The recent quiet in the eurozone and American politicians’ cavalier teetering on the brink of a “fiscal cliff” seem to suggest that the crisis is over. But the lack of urgency on the part of policymakers mustn’t be mistaken for an actual improvement in the economic prospects of both Europe and the United States.

The crisis that started in the American housing market in late 2007 and became a global financial panic in 2008 isn’t over. Rather the necessary contraction has been extended by government deficit spending and central bank financing. The former has seemingly run its course. The latter may go on for much longer, perhaps even as long as it takes for the economy to rebalance itself. Or it may not. In which case the collapse will be all the greater when it does happen.

The American Federal Reserve certainly seems to think it can go on. In early December, it announced that it would continue to pump money into the economy until unemployment drops below 6 percent. Financial markets were ecstatic. It means cheap money at least until the game is up. But the move is really one of desperation. Every policy option has been exhausted. The only thing left to do is continue to prop up a banking sector that should have partly gone under in 2008 with evermore free money — debasing everyone else’s money in the process.

The Federal Reserve tried this before. Indeed, it’s what brought on the housing bubble in the first place. When the dot-com bubble burst around the turn of the century, the central bank managed to stave off the contraction that was necessary to correct the hype of the late 1990s.

The money it poured into the economy to keep the financial industry afloat found its way into speculative if not outright ludicrous mortgage products. Combined with semi-private mortgage providers Fannie Mae and Freddie Mac that were politically incentivized to loan to low-income households that no truly private bank would have ever considered taking on as clients, it made for a dangerous situation indeed that had to blow up.

It did in 2007. Home prices had risen in the preceding decade thrice as fast as in the previous one hundred years. American mortgage debt had grown from $4.8 billion to $13.5, nearly the equivalent of the United States’ entire annual economic output. Total American debt was four times the size of the economy.

Even financial markets, lulled into a false sense of security by low interest rates, recognized that it couldn’t go on forever. But as less than ten years before, it was monetary activism, this time augmented with direct government aid, that prevented a natural rebalancing of the market by saving the banks and preserving their toxic balance sheets.

The market was more heavily regulated and remains deeply distorted, perpetuating an anxiety among investors who not only fear higher taxes and inflation as ways to alleviate the United States’ ballooning national debt but who just don’t know anymore what is really a safe investment and what is little more than hot air.

The safest bet is government debt. Even if it’s proven less than safe in Europe and government borrowing in the United States is utterly unsustainable in the long term, central bank financing, once again, changes the odds. The central banks, both in Europe and the United States, give money to the banks (that’s the only way to describe it when they can borrow at virtually zero interest) which loan it out to the government to sustain high levels of deficit spending. Thus inadvertently, the central banks simultaneously prevent the necessary correction in public finances where almost certainly there will come a point at which governments have to adjust because the welfare state is fast becoming unaffordable.

Will the house of cards come down in 2013? It should have come down much earlier so who knows how much longer we can pretend. Perhaps several more years of what is euphemistically described as a “recovery” will be enough to restore some normalcy to the system and allow real, sustainable growth to take root again. But it’s difficult to be optimistic when central bankers are all but throwing money out of helicopters to try to persuade people to take on more debt when too much debt is what got them into trouble in the first place.