Since the downturn began two years ago, 7.5 million jobs have been lost. There is no sign that they will be found anytime soon. Jobless people do not spend a lot of money. Ergo, you can't really expect an economic surge until people get jobs.

When will that happen? Possibly years from now...maybe 2...maybe 5...maybe 10...

Yes, dear reader, we are in a depression. It is a period of adjustment...of correction...of de-leveraging...of paying down debt. And there's not much the feds can do about it - except disguise it...delay it...and make it worse.

The government can spend money. The government can inflate the currency. But it's neither government spending nor inflation of the currency that makes an economy healthy. If inflating the currency could make an economy prosper, where did Zimbabwe go wrong? And if government spending could boost an economy, what did Cuba do wrong? Or Venezuela?

The two-bit, banana republic economies are almost all burdened by too much government stimulus. The feds tax too much, spend too much, borrow too much and inflate too much. Instead of doing their jobs - enforcing property rights, protecting people from crime, and staying out of the way - they meddle and spend.

The president gets a fancy house and lots of security guards. And the economy rots.

Of course, we could be wrong about what is happening in the US. But our guess is that the stock market is wrong instead. Stock market investors anticipate a return to 'normal.' But the normal they're looking at is a very unusual credit bubble that blew up and can't be mended. The real normal is what we're getting.

And the real normal is a world where bad stuff happens. Investors make mistakes. Markets make mistakes. Often, they are misled by their own financial authorities, such as Ben Bernanke. The US Fed chief meddles in the economy and distorts the picture. Investors look, but get the wrong idea.

Our guess is that stock market investors are seeing the distorted picture caused by the feds' meddling...not the real picture. They look. They see low interest rates. They see stimulus. They see a stock market that seemed so friendly and so rewarding for so long that they can't imagine anything else. They see a government taking action...and making things better. They read Thomas Friedman and think the 'political class' can fix whatever problems it encounters.

But in the real world, the political class is a life-threatening parasite. Allow it to grow large enough and the host - the private economy - will shrivel up and die.

And in the real normal world, markets go up...and then they go down. We are in one of those periods of decline. We are in a depression, with a growing, parasitic political class. This phase won't end any time soon.

BUT GOLD WILL SHINE !