The January jobs report from the Bureau of Labor Statistics continues the bad news of the past four years. During President Bush's first term, the US economy had a net loss of three-quarters of a million private sector jobs. Despite three years of economic recovery, fewer Americans are employed in the private sector today than when Bush was first inaugurated four years ago.

The slight decline in the unemployment rate reported for January is not the result of new jobs; it is the result of large numbers of discouraged people, many with university degrees, dropping out of the work force. They cannot find employment and have given up looking.

During Bush's first term, the once fabled US economy has been unable to create jobs in export sectors or in import-competitive sectors. January's 134,000 new private sector jobs are in domestic services that cannot be outsourced: couriers and messengers, food services and drinking places, health care and social assistance, educational services, temporary help, retail, and credit intermediation.

US imports are now 50 percent greater than US exports, putting tremendous pressure on the US dollar. US dependence on imported manufactured goods has resulted in exploding trade deficits, which are growing more than five times faster than the US economy. The explosive growth of the US trade deficit since 1990 has turned $3.3 trillion of US assets over to foreigners.

Flooded with US dollars, foreigners perceive their dollar holdings to be rapidly depreciating. The dollar has fallen dramatically against the Euro, gold, and the British pound.

At an international economic meeting in Davos, Switzerland on January 26, the director of a Chinese National Economic Research Institute announced that China has lost faith in the stability of the US dollar. "Now people understand the US dollar will not stop devaluating," said Fan Gang.

One likely result of this realization is that foreigners will cease to use their trade surpluses to mop up American red ink. It makes no sense to purchase dollar assets such as Treasury bonds when they are falling in value. As foreigners continue to move out of dollars, US interest rates will rise, terminating the housing boom and wrecking family finances.

America's growing dependence on imports reflects the outsourcing of manufacturing jobs and knowledge services. Every time a US firm outsources goods or services, it turns domestic production into imports. Half of the US trade deficit with China represents US offshore production for US markets.

Interest groups that benefit from outsourcing and their spokespersons who cloak themselves in free-trade rhetoric maintain that there is nothing to worry about. Outsourcing, they claim, strengthens the US economy and creates jobs. If that were true, wouldn't economic strength translate into dollar strength? If outsourcing creates US jobs, wouldn't some of those jobs be in the export sector?

Average weekly pay in the US is declining in real terms. Obviously, if outsourcing is creating jobs, they are less good jobs than the ones being outsourced. Trading better jobs for worse ones is the road to poverty, not the road to wealth.

The dismal US performance in job and pay growth is despite the most stimulative monetary and fiscal policy in my lifetime. If the lowest US interest rates in memory, tax cuts and the biggest budget deficits in US history cannot create jobs and boost pay, what can?

Charles McMillion of MBG Information Services notes that normally a 38-month old economic recovery would have raised hours paid by 11% to 14%. The 38-month old Bush recovery has raised hours paid by less than one percent!

The clowns in Washington DC imagine that they sit astride a Superpower. Absorbed in fantasies of invading countries and remaking the world in America's image, little do our deluded leaders realize that America is in the hands of our Chinese and Japanese creditors. Should either of these Asian powerhouses decide to stop mopping up America's red ink, the dollar would collapse to such an extent that it would lose its reserve currency status.

When the dollar ceases to be the reserve currency, America will cease to be a superpower.

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Paul Craig Roberts is the author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice. Click here for Peter Brimelow's Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.