"...humans are beginning to wage war on credit, even as the mechanists are doing everything they can to defend it."
The Fed's easy money campaign has defined the front line of that "war on credit." The problem is that it just hasn't worked.
It started in 2008 with that first massive stimulus. Let's call that QE0 (strike 1). That was followed by QE1 (strike 2). And the most recent Fed easing was QE2 (strike 3).
Fed Chairman Ben Bernanke had hoped for an economic home run. Instead he's had to shuffle back to the dugout.
As for the "economic scoreboard," consider the July 16 New York Times article titled We're Spent. It says:
"There is no shortage of explanations for the economy’s maddening inability to leave behind the Great Recession...the real culprit--or at least the main one--has been hiding in plain sight. We are living through a tremendous bust... a fizzling of the great consumer bubble that was decades in the making."
The article goes on to say:
"The auto industry is on pace to sell 28 percent fewer new vehicles this year than it did 10 years ago — and 10 years ago was 2001, when the country was in recession. Sales of ovens and stoves are on pace to be at their lowest level since 1992. Home sales over the past year have fallen back to their lowest point since the crisis began."
What's more, the decline in home prices may well continue. See chart below:
"[The above] chart of median home prices shows the re-awakening of deflation, which contributed so powerfully to the initial economic decline. The move back through the low of late 2008 reveals that another dramatic house price deflation is already unfolding.
"... the deeper the consensus develops that inflation is inevitable, the more convinced we are that deflation is the inevitable course."
Elliott Wave Financial Forecast, April 2011
The "developing forces" of deflation go way beyond housing.