In separate speeches yesterday, both Barack Obama and Federal Reserve Chairman Ben Bernanke acknowledged what everybody already knew, that the economy is slowing down. Appearing before reporters with German Chancellor Angela Merkel, Obama admitted that recent job and unemployment reports were less than positive. Ben Bernanke addressed the International Monetary Conference in Atlanta yesterday, and admitted that the so-called recovery was “frustratingly slow”. Both men still say there will be no double-dip recession, but based on recent polling data, most Americans may agree, as the general attitude is that the recovery has yet to even happen. Therefore, it cannot double-dip if the recession is still ongoing.

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As Bernanke spoke, the Dow Jones Industrial Average, which had rallied earlier Tuesday, nose-dived and ended for the fifth-straight day in the negative. With the second round of quantitative easing winding down shortly, the Fed chairman gave no indication of a QE3. Both Bernanke and Obama also commented on government fiscal policy and budget deficits. The looming debt crisis is pushing America closer to the brink of catastrophe.

In addition to the $14.4 Trillion dollars of ‘on-budget’ debt, also known as the National Debt, one recent study shows that there is some $61 Trillion in unfunded mandates which must be accounted for, amounting to about $524,000 of debt for every man, woman and child in America. Some estimates show this number of unfunded mandates, or unfunded “liabilities and contingencies”, to be much higher, somewhere between $105 Trillion to as much as $200 Trillion dollars.

Now, I do not often quote John Maynard Keynes, as I disagree with his views on economics, but even a stopped clock is right twice a day. In his book, The Economic Consequences of the Peace, Keynes writes about the impact of forcing Germany to pay reparations for World War One. “The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable, abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if [it] did not sow the decay of the whole civilized life of Europe.” He later adds, “And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.”

When we look at the Paul Ryan 2012 budget plan, which proposes to reign in budget deficits within twelve years, and to pay down the National Debt, that $14.4 Trillion, which, under Ryan’s budget will still climb to about $25 Trillion when all is said and done, not until 2040, we are essentially doing to ourselves what Keynes warned about in 1920 of doing to Germany. Condemning a generation, if not two generations, to a miserable life of servitude due to the folly of the past couple generations. Is it any wonder that China dumped 97% of its short-term U.S. Treasury bonds?

The problem with our nation′s economy has long past a point of correcting it with minor ‘tweaks’ and reforms. A recent poll conducted by the Washington Post shows that 89% of Americans have a negative outlook on our economy. Most believe the so-called recovery, which economists claim started in the summer of 2009, never really happened. Between stimulus packages, bailouts and cheap money from the Fed and the U.S. Treasury, at least $4 Trillion dollars, more than 25% of our GDP, has been injected into our economy in the past 30 months and has produced little if any results. Some economists, like former Enron economist Paul Krugman, claim the stimulus was not large enough. Brighter bulbs tend to believe that all of this spending was misdirected, wasted in ways that would not produce any positive results in the first place.

Barack Obama and Ben Bernanke can say whatever they want, but the bottom line is that their policies have been a complete failure. Worse yet, their policies have actually made the long term problems our economy faces even more dire than before. This is why market strategist Peter Yastrow declared last week that “We’re on the verge of a great, great depression.” The current slow down is not just a blip or a bump in the road as the Obama administration is attempting to characterize it. The policies from the White House and the Federal Reserve for the past 30 months have pushed us to edge of an economic disaster.

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