What the US economy desperately needs and richly deserves is a slowdown, says Bill Bonner in The Daily Reckoning.

People borrowed too much… and spent too freely. Now, they have to cut back and pay up. The sooner they get it over with the better; clearing away excessive debt and cleaning up balance sheets will give them something solid to build on.

Of course, it won’t be easy or painless. Before it’s over, the spendthrift consumer will feel like a Zimbabwe voter.

But the Fed is doing all it can to avoid a slowdown.

That is why we have the key Fed rate at a NEGATIVE real yield of 2.2%. And it’s why when you put money in a money market fund you get a return of less than half the rate of consumer price inflation. The low rates discourage you from doing what you ought to be doing – saving money rather than spending it. The 90-day T-bill rate is only 1.8%. That’s part of the reason gold is so expensive; you don’t give up much income to own it.

Usually, the regret phase of the financial cycle has its own rewards. There are fewer cars on the road… and it is easier to get a reservation in a fancy restaurant. And when people begin cutting back on spending it causes consumer prices to fall. But those were in the good ol’ days. Now, the economy has gone global and the U.S. Fed no longer controls inflation. Prices are no longer set by America’s 300 million consumers… but by Asia’s three billion consumers.