ID:39674
 
The US economy will go into a recession within the next 2-3 years no matter how the government tries to fix the situation, or how far negative the Fed lowers rates. The only thing the Fed and the government can feasibly do is delay and worsen a recession.

Reasons for the current recession:
Government Spending:
400 Billion in deficit spending for 2009(French Revolution anyone?)
$430 - 553.5 Billion Overseas military spending

Economy: 700 Billion US Trade Deficit and growing.

That means that roughly 1.1 trillion of US dollars is sent out of the country each year, and at least 400 billion is borrowed by our government from it's own people, or from countries like Russia or China.

2008-02/Strawgate-0001/Economic Growth - Trade Balance.jpg


The only way for equilibrium to be maintained is for US citizens or companies to:
A. Take out credit, balancing the money going out.
B. Sell Assets, which has been seen on a large scale as of late with companies being bought by foreigners.

When a country runs out of willing companies to sell assets, and the people are maxed out on credit, two things happen, the money supply retracts, causing the government to issue currency, causing inflation. There is less money staying in the economy meaning business will slowly downsize, causing unemployment.

Inflation + Rising unemployment = StagFlation!

Don't worry, the US won't go into a recession forever, the recession will end with either:
A. Government Intervention, delaying a recession and further worsening it.
B. A prolonged recession with a drop in the dollar reducing the services sector, and boosting the manufacturing sector within our country. Thus raising exports, and lowering imports, which has happened during every single US recession.

What are you talking about? This will all be avoided when we get our $600 checks that will be mailed in 6 months.
I'm moving to Canada.

srsly
Word! Actually, a lot of the money isn't being borrowed from We The People, but from our progeny who will be stuck with debt that they couldn't vote for! We taxpayers are just paying back the debt our ancestors voted for when we couldn't vote.

Even cannibals don't eat their own children!