The economy is slipping back into recession, and was never really out of it, except in the Fed-primed FIRE sector. Inflation, driven by commodity speculation, will soon ebb as the money pump is turned off. And now that QE1 and QE2 have ended, we can see there was nothing in the real economy to keep the so-called recovery going.
We are undergoing not a contraction, but a deleveraging. This could last 6 to 7 years , says The Economist magazine. That, to all but the elite, including those in Congress, who are on average, near millionaires, would constitute a depression, equal to the Great Depression. The current imbroglio over the unconstitutional, politically motivated debt-ceiling, is reminiscent of what happened in 1937, when FDR was convinced to pay down the debt, and turn back the New Deal programs. This resulted in slipping right back into a depression, which didn't end until the "stimulus" of WWII. It's worth noting that the debt, as a percentage of GDP, was considerably higher than it is now (<100%) during WWII, and FAR less in 1937 (40%):
So, the debt catastrophe argument, and the ridiculous analogies with family budgets and corner stores, falls flat.
Still, the Tea Party-dominated Congress continues to play this card, and the MSM is too unsophisticated, and too bought-out, to tell the difference, or the truth about who profits from the debt.
Now is the time to turn to the lessons of one of most trying periods, the Civil War. At that time, the banks wanted 24-36% interest to fund the war for the North (it's arguable the European banks, which backed New York, wanted to see the country split in half anyway, to eliminate possible competition). Greenbacks would be an immediate solution to the debt crisis since they wouldn't add to the debt at all, just produce fresh, new MONEY. Money that could be applied to the REAL economy in a real jobs program fro say, infrastructure, over 5 years. From Wikipedia:
"A United States Note, also known as a Legal Tender Note, is a type of paper money that was issued from 1862 to 1971 in the U.S. Having been current for over 100 years, they were issued for longer than any other form of U.S. paper money. They were known popularly as "greenbacks" in their heyday, a name inherited from the Demand Notes that they replaced in 1862. They were called United States Notes by the First Legal Tender Act, which authorized them as a form of fiat currency, but because their value derives from their status as legal tender they bear the inscription "This Note is a Legal Tender" and are often called Legal Tender Notes. They were originally issued directly into circulation by the U.S. Treasury to pay expenses incurred by the Union during the American Civil War. Over the next century, the legislation governing these notes was modified many times and numerous versions have been issued by the Treasury."
Obama talked recently about setting up an infrastructure bank; well, he's not going to get a dime for it out of this Congress if it adds to the debt. They'd rather see the country fail first. To get around this, and argue for new United States Notes, Obama could say that the Federal Reserve is too legally constrained to apply the money to where it needs to be applied (you know he hates to pick battles with ANYONE).
So, Obama could present them with a choice: go into a second Great Depression, or allow Congress to do what Article 1, Section 8. allows them to: "To coin Money..." (small 'c' - as in the verb: "to coin (make)" Money (capital 'M')). He could reach out to their patriotism by reminding them that it is our Sovereign right to produce our own currency, and that the 1913 Federal Reserve Act, barely passed on the eve of Christmas Eve by a grossly under-attended Congress, has usurped that right, and that for the good of the country, it must be reasserted.
We need something big, immediate, debt-free, and effective. U.S. Notes are the answer.
Here is a petition to do just that.