Too much debt from both the government and the individual CAUSED the crisis, and all further debt-driven spending will do is make the crisis worse and delay it for a short period of time. I’m talking about outcomes 3 to 5 years down the road at the current rate which can be averted IF YOU DO SOMETHING NOW; all government stimulus will do is the same thing it has done already, and that is temporarily increase productivity by front loading demand and when the stimulus is gone the demand will fall to a lower level (because everyone who would have bought in over the next 12 months was attracted by the temporary incentives).

I’m one of those weird people who was reading about and warning people of the housing bubble in 2003 and 2004 and back then people had the same attitude as you have now; essentially "Its not an immediate problem so why should we do anything about it?" ... In 5 to 10 years you'll be wishing the US only had 15% unemployment.

No I think you misunderstood what caused the crisis, it wasn't the debt but the excess risk that precipitated the crisis.

No further deficit driven spending is the only thing keeping things afloat, without it, we'd be heading into a downwards cycle, perhaps a permanent one.

Ummm, so was I, I was telling people back in the early 2000's that we'd have another downturn that could become a depression, so you aren't unique in that regard, but you seem to be misunderstanding the problem we are facing, you keep trying to argue that the economy will recover if we pull spending, when in fact, that's the exact opposite of what will happen.  If we pull spending, there will be more unemployment, a lot more, and a lot less investment and consumption, and this would happen in months, not the years that even in the worst case scenario, your concerns would occur, this is what it boils down to, what is the immediate concern, the state of the economy, the debt is a longer term concern, something that will need to be addressed, but only once this current crisis is over.

So, axt, what exactly are we spending on that is preventing the depression?

You've said it a lot, but haven't pointed to specific things. I'd like to hear exactly what we're spending money on that is preventing a total collapse.

I think the best thing to keep in mind during all of this economic uncertainty is that the world economy will all crash eventually.  The amount of debt that the US and other countries carry are not sustainably.  All we are doing is delaying the certainty of economic destruction.  The question you have to ask yourself is what can you do to help youself.

1) Pay off as much of your debt as you can.  Any debt you have when the economy goes south will be exponentionally more difficult to pay off.

2) Keep some cash on hand.  In an economic breakdown liquidity is king.  It would also be a good idea to have some money in gold, silver, or other precious metals since they are the only real intrinsically valuable money.

In summary, realize that the world's approach to money will fail eventually. All you can do is put yourself in the best poaition that you can.

When the entire economy collapses and people are resorting to barter, because money is worthless, what the heck is gold and silver going to get you?  Yes, get out of debt, but I think far more important is to possess skills people have use for and need, so you can get basic food and water and clothing and shelter.  Gold and silver and precisions metals are good when you have a stable economy, and want to hedge against inflation.  But, in a total meltdown, exactly what is it worth?  People would only want it, if others want it.

Look this is crazy.  Even if the world economy totally collapses the idea of money is practically hardwired into our society at this point.  Furthermore gold and silver has been valuable for just about as long as we have had civilization.  If people decided not to place very high value on gold and silver anymore it would be just about the first time since the stone age. 

*sigh* again, and again, our biggest danger RIGHT NOW, is DEFLATION.

http://inflationdata.com/inflation/inflation_rate/CurrentInflation.asp

Current Inflation Rate

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ave 2010 2.63% 2.14% 2.31% 2.24% 2.02% NA NA NA NA NA NA NA NA 2009 0.03% 0.24% -0.38% -0.74% -1.28% -1.43% -2.10% -1.48% -1.29% -0.18% 1.84% 2.72% -0.34% 2008 4.28% 4.03% 3.98% 3.94% 4.18% 5.02% 5.60% 5.37% 4.94% 3.66% 1.07% 0.09% 3.85% 2007 2.08% 2.42% 2.78% 2.57% 2.69% 2.69% 2.36% 1.97% 2.76% 3.54% 4.31% 4.08% 2.85% 2006 3.99% 3.60% 3.36% 3.55% 4.17% 4.32% 4.15% 3.82% 2.06% 1.31% 1.97% 2.54% 3.24% 2005 2.97% 3.01% 3.15% 3.51% 2.80% 2.53% 3.17% 3.64% 4.69% 4.35% 3.46% 3.42% 3.39% 2004 1.93% 1.69% 1.74% 2.29% 3.05% 3.27% 2.99% 2.65% 2.54% 3.19% 3.52% 3.26% 2.68% 2003 2.60% 2.98% 3.02% 2.22% 2.06% 2.11% 2.11% 2.16% 2.32% 2.04% 1.77% 1.88% 2.27% 2002 1.14% 1.14% 1.48% 1.64% 1.18% 1.07% 1.46% 1.80% 1.51% 2.03% 2.20% 2.38% 1.59% 2001 3.73% 3.53% 2.92% 3.27% 3.62% 3.25% 2.72% 2.72% 2.65% 2.13% 1.90% 1.55% 2.83% 2000 2.74% 3.22% 3.76% 3.07% 3.19% 3.73% 3.66% 3.41% 3.45% 3.45% 3.45% 3.39% 3.38% Note: Red indicates Deflation, NA indicates data not yet released. Get more Historical Data from InflationData.com

For christ sake, we even had brief momments of it, and the fed and government absolutely shit themselves.

Look, you know the Microeconomic supply and demand curve right? Replace Price with Aggregate Price, and Quantity of G&S with GDP/Output.

What happens when Short Term Aggregate Demand goes down (in other words, what happens when everyone begins to hide money in their pillows, rather than buying stuff)? There's less quantity demanded at every aggregate price level. Therefore, output has to go down, along with inflation rates. If disinflation continues, then it'll eventually become deflation.

So much pseudo monetary policists talking about crowding out, despite interest rates being close to 0%, well what the fuck is going to happen to investment when we have deflation? What will happen to consumer spending when there is deflation? What do you think the confidence of debt holders will be when we enter a deflation, a fucking Third Depression?

Shift the yellow line to the left.

Akvod -

I would read what everyone is saying when we tie inflation in with quantiative easing as opposed to austerity when it comes to deficit spending. That is, that the easiest way for America to get out of its $13 trillion debt commitment is to create $13 trillion USD...As opposed to, you know, fix the system.

Do you want to completely pay off 13 trillion dollars in a short period of time? Because that's ridiculous in my opinion. The best way to deal with our debt, right now and in the long run, is to fight this recession, and then as educated voters, get our politicians to commit themselves to counter cyclical policy, spending during recessions, saving during expansions, and ensure steady economic growth.

Both voters and politicians do the exact opposite thing we should have done >.< And they all work hand in hand, despite voters complaining about politicians. We were the ones that ultimately asked for the Iraq and Afghan war. We were the ones that asked for low taxes. We were the ones that drove the fucking bubble.

Now it's even worse. People are asking for one thing, but asking for another. Cut spending, but don't cut benefits, raise taxes, reform health care, quit the war, etc. Drill oil, but don't.

I mean, I really feel depressed, because it's irrationalism. Irrationalism is ruling everything. I'm not saying that people are irrational because they're wrong. I don't care if people have different views and arguments. But the problem is, people are saying stuff, but blatantly contradicting reality, and themselves.

You use gold and silver in economies AS money.  The thing is that, when markets break down, and people can't trust anything, and get basic goods and services, they want food and clothing.  They don't want gold or silver.  You can historically see what happens, from Katrina onward, and even the Soviet Empire.  People bartered goods and services.

Watch this: