How appropriate that in advance of the Labor Day holiday the party on Wall Street came to an abrupt end.

The reason? Jobs...or rather the lack of jobs. The August employment data, released on Friday, showed a continued lack of job creation in the US economy.

Wall Street was surprised by this as the dummies there cannot grasp the concept that the policies of the Federal Reserve are not working.

The reason for this lack of a grasp of the obvious is that all of the monies printed by the Federal Reserve have gone to only one place – Wall Street.

According to Bloomberg, during the financial crisis, Wall Street received $1.2 trillion in “loans” from the Federal Reserve to keep the big banks going.

In addition, the Fed had its QE1 and QE2 programs which gave in excess of another $2 trillion to Wall Street via purchase of Treasury and mortgage securities.

With more $3 trillion received directly from the Federal Reserve, no wonder Wall Street has enjoyed such a party since March 2009!

But what the party goers on Wall Street have ignored is the fact that they have received all of the Fed's largess. Main Street got nothing and conditions continue to worsen there.

Recently, Fed chairman Ben Bernanke hinted very strongly that sometime before the end of the year, possibly as early as later this month, the Fed would initiate QE3. It would likely be in the amount of half a trillion to $1 trillion and you guessed it – the monies would go to Wall Street again.

That is why until Friday Wall Street was in party mode again.

So why does the Fed keep using a policy that does not work?

Simple. As explained in a prior article, the Fed is not an independent agency as it is portrayed. It is literally owned 100% by the banks and its main purpose is to see that the banking industry remains healthy.

A second reason is the short-term mentality which now permeates Wall Street. Most of its denizens could care less about anything longer term than three months...only short term profits matter.

Think of two scenarios.....

In the first scenario, the economy and especially Wall Street would suffer through a terrible two years. But afterwards, all would be well and what would follow was the biggest boom in history.

In the second scenario, Wall Street would have a terrific year. But afterwards, it and the US economy would enter a period of many years that would make the Great Depression look like a picnic.

If forced to make a choice, I think most people would choose the first. I know I would.

But if this question was asked of people on Wall Street, my 30 years of experience tells me that today 99.9% of them would choose the second - "let's enjoy the party and not worry about a year from now".

Until this psychology changes, the "Great Recession" in the United States will continue to linger.