The Fed's substitution of debt for income has only doomed the nation to a deeper, more painful realignment of real income and expenses.
The economic "recovery" has been based on a simple premise: debt can be substituted for income with no ill effects. As real household incomes have declined, the legitimate foundation of additional spending--more income--has eroded for the bottom 90%.
Even the ephemeral foundation of additional debt-based spending--the Fed's beloved wealth effect--has eroded for all but the thin layer at the very top of the wealth pyramid.
To replace this diminished income, the Status Quo has substituted debt as the source of additional spending: household debt, corporate debt and government debt.
But debt is not income. Rather, debt requires income to be diverted to pay interest and principal. So substituting debt for income ends up further depleting declining income.
This scheme of keeping a bloated, inefficient Status Quo afloat with debt is not a success--it's a failure on an epic scale.