Pains me to say it, but most of the US economy is a ponzi scheme based on consumption fueled by foreign backed debt. Well, actually now the Fed is the largest purchaser of Treasuries surpassing China and Japan, so go figure that one !?
We went from being the largest creditor nation in the world to the largest debtor nation in the 80's and everything since then has been a delusion centered around fantasy standards of living and bubbles via artificial interest rates, exotic derivative markets, and devaluation of the dollar. An economy based purely on consumption paid for by debt is, even at face value, unsustainable.
The middle class is getting poorer and poorer as we squander our former capital asset dominance. It's BOTH parties fault.
Why did the republican Nixon go off the gold standard? He had to because the democrat LBJ was financing the Vietnam war and his social entitlements programs ("The Great Society") with deficit spending. Not to be outdone, Nixon drove us deeper into debt.
Reagan, Clinton, Bush etc all of them have contributed in their own way to weakening the economic underpinnings of the country through Federal Reserve monetary policy and US fiscal policy, employment and CPI lies etc ( Because Fed interest rates are based in theory partly on CPI inflation number which are themselves lies) Clinton benefited from the supposed dot.com boom that happened on his watch, but in 2000 when it crashed we all realized what a lie that bubble had been built on. He also perfected the art of Bullshit economic numbers coming out of Washington with hedonic adjustment and commodities substitutions in the CPI numbers. Millions watched as their "millions" in the stock market evaporated. Next stop..the housing market.. all aboard...
Bush/Greenspan ratcheted it up through more deficit spending and low interest rates and foreign wars (a time tested and favorite way for Empires to implode, starting with Athens vs Sparta)
Obama made things much worse, but then again we are in such a fucked up postion that every politician can do little more than hope to kick the can down the road a few more years until thye are out of office. As Jim Rogers is fond of saying , Obama knows nothing about economics but why should, he was until recently a "community organizer"
So don't look to him for answers, you wont find any. Or anywhere in Washington, save for a few like Ron Paul who will never get traction anyway since their solution is too bitter and distasteful to consider.
Raising short term interest rates would crush the economy once and for all since we owe so much debt and most of it is in 3-year treasuries (Think of what your mortgage payments going up 50% or more would do to your fiances - That's what's will happen when the Fed has to raise interest rates to continue to attract foreign bond investors)) The only other choice is to devaluate the dollar even more (QE 2, 3 ,4 etc) so your middle class existence is going to be wiped out along with your 401k.
Only thing you can do is buy tangible commodities like gold, silver, oil, wheat, rice etc and wait until the housing market drops another 30% or so and then perhaps purchase real estate. The stock market has been in a bear market since 2000 and will remain so until at least 2015 or 2020. After than, it should be a safe way to outpace inflation again. The only way to survive and thrive is to move into undervalued asset classes and then move out once they become overbought.
Remember, nominal values on your house or your stocks mean nothing. Relative value is everything.
PS: It's not just the US thats in a world of hurt.. much of the Western economies are built on a house of cards. Some like the European PIGS countries are WORSE off than us, while others like Germany are on much firmer ground. Any bets as to how long the EU can hold together, or when will solid countries get tired of footing the bill for central bankers and delusional local economic policies?