Fed Vice Chairman Says Economy 'Severe'

Usually officials are being optimistic about economic problems trying to ensure the public that the situation is not that bad. However, in this case someone arguing the crisis would look silly because the problems are obvious.

"We have a very weak economy. The U.S. economy is declining right now," said Kohn. "My most likely outcome is for a couple of quarters of negative growth, and inflation coming down, but not getting to that deflationary state."

Since everyone accepts the crisis exists, it is time for them to think about resolution, and here is where another problem occurs: there are a lot of points on how to help economy recover and officials argue which point is the best. Some think that regulatory changes are needed, others hope monetary policy will help.

“I am not convinced that the events of the past few years and the current crisis demonstrate that central banks should switch to trying to check speculative activity through tighter monetary policy. The case for extra action still remains questionable,” Kohn said.

However, the best solution will be proven the best only after implementation and actual success. US is huge country and it will be very difficult to recover from financial crisis, because it is a well known fact that the bigger a country is and the higher its economy level is, the more easier the country can collapse, and of course it will take more efforts and time for such a country to recover from a recession.