Oscar Wilde once said “A cynic is a man who knows the price of everything and the value of nothing.” Perhaps he might better have aimed the barb at economists, who tend to look at the economy solely in terms of money. Sometimes it is worth stripping away the money aspect, because it is at best a rubbery yardstick and at worst a conjurer’s wand, providing the illusion of wealth and success where neither exists. The Fed has used monetary policy to accelerate consumption. Easy credit and low interest rates encourage present consumption and discourage deferred gratification. The justification is that the demand for goods and services stimulated by credit results in more investment, thence more production, thence more goods and services to distribute around the population, thence a higher standard of living for everyone.

Unfortunately, this hasn’t worked out. More goods and services have been produced, but they have been distributed mostly to the self-appointed elites of government, finance, law, medicine and the boardroom. Most people are no better off, and in many cases worse off in real terms, than they were twenty years ago. Worse than that, people who thought they were amongst the better off are seeing their houses, cars and assets seized when they cannot pay their debts. Communities are left with streets of overgrown lawns and vandalized houses. Unemployment is rising. The industrial base has been eroded and moved offshore, where the citizenry has been more willing to defer consumption and invest in the education and training, the plant and equipment to produce the goods and services that Americans want. The country’s infrastructure is falling apart from lack of maintenance, let alone replacement or improvement. The education system is producing five times as many lawyers as engineers - because engineering is too hard. While the elites worship celebrity chefs, the use of food stamps is at record levels.

And yet the government has the nerve to claim that the economy is growing. No. America is consuming itself.