The failure, of the neo-keynesian ideologues relative to the advice they have provided US national policymakers, is greatly compounded by the metaphysical belief that business cycles tend toward equilibrium. Thus, Wallstreet traders and investors live with the quasi-religious hope that time will heal all because of their expectation the business cycle will include a snap back into growth. This is, of course, a misplaced hope. Worse, it is a hope, that is transmitted to the Congress and the President daily.
The sad reality is the decline of the economy will continue until such time as the level of private debt is brought down relative to GDP. Unemployment is a function of the size of the private and public debt which has now reached exponential growth. Currently, the debt is more than 400 percent of GDP. Of even greater concern is the push by conservatives under the impulse of advice from some Austrian economists to contract the economy through the elimination of safety net programs. While reducing the debt makes sense, eliminating the safety net makes a bad situation worse.
If this analysis is correct, then it behooves all Americans to prepare for the slow decline and potentially severe and volatile downturn that will affect our lives and those of our neighbors.