US consumers and businesses have become used to cheap credit; it's what helped get us into this current mess. The government response has been geared towards making credit even cheaper. They've done that by bailing out the banks, buying residential mortgages, buying consumer debt and buying long term treasuries. Current 30 year mortgage rates are below 5% and may fall to almost 4% by year end.

Regardless of whether the measures the government has taken will stem the economic collapse, the end result will be inflation. Unfortunately, their options to contain inflation will be limited as raising interest rates is always politically unpopular and would put an added strain on any housing market recovery. Additionally, the Fed will have incentive to keep rates low to finance the monstrous debt that is being built up.

It's unfortunate that the current economic crisis hasn't been used as an opportunity to modify our massive dependance on consumption. Obama-bashers should be relieved that he's as afraid of making any meaninful changes as our past president. The current economic policies are geared towards more of the same... only worse.