Economic activity continues to slow, both in the United States and globally. Japan and Europe are on the cusp of recession; China’s has slowed meaningfully. Aggressively accommodative monetary policy in the United Staes is driving interest rates down and stock prices up. Look for a cut in the federal funds rate on July 31 with more cuts probably to follow later in the year. Policy can extend an economic expansion for a very long time by supporting investor, consumer and business confidence. But, by itself, monetary policy cannot fix economic imbalances and, in fact, could exacerbate them. The day of reckoning will come, but it is not yet at hand.