Eight years after the financial crisis ended, the Federal Reserve Board has continued to fail at its goal of jumpstarting the U.S. economy and achieving "escape velocity."

Why? According to Gluskin Sheff + Associates chief economist David Rosenberg, it has based its forecasts on pre-crisis data.

The Fed may be the owner of the world's most sophisticated and expensive econometric model, but when it plugs in irrelevant data, it produces irrelevant forecasts. That's why Fed members have been "constantly cutting their forecasts" for the last seven years, Rosenberg told attendees at the seventh annual Inside Alternatives conference in Denver yesterday.

They even continue to cut their forecasts for the one variable completely under their control: the Fed Funds rate. "The missing link is that eight years later we are so much more connected to the crisis, which was almost a depression," than we were to other recession-causing events, including the 1973 oil embargo, the stagflation of the late 1970s, the S&L crisis in the late 1980s or the tech bubble of the late 1990s.

The Great Depression entailed 15 years of pain before the U.S. economy finally emerged from a coma during World War II. Rosenberg argued that to this day, the Great Recession still influences how people borrow, save, spend and invest. Because many people were unable to sell their houses, labor mobility was severely effected. Corporations focused for years on deleveraging, not capital spending or growth.

In Rosenberg's view, the stimulus program enacted in 2009 was puny and should have been closer to $2 trillion. Indeed, the one issue both presidential candidates agree on is that the U.S. needs major investments in its dilapidated infrastructure. Years like 2009 and 2010 would have
been a perfect time to make those investments when materials and labor were plentiful and cheap.

What can take the U.S. economy and the rest of the world out of this protracted period of muddling along? The problem is nobody has ever delevered.

Some central bankers and politicians believe that going to a negative interest rate regime is the solution, but the evidence of the last eight years indicates that monetary policy tricks and games have become increasing impotent.

Another option is a helicopter drop. That might ignite inflation, but it's hardly clear growth would follow. "If a helicopter drop happens, buy TIPS," Rosenberg says.

In the meantime, the U.S. remains mired in deflation. Fully 40 percent of the Consumer Price Index is rents. Strip that out and the rest of the index is negative or near-negative.

Rosenberg believes that over the next five years we'll hear more about a debt jubilee, or forgiveness. Watching countries like Greece restructure debt every two years that they can never repay is a farce. Other European nations face similar predicaments, even if they are less dire. But any jubilee would need to be very carefully orchestrated or it could tip the global economy totally upside down.