Hi Frank,

The legendary basketball coach John Wooden used to say that you should evaluate players performance not on how they performed, but rather how they performed given their talents. What would the rates look like if there were no Federal Reserve tinkering with interest rates? What would the economy look like if the government never got involved in mortgages - before the crisis? How about after? Would the market have already cleared? Lots of historical evidence of countries letting markets clear, then true recoveries begin. When governments act to put people to work, they displace something else. For many years, governments got away with this game as the debt situation was manageable. However, debt acts to defer the cost of the trade-offs placing them in limbo, until the day of reckoning. As governments push ever-harder to "fix" the problems by plugging every hole in the banking system and/or financial markets, inevitably, the cost is born by the real economy. It is possible that the debt never turns into inflation - but that is only possible if the governments destroy the economy first. And they might just do that.