“Contained” has been the most popular phrase used by government officials in the past few years to put lipstick on the pig that is the fundamental picture of the American economy. In a way I understand why they are doing it. In their mind, their job is to prevent a total meltdown and encourage consumers to spend. Consumer consumption, after all is 70% of GDP. The goal of inflating 401Ks through an increase of equity assets via devaluation of the dollar has been largely accomplished. People will feel better and more optimistic and spend more. That’s the theory. The problem is many people are not better off, just some are.

In fact we are facing a catastrophe:

A program once scorned as a failed welfare scheme now helps feed one in eight Americans and one in four children.

Poverty in America is rising rapidly. With the contraction of credit and increase in the number of distressed consumers you will not have a sustainable recovery. Keep in mind that the majority of GDP growth currently is due to government spending.