CHESSNOID

There were 2 good articles that indirectly explain why this severe recession continues to get worse.  The first reason is we do not have an administration that is fiscally responsible.  By that I mean, we continue to spend more than we make.  Yahoo AP:

WASHINGTON (AP) — The federal budget deficit soared to a record for May of $189.7 billion, pushing the tide of red ink close to $1 trillion with four months left in the budget year.

The rising deficit reflects increased government spending due to the recession, and billions of dollars spent on bailouts for banks and other troubled companies.

The Treasury Department reported Wednesday that the red ink so far this year totals $991.9 billion. The administration is projecting the deficit for the budget year that began Oct. 1, will total an all-time record of $1.84 trillion. That would be more than four times the amount of last year’s record deficit.

Because of the recession, spending has increased for benefit programs such as unemployment compensation and food stamps.

Outlays also have risen because of the $787 billion economic stimulus package that President Barack Obama pushed through Congress earlier this year.

The new Treasury report showed government spending totals a record $2.37 trillion through the first eight months of the budget year, 18 percent more than the year-ago period.

We were suppose to have some change from the Bush policies under Obama, but it is more of the same. Just a whole lot more of the same policies that has ramped up the budget deficit to a trillion dollars in 8 months.

I suspect the second reason the recession isn’t going away soon is the Federal Reserve is allowed to influence policy.  They have interest rates at 0% and continue to bailout bankrupt companies by taxpayer money.  According to another article the Fed would be shut down if audited by its own standard.  We don’t know this to be true because they are not accountable to anyone.  Right now Ron Paul has a bill to audit the FED which would shed some insight about their secret dealings.

Fed Would Be Shut Down If It Were Audited, Expert Says

The Federal Reserve’s balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant’s Interest Rate Observer, told CNBC.

With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions, Grant said in a live interview.

“If the Fed examiners were set upon the Fed’s own documents-unlabeled documents-to pass judgment on the Fed’s capacity to survive the difficulties it faces in credit, it would shut this institution down,” he said. “The Fed is undercapitalized in a way that Citicorp is undercapitalized.”