If you have been listening to the news coverage of business and the economy, you probably thought that things are really getting better. After all, the banks and other financial industry companies are reporting profits again, and even some of the tech industry companies are seeing gains. But the reality is different.

The biggest part of the gross domestic product–somewhere around 70%–consists of consumer purchases, which in recent years was primarily financed through debt, including refinancing of residential real estate. In other words, the level of purchasing we saw in 2003-2006 wasn’t supported solely on personal incomes, but on borrowings, including loans against home values that were far too high. How do we expect to repeat this when between 10 and 22% of the workforce is unemployed?

With layoffs and foreclosures continuing at above-average levels, I would expect that the overall economy will remain at a lower level for at least the next six months. After all, real estate prices still have not fallen to sensible levels, and even if they had, every state in the union is trying to squeeze more money out of its residents. California, for example, raised its payroll withholding rate by one-tenth, as an interest-free loan from its employed citizens.

So I ask you, how does any supposedly competent economist expect things to pick up soon? Is money supposed to fall from the sky? Indeed, I am surprised that economists and financial analysts did not notice that the economy’s underlying fundamentals changed some time in the past twenty years or so. If they had noticed, they would not have been surprised when the debt-fueled growth stopped. And they wouldn’t have supported economically-illiterate moves like the bank bailouts, because they would realize that the overly-expansive financial industry had thrown common sense out the door in the pursuit of ever-increasing profits.

This irresponsibility of finance industry companies hurts families, small businesses, and municipalities, primarily because it hides their need to dramatically constrict spending, and to save up for larger purchases. Irresponsible finance companies make it too easy to spend now, even when the better way would be to defer spending and save. Naturally, fiscally-aware families soon find themselves left behind as overspenders continue to pile up more and more new “stuff”. Finally, even many fiscally-aware families have to take the dangerous course of living on credit just to avoid divorce.

In finance classes, they talk about “financial leverage”, where using debt to finance a part of a company’s capital needs can increase the return to (a reduced-size group of) shareholders. The other side of this, of course, is that the firm’s profits become much more sensitive to changes in sales. In other words, returns can be increased at the expense of making those returns more risky. This kind of financial education is badly needed in every corner of our society, from the White House on down to the guy living in the shack downtown.

Perhaps the media chooses its pundits based on the desired message. It surely cannot be choosing them based on any rational criterion related to understanding the impact of continuing job losses and lender paralysis on the largest part of the economy. For then they would not be seeking out the “the crisis is ending” group. This is not a “jobless recovery”. It isn’t a recovery at all. In fact, it is only the constant promotion through the mainstream media (MSM) that has kept the economy from going into full free-fall.

What should you do? Well start by turning off the media, going to the library, and reading history, economics, political science, and related books. Learn to understand the knowledge gathered by many generations of curious and independent thinkers before you. If you have a back yard, plant a little vegetable garden. This isn’t an attempt to become a subsistence farmer–if things get that bad, your neighbors will kill you and take your food–but an a way to help you feel a little bit of independence. Start cutting your unnecessary spending, so you can save something just in case things get hard.

It might never get harder. In that case, keeping your spending in check and saving up funds can put you in the group we call “investors” instead of the group we call “consumers”. You can be one of the ones who rejoice when the Dow Jones Industrial Average goes above 10,000. But if things do get harder and you have an extra three months worth of income saved up, you might get to keep your home when your neighbor loses his.

Important: I am not a financial advisor. If you take financial advice from some random person on the Internet, you’re being foolish. Instead, consider this an opportunity to start thinking for yourself.