Economics 101 why America can’t get out of this depression

Economists are touting the great strides consumers are making in paying down their debt, but in prompting this illusion they have tuned to the wrong channel.

The real reason many Americans’ went into debt was because their wages didn't keep up with the costs of goods and services. The median wage (adjusted for inflation) dropped between 2001 and 2007, the last purported economic expansion. And that was one of the primary reasons America began borrowing the equity out of their homes, in many cases it was to be able to make the payments and retain some semblance of a purchasing power.

A recession had already begun in 2000, and by September 11, the economy came to an abrupt stand still. What brought us out of that bog was the ability to draw on our own assets. That is what actually maintained the appearance of a robust economy, but that was an appearance only!

As the bubble began to burst, most of the borrowers; that class between poverty and abundance all but threw in the towel

The common wisdom today among Wall Street’s elite is that excessive debt-financed spending was one of the causes of the recent recession; to the contrary, that was what brought America out of the last recession. It was when the ability of borrowers to refinance their assets in order to maintain the economy fell apart that we dropped right back into the fan.

So now Americans out of work and living with much less income from working fewer hours have no choice but to cut back their debt load and perhaps this is why millions have either stopping making their mortgage payments, and in some cases actually filed for bankruptcy.

Consumer spending is 70 percent of the economy. Since consumers had until the financial collapse traditionally lived with their credit cards outstretched, it helps explain why so few jobs are being created, aside from the fact that everything has been outsourced; and it explains why we can't escape the gravitational pull of this Depression without far more government spending. However should government continue to spend like a drunken sailor it will inevitable crush the US economy even further, it seems to be an impasse we are disaster-prone either way we go.

It's also a bad prophecy for the future.

Moving out of a recession and into a recovery?

If you love a good story you’ll love the latest novelette published by the FED. It’s full of hope and optimism, and dreams and imaginings and its heart wrenching. If only it were true!

According to the latest vision of the FED who now claims to have conducted a poll, the FED found that we are moving out of a recession and into a recovery. What a great story and I only wish it was true, but as I am not an ostrich I don’t buy it.

Just like GM paid off their obligation to the US government was supposed to make us believe that GM had turned around, those who read my articles know I called the shot on what really occurred. GM paid back the government with the money it borrowed from the government.

Now the real polls taken in the past couple of days show a much different story, and it’s one that is much more pessimistic. Only 29% of Adults now believe the economy is getting better. That’s down from 34% before the jobs report last week. But these are the 10% at the top; a remarkable 71% of the population isn’t buying into the propaganda.

And it’s the same among investors, 36% believe the economy is getting better while 42% say it’s getting worse. Before Friday’s report, investors were more evenly divided with 41% thinking that the economy is getting better and 39% offering the more realistic and sadly pessimistic view.

On the night that Lehman Brothers collapsed to begin the financial industry meltdown, 43% of Americans rated their own personal finances as good or excellent. Just 31% of Americans are now that upbeat about their own financial situation.

Today, only 24% believe their personal finances are getting better while 46% say they are getting worse with 30% remaining constant fairly equal to those who currently believe the economy is improving. And the FED acknowledged, economic growth won't be strong enough to bring speedy relief to millions of out-of-work Americans. Growth in the early stages of economic recoveries is usually much stronger. That's not happening this time because consumers and businesses haven't shown signs that they are inclined to go on spending sprees. There continues to be one important element that remains elusive, it’s called JOBS!

Without them there can’t be a real and meaningful recovery, what the FED fails to mention in its work of fiction is that what economy there is has been created by what his Wall Street friends have characterized as “Strategic Defaulters” home mortgage borrowers who have intentionally made a decision to stop making their mortgage payments and are instead spending the money.