The analysis out of the Federal Reserve meeting yesterday is filled with unspoken warnings about what the future holds for the U.S. and global economy. By observing that inflation will not be a problem anytime soon, the question was begged about what looms as a far greater and intractable threat, namely, deflation.

High unemployment in the U.S. is the single biggest obstacle to a genuine recovery, and there is no scenario in sight that is expected to turn that around. Everyone from Treasury Secretary Geithner to Fed Chief Bernanke is asserting these days that there is nothing on the horizon to prevent unemployment from climbing well above 10 percent, officially.

Of course, there are many states where that number is already well above that threshold number, including the economic powerhouse of California. Many experts calculate that the official unemployment numbers are badly skewed, as it is, since persons no longer seeking work or underemployed are not counted.

Don’t forget that the Great Depression was not called the Great Inflation. It was a decade-long malaise characterized by deflationary economic trends and high unemployment. With the current economic realities situated in a global, not national, context, some of the effects more closely mirroring the 1930s are spread out around the globe, and therefore can be masked from acute public scrutiny in this country.

Wall Street and financial types, of course, are saying that we are experiencing a recovery from the recession of earlier in the year. They point to improved earnings reports from key industries and sectors of the economy.

However, in almost every case, those numbers involve cuts in costs rather than improvements in income. The reported profits margins are reached through mass layoffs and cuts in benefits.

That simply kicks the problem down the road, and only the most sober analysts will concede that. The reason it is not acknowledged in a forthright manner, of course, is the belief in market voodoo, that things like consumer confidence and optimism are what will really right the titling economy.

So, they are desperate to preach the return of prosperity, in hopes of getting people to pull their hard-earned cash out of their mattresses and spend it on more useless or highly risky junk. People were preaching an imminent return to prosperity in 1931, don’t forget, only to see brief illusionary upturns sink into the deepest throes of the decade-long Depression only months later.

When Geithner spoke to the CNBC town forum a couple weeks ago, he was pretty realistic about the future, at least in terms of the intractable unemployment problem and slow growth. You can be assured, however, that what he was presenting was a “best case scenario,” and it was hardly rosy. Take what he said as the best possible outcome, and calculate reality from there.

There are two fundamental facts that define the current situation. First, thanks to George W. Bush and his radical anti-regulation friends, the global economy became an unimaginably over-leveraged house of cards. All regulatory barriers to leverage limits were breached, being far more deadly in their consequences than the levee breaches by Hurricane Katrina. When the bubble burst, the descent from the hot-aired heights spiraled toward the depths of total and complete global financial meltdown over the course of six short weeks.

Secondly, the underpinnings of that economy, being not only sub-prime mortgages, but also unrestrained consumer spending on overpriced luxury and discretionary goods, has also collapsed and will further as unemployment, and the fear of it, drive the American consumer toward a frugal lifestyle.

This “new normal” is not going to end until high unemployment does. The result will be a more gradual decay of the economy than the six-week cascade of financial instruments, but it will be just as devastating in the long run.

So far, the stimulus efforts have averted a sheer catastrophe. But they have not addressed the problem at its root. A profound shift from a consumer-based to a production-based economic model is required, and that will be neither easy nor quick.