Fact is that the multinationals can make higher profits in low-wage countries like China, India, Vietnam etc. no matter “encouragement” bonuses by the US govt. Thanks to the policy of outsourcing, US workers have to compete with people who can earn as little as $0.39 / hour.

The result of QE2 (= printing money to pay the ever increasing debt) is quite noticeable: inflation which shows best in increasing price for oil, gold, silver, food etc.

As QE2 just like QE1 fails to create another bubble to simulate “booming economy” again, there can’t be the least doubt of QE3, even if it isn’t announced: Japan, before the nuclear meltdown a buyer of US treasuries, will have to raise capital for rebuilding the damaged part of the country IOW instead of buying US debt paper, will start selling a huge amount of their holding. So the price will go down.

Increasing interest rates in order to make US debt more attractive is impossible because the debt is excessive so there’s no way to serve the interest on it, other than printing it! Hence inflation will continue to rise. Combined with declining wages in the US, consumer spending can only decline.

But as consumer spending in the US is good for 70% of GDP,that can only mean, the real US economy will shrink. Of course with creative bookkeeping the GDP can be made to rise but anyone with some analytical skill will see through that.

Summarized, there’s no way out of this economic quagmire but to run the money press 24/7 and hope that nobody notices :-D