Is It Decision Time for the 2012 Economy?

The media has been reporting for some time, based on "expert" opinions, that we are in a recovery and that the economy is slowly getting better. There are some data points that are getting better. Afterall, we should get some nominal improvement after the government spent about $10 trillion in the last three years (40% of it borrowed) and the Federal Reserve printed another $3 trillion over the past four years. But, the problem is that it's only temporary. The improvement only lasts as long as the printing presses are running. The net is that the market is being held up by printing money but the economy itself is not improving much.

Now however, we are running out of previously printed money. Quantitative Easing (QE1 and QE2) and the Feds "Twist Program" are winding down. So going forward, we can't get an increase in nominal GDP growth. Therefore, GDP will now start to decline. For example, Goldman Sachs revised its estimate of GDP in the first quarter down twice lat Friday and Bank of America is now at 1.8% for the first quarter. We must print more money to get an increase in GDP.

Yes, both political parties know this and the Federal Reserve knows this as well. But, with current debt at close to $16 trillion, some people are saying no to more debt. Therefore, the government needs to "prove" we need more money printing. After all, elections will be here soon. So, the Federal Reserve needs some bad numbers now to justify printing more money. I wonder about Friday's jobs number. Maybe if gold and silver dropped in value, it would show that debasing the dollar by printing money wasn't the reason for its rise in value. Or maybe a quick hit to the stock market would generate enough fear to do the trick. And, oil needs to come down in price because you can't start a war with oil over $100 per barrel. Or?

The net is this; we could be at a tipping point. Either we side back into recession or we print more money and "jump start" the economy, again.