I will declare a beginning to the end of this recession/depression when equity returns to the housing sector and I mean positive not negative equity and our present rate of deflation turns into inflation. Let me explain that. When a home appreciates people tend to refinance when the interest rates are low, as they are now, and then return much of that money into the economy, by spending it, not concerned as much because they feel that their home will continue to appreciate in value. Today, many of these people are being shut out of the system by the banks’ tougher underwriting qualifications, which a certain amount of should be expected, considering that it was lax underwriting procedures, in massive proportions, that was the major cause for the recession/depression we find ourselves in today. I would say that if you bought your house before 2004, and if the economy does recover, it’s probably worth as much or more than you paid for it but if you bought it after that it has negative equity and when you begin to see homes in your neighborhood renting for two or three hundred dollars less than your mortgage payment is than you may seriously consider letting it go and joining the renters.

In a system that is based so heavily on the real estate sector a healthy economy is one that can only sustain a housing bubble if, when it bursts, the economy readjusts itself and this includes to a significant degree the real estate sector, which includes real estate companies, the mortgage market, title companies and attorneys, appraisers, surveyors, engineers, the construction industry and the retail and wholesale home manufacturing and remodeling businesses. An entire industry with millions of jobs and when this sector is down, as it is today, the economy is down with it, obviously.

The Fed continues to print money for the banks and hope that the economic situation improves because with that much more money in the system banks should lend more and people will then spend and their income is supposed to rise but that isn’t happening; here or anywhere else in the World. We are now stuck with a deflation rate at about the same level as the inflation rate should be, a little over 2%. That’s right sports-fans, a certain amount of inflation is normal and actually good because deflation, which is what we have now, is actually believed to create or help cause unemployment and falling production rates, or vice-versa.

The problem is that you can’t lower interest rates past what they are now and Bernarke and Geithner have flooded the banks with money but the banks aren’t listening, which means that we are now in danger of hyperinflation; which is inflation that is out of control and which drastically devalues the currency. Hyperinflation usually occurs during civil strife, wars, economic depressions and political and social upheavals, like, say, a battle between politicians and their constituents over a major problem, like, ah, Health Care Reform in America. Just sayin’ …