It ain’t gonna happen.

The underpinning of the housing market has been the work ethic of the American employee. He has been making and spending his head off for 20 years. He has been using his home as an ATM machine refinancing to buy more and more goodies he didn’t need.

It’s wonderful to buy a riding mower for that 1//2 acre home or a golf cart used only once a week. Keeping up with the neighbors is a must – he just bought a new 6-burner stainless steel barbeque outfit for the back yard. Gotta have one too.

The new administration now headed by a rank amateur who has never had a job is encouraging consumers to start spending again like the drunken sailors they were in the past. He never heard the word thrift.

The new mantra is “Spend, Spend, Spend”. Joe Sixpack can’t print money out of thin air as the Federal Reserve does. The continuation of the spending spree is supposed to support the U.S. and world economy. How does going deeper and deeper in debt stimulate anything especially when the money is being wasted on projects that have no positive effect on the Gross Domestic Product (GDP). That type of spending is like blowing bubble gum. It ends with a pop and hot air.

Now those who have been frugal and not overspent and put money in their 401Ks are going to be hurt. In about 2 years or less as inflation will hit everyone. If a person can add 2 plus 2 it is very obvious that all the money that is being printed out of thin air is going to dilute the U.S. dollar. It is going to buy less and less. The economy will be hit again.

The only asset that will not decrease in value will be gold.. Those who have their home paid off will be hit by rising real estate taxes as more and more people will be out of work. Having a job, any job, will be the most important family asset.

With each leg down in the economy the unemployment rate will rise. During the 1929 Depression when unemployment hit 24% there were be multiple families in the same house.

Does this scenario scare you? I hope so. Until we get new representatives sent to Washington this is now hardening cement that could create a Japanese type recession that has been going on for 14 years.

Because of unemployment home prices will continue to fall. Almost every big ticket item (asset) will be under price pressure. Home prices will continue to decline.

The fallacy of going into debt and spending government money (your tax dollars) won’t stabilize asset prices until people are all back to work.

Copyright 2009 Albert W. Thomas All rights reserved. Author of "IF IT DOESN'T GO UP, DON'T BUY IT!"