The Fed (finally) beginning to understand the entrenched and endemic nature of this crisis

"...the latest Fed Beige Book that make it clear that the Fed is (finally) beginning to understand the entrenched and endemic nature of this crisis. While the notes are written in shamanic double-speak, the point is unambiguous - members of the Fed don't expect the economy to get back on track until 2015 or 2016.

"Participants generally anticipated that, in light of the severity of the economic downturn, it would take some time for the economy to converge fully to its longer-run path as characterized by sustainable rates of output growth, unemployment, and inflation consistent with participants' interpretation of the Federal Reserve's dual objectives; most expected the convergence process to take no more than five to six years."

The simple reality the Fed is waking up to is that the structural underpinnings of the economy are damaged beyond any quick or easy fix.

That's because until the debt is wrung out of the system, either through default or raging inflation - there's no chance of it actually being paid in anything remotely resembling current dollars - the equivalent of an economic Black Death is going to plague the land.

Each new government initiative, the latest being financial reform, that doesn't decisively address the debt, but rather tightens the dead hands of politicians around GDP, only serves to spread the wasting disease like so many flea-infested rats running through the economy.

And so, each new day will find the carts freshly laden with failed homeowners, businesses, and banks that have succumbed.

Pundits are fond of saying that things are never really "different this time around"... yet there is something truly unusual now going on. See if you can spot the disconnect in the following descriptions of the current economy.

-Record total debt.
-Record government deficits.
-Record trade deficits.
-Massive additional government debt financing required to keep the doors open and avoid reneging on social contracts directly affecting the quality of lives of millions of people around the globe - the U.S., Japan, and Europe especially.
-Near record-low interest rates..."