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US government is on a spending spree with people's money! Keep dreaming about recovery. It is a deflationary crash, Great Depression style. US government may go bust!

Housing prices are subsidized by the government. 8K tax credit will go away. Tax is going up.

Case Shiller index suggests we are still 20% above long term averages. These long term average prices are the result of bank credit inflation that lasted for 50 years. It is a huge bubble that is deflating now. Glenn Beck explains the bubble home prices we are trying to sustain via unprecedented government stimulus:

http://www.kondratieffwavecycle.com/housing-bubble-bust

Whenever credit reaches multiples of GDP as we have it at 350% now, it implodes taking down the economy with deflation. As the money dissapears due to deflation, we should expect substantially lower home prices going forward. You cannot rely on current rent prices. They will come down too. You cannot rely on your salary, it will come down too.

Why do we care about housing? Because when we borrow money to buy an expensive house, by lending us, bank creates brand new money. That is called bank credit. Almost all of our money is bank credit. That is why it is deflating. That is why government wants expensive housing, so that people can get a big loan and inject it into the economy. It is a ponzi scheme to make the current government look good. It is detrimental to the long term health of the economy.

When we borrow, we create money. This money stimulates the economy. People can earn more because there is simply more money to earn. But when we pay back, the money dissapears in the banking system just like the way it was created.

The herd behaviour of the population causes these boom and bust cycles. When things get better, people start borrowing. They look at each other and do more of the same. If each person acted individually in a vacuum, while one person was borrowing, the other would be paying back debt and it would be a smooth sailing. But when the entire population borrows and goes on a shopping spree, this creates a boom. Then borrowing flattens and growth stops. And then the bill comes due. People have to pay back what they borrowed. However, almost all money in the economy is bank credit. It has principal + interest. And the principal exists, but the interest is not created yet. As people pay back debt and the money supply shrinks, it becomes harder and harder to earn enough money to pay principal + interest.

Let's put it in numbers. Monetary system has 60 trillion US dollars. Almost all of this is borrowed money. Let us assume, when people borrowed this, they promised to pay back 100 trillion. The assumption was that through non-stop borrowing, some day there would be 100 trillion in the economy, so that we could earn it and pay it back. However, now that the music stops and everybody stops borrowing, how will the additional 40 trillion be created? So bankruptcies soar, foreclosures happen. This is the web of debt we are facing!

Not only that, as we pay back the debt, the deflation shrinks the money supply. Instead of having 60 trillion, we end up with 30 trillion of money supply. That creates an imbalance where prices, salaries were based on an expected 100 trillion, but now we have 30 trillion.

You figure the rest. The stock market crash will be worse than Great Depression this time. We have not seen the bottom yet:

http://www.kondratieffwavecycle.com/stock-market-big-picture