The dirty little secret.

• Author: Adams, Tucker Hart
• Position: [the] ECONOMIST

There's a dirty little secret out there: No one can provide a quick fix for the economy. Not the president. Not the new Republican Congress. Not the Federal Reserve. It took us a long time to get into this mess, and it is going to take a long time to get out of it.

[ILLUSTRATION OMITTED]

That said, there are clear signs the economy will look better in 2011:

* Third quarter output data were revised up in November.

* Exports are rising, as the recovery accelerates in developing nations such as China, Brazil and India.

* Consumers are more optimistic and are spending a bit more freely, albeit still looking for bargains.

* People are traveling more, and the lodging tax in metro Denver Is rising at a double-digit rate.

It doesn't take a lot to make us feel better these days. I had to smile when the good news about small business a few weeks ago was zero job growth. At least that's better than the more than a year of job losses that preceded it.

One question that seems to be on everyone's mind is the Federal Reserve's new program of quantitative easing, or QE2. The more pessimistic savants argue that it is more likely to be T2, a repeat of the Titanic disaster.

In reality, QE2 isn't that different from the actions the Fed normally uses to influence interest rates and the economy. The difference is that rather than buying or selling the shortest Treasury maturities to affect short-term rates, the Fed is going to buy intermediate term securities (three- to five-year Treasuries) to keep longer rates low. The hope is that this will encourage businesses and consumers to borrow (and banks to lend:), creating jobs and economic growth.

The lack of job growth is the biggest problem facing the U.S. economy and the reason the last 18 months haven't fell like a recovery. The "true'' unemployment rate, which includes discouraged workers and those who can only find part-time jobs, remains around 17 percent for the nation and 15 percent for Colorado.

The primary reason the reported unemployment rate isn't at a double-digit level is that people became discouraged and stopped looking for work, thus ceasing to be unemployed by the Department of Labor definition. Soaring enrollment at Colorado's community colleges provides a stark reminder of what is occurring.

Why do financial experts argue that QE2 can be a bad thing, in the face of the jobs problem? There are two primary...