That doesn't make sense. If people spend all the money, they will not have reduced their debts by that amount... so the root cause for the recession will still be there.

Spending too much and taking on too much debt is what got the US in the mess it's in. What's the main reason to believe it will be any different this time?

People are already saving more money than before. Getting rid of debt and creating savings is what will make people financially healthy enough to consume in the future. At a lower level than they consumed in the past few years.

You seem to be having trouble understanding, so i'll try explaining it again. See the concern isn't the Debt its the lack of consumption and investment, now when government spends those billions that money enters the economy, they buy stuff, labor, goods, services, and materials, that goes to people and companies who save some of it and spend some of it, it doesn't matter who you are NJ5, even in this economy you are still spending some of your money, the money that isn't saved or used to pay off debts is then used to buy things, which means the money continues on the chain, at each stage some gets saved or used to pay down debts but some gets spent. This how a few hundred billions can result in trillions in effect, now for the government taking on debt isn't a concern in the short term which is why it doesn't really matter right now if they are going into debt, bcause they can continue to deficit spend in the short term.

I do understand, we keep coming back to the same point, which is:

So your point is that all the consumption money comes from the government, and people are still as indebted as before. What happens when Uncle Sam's tap gets turned off? People's problems are still as big as before, and the government and taxpayers are poorer.

By the way, since we're talking about the stimulus I found this graph, which consists of the White House's original pitch for the stimulus, plus 5 months of data of what actually happened in terms of unemployment.

This should tell you how much the effect of the stimulus plan is understood by those who proposed it...

Dark blue line - the White House's estimation of unemployment with the stimulus plan.

Light blue line - the White House's estimation of unemployment without the stimulus plan. 

Red dots - what actually happened

Tjhe problem is you're making flawed assumptions there, first the liklihood that the US's tap will be shut down any time soon is remote at most, no the US is still the most important single market in the world and will be for the next decade or so, so that won't happen, secondly that people will still be as poor and indebted, consumption is down because people aren't spending as much, meaning they are becoming less indebted.  They are still spending, just not as much, that reduced spending is going into their debts and savings, meanwhile government is working to stimulate production and employment and eventually consumption.

As for the Stimulus plan chart, even the most optimistic economists were saying that that chart was too rosy when it was released NJ5, its called spin, of course the white house wasn't going to tell people that unemployment would be around 10% no matter what.

1- By tap I meant the stimulus funds. How long do you think the USA will have to spend hundreds of billions in stimulus and double its annual deficit?

2- If you saw the data in the last link of the OP, consumer debt decreased by 2.36% in 9 months. This means consumers are very slowly reducing their debt.

3- If you accept that the unemployment charts were spin, how can you still accept the White House's statement that the recession will be over this year or early next year?

Ahh, well when you come from a position of arrogance and speculation, it' hard to see that your wrong.

Someone once said "the British Empire is still the most important single market in the world and will be for the next decade or so, so that won't happen"

You could also replace the US with the Roman Empire, or a dozen other world powers.

Let's look at it from another angle. One day, the US will fall. It will. To think it won't, or can't is to completely disregard history. One day it will fall. What makes you if we keep doing what we are doing, it won't be in your lifetime.

Also, as for that chart, it doesn't show that the economy was worse then expected, it shows that the spending package did nothing. Also, look at the slope of that line. Nothing about it indicates that this will be over before we hit 25%. Nothing.

In fact, nothing is pointing to it being over. For anyone to say we see an end, is not looking at any evidence, they are just guessing.

Like this guy said. The only way for it to end, is for the root problem to be solved. We are not solving the root problem. We aren't even trying. We are just trying to fix the symptoms.

Didn't I just get finished saying the war was its own bubble?  It was government propped up employment, it wasn't economic market based.  Sure, it looks good on paper but we still were not out of the woods yet.

One factor that many people seem to be missing is how the continuing rise in the unemployment rate will cascade through the system and (potentially) create new shocks to the system on the whole.

If we're looking at 11% or 12% unemployment at the end of the year the banks that passed the "Stress Test" under the assumption of 8% unemployment will (potentially) be facing failure again, house prices will continue to fall as mortgages are foreclosed on whem people enter bankruptcy, and companies will be forced to scale back on their work force further because families with reduced income are going to dramatically reduce their spending.

Who said I was accepting their spin? I have my own reasons to believe that the recession will end by the middle of next year.

Maybe its because they don't feel their debt is as crushing as your source seems to believe, if it was, they would be deeper retractions.

US can keep deficit spending for quite some time, so its not really a concern in the short run, after the recession is over it will need to be addressed, but not right now.

Not its not that the war was a bubble, it was thatthere was a period of transition from the war economy to the post war economy, which caused a small postwar recession, however even accepting the recession after the war, the depression was over during the War

That assumes that the banks won't be able to survive the 10-12% unemployment, and that the 10-12% unemployment will alter the number of foreclosures and bankrupticies and spending dramatically over where it is now, and likely a 1-3% increase in unemployment over our current state will not have a drmamatic effect on the economy