary load from the past? What is the point of carrying it?

And in fact the more you carry from the past, the less you will be able to respond to the present, because the present is not a repetition of the past, it is always new, always always new.

— Rajneesh

♪Vivaldi Four Seasons: “Winter” (L’Inverno), complete; Cynthia Freivogel, Voices of Music 4K RV 297

Q. Where can I learn more about this music? A. You can visit our website, https://www.voicesofmusic.org/ Also, subscribe to our video channel! Just click on the logo on our videos. Q. Where can we hear you play in concert? A. We perform in the San Francisco Bay Area. For a concert schedule, visit our website or join our mailing list https://www.voicesofmusic.org/ Q. Where can I buy CDs? A. Our CDs are available on iTunes, Google, Amazon, CD Baby and just about everywhere; you can also buy a CD in a jewel case from Kunaki: https://www.voicesofmusic.org/cds.html Q. What is Early Music performance, or historical performance? A. We play on instruments from the time of the composers, and we use the original music and playing techniques: it’s a special sound. Q. Why are there no conductors? A. Conductors weren’t invented until the 19th century; since we seek to recreate a historical performance, the music is led from the keyboard or violin, or the music is played as chamber music~or both 🙂 Q. What are period instruments or original instruments; how are they different from modern instruments? A. As instruments became modernized in the 19th century, builders and players tended to focus on the volume of sound and the stability of tuning. Modern steel strings replaced the older materials, and instruments were often machine made. Historical instruments, built individually by hand and with overall lighter construction, have extremely complex overtones—which we find delightful. Modern instruments are of course perfectly suited to more modern music. Q. Why is the pitch lower, or higher? A. Early Music performance uses many different pitches, and these pitches create different tone colors on the instruments. See https://goo.gl/pVBNAC Vivaldi’s brilliant concerto is here presented complete in 4K, ultra high definition video, performed on original instruments. For this video, a new edition was prepared from the original sources, prints and manuscripts for Vivaldi’s music. In addition, a digital overlay has been created for Vivaldi’s sonnets which were inlaid into the original engraving: click the CC button to view the sonnet and the gear icon to choose your preferred language. Voices of Music is creating a worldwide digital library of music videos, recordings and editions, free for anyone in the world. To support this vital project, which will enable new generations of people all around the world to enjoy Classical music, please consider a tax-deductible donation or sponsor a recording project. With your help, anything is possible! https://voicesofmusic.org/donate.html Voices of Music continues our groundbreaking work as a pioneer in the new field of Ultra-High definition video. Although the Four Seasons is the most recorded work in Classical music, this is the first time that the work is made freely available in this format, and performed on period instruments. Your donations will keep the presses running!

 

♫ Our House ♫

Perfectly cozy love song, sung with such grace and ease, that’s love. 🙂

Filosofa's Word

I keep having these strange days where nothing quite seems as it should be.  I go into the kitchen for the sole purpose of cleaning my glasses.  I make a cup of coffee, put a couple of dishes in the dishwasher, see a bit of something on the countertop and wipe it down, check the freezer to … what?  Make sure there is still food in it?  Open the dryer … oops, forgot to fold the towels.  Fold the towels.  Bring the coffee back into the living room, sit down, pick up the laptop and … why is everything so blurry?  Oh yeah … I forgot to clean my glasses.  I blame all this on Donald Trump and his supporters.  Anyway, this song popped into my head while I was rolling smokes tonight, and I thought that somehow it fits my mood just perfectly!

Our House, released in September 1970…

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Student debt forgiveness and the upcoming 2020 election!

Excerpt from Money:

I’m a 29-Year-Old With $235k in Student Debt. I’ll Never Pay It Back.

I have $235,000 of student debt. The first $120,000 came with a bachelor’s degree from my state school. Another $70,000 or so came with my master’s degree. The remainder is accrued interest.

The suggested minimum monthly payment on my private debt alone is approximately $1,200. For reference: that’s nearly rent for the 600-square-foot apartment where I live with my partner in New Jersey.

Without income driven repayment, the minimum payment amount for my federal student debt would be around $1,000.

I would have to begin devoting half of my income to debt payment if I cared to pay it off by 2042. I can’t do that because I make just under $4,000 per month. And that income is a fairly new development in my life. Why would I choose to pay down my debt if it meant I wouldn’t be able to afford basic living expenses?

Short of winning the lottery, there’s no way I could ever afford to pay off my debt. And though I have a higher debt burden than most, I’m certainly not alone.

One in four American adults has student debt. And that amount will grow over the coming years. Seven in 10 college graduates are now graduating with student debt, with the greatest burden falling on people of colorlow-income borrowers, and women.

Meanwhile more and more people can’t make their minimum payments.

The price of a college education has quadrupled since the 1980s while wages haven’t budged and rents went up by 50 percent. No wonder nearly 5 million American are in default on their student loans. At this rate, 40 percent of borrowers are expected to be in default by 2023.

I’m privileged to have made it through the first few years of repayment. With a financial hardship agreement with Sallie Mae, my parents – cosigners on my private loans – pay $600 per month to keep default at bay from our family and allow me to live a decent life. And through an income driven repayment plan (IDR) with Navient, I’ve been paying less than $50 per month on my public loans, though that could change as my income changes.

My parents cosigned my loans because we’re first-generation immigrants. Moving to the U.S. was about giving me a chance to live my best life. College was a critical component and we couldn’t afford it any other way. The only reason they can afford those $600 monthly payments now is because they paid off their 30-year mortgage just a few years ago.

My parents are in their 60s and 70s and will live the rest of their lives with my student debt. Likely so will I. Again – we won’t be alone.

Three million Americans over the age of 60 are paying off student debt. Approximately 40,000 of them are having Social Security or other government payments garnished.

College was supposed to be about getting ahead in life. But it’s become a driver of inequality.

It does not have to be this way.

Some economists say that forgiving student debt would boost GDP by $100 billion per year for ten years and add several million jobs to the economy. It would unlock the capacity of 44 million Americans to buy homeslaunch small businesses, and retire with dignity.

Congress could pay for it by repealing the $1.5 trillion tax cut it passed in 2017. Primarily benefiting the wealthy and corporations, even Goldman Sachs says that whatever economic boost the tax cut brought with it has passed.

And to keep future generations from suffering under the burden of student debt, Congress could make public colleges, universities, and trade schools in the United States free.

The federal government already spends $80 billion per year on grants and tax breaks for students pursuing higher education. It spends another $100 billion every year issuing new student loans.

That’s $180 billion the U.S. could stop spending on a broken system if it decided to invest it in a new one. Coincidently, that amount is more than enough to cover the cost of that new system.

Tuition at public institutions of higher education totals $63 billion. Add cost of living and that number reaches $127 billion. With the remaining $53 billion, the U.S. can invest in expanding access to higher education with job training and small business accelerators.

Until then, I’m focused on keeping the cost of servicing my debt low while I do other things a 29-year-old should be doing, like saving for an emergency fund or a down payment on a house.

I’m spending my money in a way that invests in my future. Can the country do the same?

Quote of the day

Once you are in a relationship you start taking each other for granted. That’s what destroys all love affairs. The woman thinks she knows the man, the man thinks he knows the woman. Nobody knows either. It is impossible to know the other, the other remains a mystery. And to take the other for granted is insulting, disrespectful.

To think that you know your wife is very very ungrateful. How can you know the woman? How can you know the man? They are processes, they are not things. The woman that you knew yesterday is not there today. So much water has gone down the Ganges; she is somebody else, totally different. Relate again, start again, don’t take it for granted.

And the man that you slept with last night, look at his face again in the morning. He is no more the same person, so much has changed. So much, incalculably much, has changed.

That is the difference between a thing and a person. The furniture in the room is the same, but the man and the woman, they are no more the same. Explore again, start again.

That’s what I mean by relating.

Rajneesh