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The following two charts tell one all they need to know about the status of the U.S. economy. First of all, note chart one which gives the breakdown in labors’ share of non-farm business. If consumer spending is 70% of the economy – does this look like a possible problem?

Now let’s look at all personal income excluding government transfer payments. What this shows is that if Washington had not borrowed and collected enough taxes to run a $1.5 trillion deficit for three consecutive years, the U.S. economy would likely be in a depression right now.

Adapted from gordontlong.com

So what does all this mean? My friends, no matter what Wall Street tells you, we are in a seriously bad economic paradigm which will last for years. Here is what most won’t tell you and/or don’t know better: we must stop the creation of more government debt or things will not get better. That, of course, could create depression-like conditions. It’s a hurt me now or kill me later proposition. The solution is bad news now, but much better news later. It’s either that or Greece.

Central Plains Advisors

Information contained in these commentaries is based upon information obtained from sources both external and internal which we consider to be reliable, but the accuracy of the information and the recommendations contained herein cannot be guaranteed, nor do they constitute a solicitation for the purchase or sale of any securities mentioned herein. Information contained in this commentary may not be reproduced in any form without written permission from Central Plains Advisors.

Disclosures: As benchmarks for comparison, the indexes used represent an unmanaged, passive buy-and-hold approach. The volatility and investment characteristics of the benchmarks cited may differ materially from those of Central Plains Advisors. Please be advised that the comparison to the S&P 500 is not an apples to apples comparison, as they are a different class of assets. The account performance figures reflect the reinvestment of dividends and capital gains. Past performance may not be indicative of future results and does not guarantee positive returns. The performance results for 1991 through 2009 have been independently compiled by CPAs from information provided by Central Plains Advisors. The period of 1991-1999 was one of generally rising stocks and bonds. The period of 2000-2003 was one of generally lower stocks, but rising bonds. The period of 2004-2007 was one of rising stocks and bonds. The year 2008 experienced a stock market crash and average bond market. 2009 experienced a strong stock market and positive bond market. 2010 was a good year for both stocks and bonds. The year 2011 experienced a modest stock market return and quite positive bond market results.