Unemployment in developed markets is normally subliminal in nature – a creeping phenomenon confined to specific geographic areas or segments of an economy.

Countries with flexible workforces and free movement of capital are usually able to adapt and adjust to shifts in demand by creating new products and services to meet these changes.

The worrying development with the present climate is that job losses are coming with such velocity, particularly in the US and the UK, that economies are likely to struggle in creating enough new roles – triggering a potential downward chain reaction.

Almost 25,000 Americans lost their jobs every day in December, January and February with 8.1 per cent of Americans now out of work – the highest percentage of jobless since 1983.

The US economy has shed 4.4 million jobs since the beginning of the slowdown, with more than half of these positions cut in the last four months alone.

651,000 jobs were lost in February, 655,000 in January and 681,000 in December.

The situation is less bleak in Australia but growing data suggests things are far from perfect.

A new study by CoreData has found 1 in 10 adult Australians have someone in their immediate household who has been directly affected by job loss over the past three months.

The challenge for governments is how quickly new jobs can be created to reverse the inevitable decline in demand for products and services that unemployment causes.

Many are doing their utmost to ensure economic demand does not fall to such a degree that even a big fiscal stimulus package becomes impossible (or at least unserviceable to the nation’s debt levels) in reversing a slump in demand.

There have been a number of comparisons as to where the world is today (and where it is heading) with the Great Depression of the 19th Century.

The difference this time around though is that Governments are not sitting on their hands and adopting a ‘wait and see’ approach, instead unleashing all of the monetary policy tools at their disposal to stave of a downward spiral of falling demand.

The interesting (and apocalyptic) thing now though is whether the tools being used will be enough to fix the damage triggered by the financial services industry.

So, once the interest rate and Government handout options are exhausted what else can be done?

The UK thinks it may have found a solution in the form of the central bank printing new money. (See our Licence To…Print Money article)