Faithlessness, when it has infected every area of a culture, blurs the distinction between right and wrong, good and evil, morality and immorality. Without truth, there is no reliable ethical basis for government, commerce, or social relationships. There are no solid standards. Without virtues upon which a majority agree, one can never be quite sure how another will conduct himself, and so everyone becomes untrustworthy.
In the context of Hosea's comments, mercy connotes steadfast love rather than a singular act of kindness toward somebody in need. Hosea is saying, then, that people waver in their loyalties. They pursue whatever fad comes along. We might say today that they "blow hot and cold." When they are "hot" they are "hot," but they can never seem to sustain it because, when their eyes are lured by some new, exciting interest, they are off in that direction until yet something else catches their imagination.
The "knowledge of God" includes two elements: First is the knowledge about God, of His existence, Word, and way. The second is acknowledging Him. This denotes commitment, a steady loyalty to Him personally and to His way of life as a pattern of living. The context demands the second element, since God would have no reason to accuse people who were not aware of Him and His way of life. Because He is addressing those who have that basic knowledge, His complaints are directed at faithless, uncommitted people. In America, it is becoming almost impossible to find responsible and trustworthy people.