Presidential hopefuls are talking about it more and more, trying to reassure the people that we are not heading for a serious recession. They would like people to believe that if they were president, the economy would be great all the time, but in our economy nobody has that kind of power. The economy is shaped in part by how people behave with the resources available to them, and that more than any other reason is why the economy is in trouble.

America in the 21st century is a vast debtor nation with millions of citizens living way beyond their means. According to cardweb.com, the average American household with at least one credit card has over $8,000 in debt. And according to the Office of Management and Budget, the government is over $9 trillion in debt. On top of that, we have a currency that's slipping all over the world and that isn't backed by anything other than our belief in its value. And yet our economy rolls along.

It's an amazing thing to contemplate. How can we be in so much debt using a declining currency and still function? There are many complicated reasons, but there are two in particular that stand out: us and government policy. We as a people have developed spending habits that put us so deep in debt that we spend a good chunk of our lives trying to get out of it. Most of us went into debt just to go to this great university of ours. We came in hopes of creating a better life even though part of that life will be at the mercy of creditors, making it even more difficult to move up the economic ladder.

It doesn't help that the government helps finance this debt. It is largely because of to its policy and that of the Federal Reserve that credit becomes cheap and people start living beyond their means. And all it takes to send people into a panic is for the credit to stop coming. Because without our credit, we can't support the lifestyle we want. The American dream is possible, but it comes at a price.

Some say these ups and downs of the economy are just a part of capitalism. And that's true. There will always be ups and downs. But the downs can be made a whole lot worse by bad policy. The best example is the Great Depression. While there were many causes leading up to it, one of the most important was credit. The Federal Reserve had just come into existence a decade before and started making out loans to banks, which in turn made loans out to people. And some of those loans were in the stock market in something called margin, which allowed people to buy stocks on credit.

The short-term effect was good. It gave people the capital to buy things they couldn't otherwise afford. It would have been impossible without the Federal Reserve. Because of its policies, it created a bubble that famously burst in October 1929. The same thing has happened again with the sub-prime mortgage fiasco, which also would have been impossible without the Federal Reserve. And we just keep reinforcing that policy with our constant demand for credit that doesn't exist.

It's another instance of human nature getting the better of us. We want short-term gains without thinking of long-term consequences. Our government policy, which was aided by the public, has created a system where an increasingly smaller group of unelected people control our economic fate. It is a system where the rich get richer and the poor get poorer because the people at the top control the resources that the people at the bottom need to work their way up.

All the gloomy forecasts about the economy ever do is create more fear. From that fear, we demand from the people in power that they do something about it. And when the government tries to perform the will of the people, it fail because no government can effectively regulate the economy. They tried that in the Soviet Union and it didn't work out. Every instance in history where it has been attempted has failed. It's possible to influence the economy, just not to the extent that we all would like.

Institutions such as the Federal Reserve only make things worse by trying to control markets. Even when a decision leads to disaster down the line, it's not held accountable. Nobody on the board is reprimanded, fired or even scrutinized. And these are the people we trust to keep our economy going.

We ask so much of the economy and often don't get what we want in return. But demanding action from institutions that have no business regulating the economy is not the way to go. A little frugality mixed with a little planning goes a long way, because at the end of the day, we are the most powerful force that drives the economy.