From March to September, U.S. equities markets enjoyed a nice recovery.  But was this six month rebound based on fundamental valuations, or a reflex reaction to all the cheap money being thrown around by various government institutions?

Now, I’m not saying that a government can’t provide valuable public investment, I’m just saying they didn’t accomplish it this time around.

Remember a year ago when there was a lot of talk about high speed rail, a complete healthcare overhaul, and a new investment in education?  Well, it turns out that most of the bailout and stimulus is going to maintenance – its going to cover bills and existing obligations that were relying on unending annual tax growth.

Even as major banks hand out another round of record bonuses, our social safety nets are unraveling.  Social Security is on the brink of deficit, and the FDIC is finally admitting that its out of cash.

So despite the quantitative easing, despite the interest rates and federal guarantees, investors are starting to wonder if buying in to this economy is actually a good deal.  For the millions of Americans who lost jobs during the latest run in stock prices, I’m sure they’d vote against having too much confidence…

Unpaid debt hangs over your potential spending choices.  If America wants to really invest in the things we’ve decided are valuable:  technology, education, good health, then we’re just going to have to pay off the Humvees and oversized houses first.  Otherwise, we leave interest payments to chunk away our income despite never affecting the principle.  There’s a lot of bad debt and unproductive consumption that still has to be accounted for before we can think too much about other possibilities.

Magic wand economics won’t save us either, dollar inflation requires willing participants victims who will continue to buy debt despite an implicit guarantee that it carries a negative return.  China has been an on-and-off ally of America for quite a while now, but they’re not going to ignore the most shameful chapters of their national history by letting foreign interests dominate their own domestic economy.  From Latin America to Russia, there are repeated calls for a new global monetary order – and no one is calling for America to lead the way.