Hope Springs Eternal... Usually

Congratulations to Senator Obama on his remarkable and historic victory...

Condolences to Senator Obama on his remarkable and historic victory...

I am a hopeful guy, an optimist at heart. I would not trade places with Barack Obama for all the money and power in the world.

I think we are in for some tough sledding, because as I've continuously mentioned (to the point of monotony), the US government has created and continues to create, more money than at any time in our history, by a huge margin, and this massive influx of dollars MUST either be re-absorbed back into the Treasury before it gets into circulation, or it MUST find its way into circulation where the laws of economics dictate that each dollar will decline in value proportionate to the percentage increase in the numbers of dollars.

All things being equal, if the Fed doubles the number of dollars in circulation, the value of each dollar will decline by 50%, and your $4.50 loaf of bread will cost you $9.00, and soon.

Some economists, analysts and talking heads on CNBC and elsewhere are pointing out that we are actually in a massive DEFLATION, and that inflation is only a remote threat at this point. I agree that most of our assets are deflating rapidly right now, but as regards inflation, I think they are fooling themselves. Don't you be fooled.

I believe that the "deflation of assets" they speak of is actually a "devaluation of assets." The portfolios of Special Investment Vehicles, Collateralized Debt Obligations and other Mortgage-Backed Securities ARE plunging in stated value, but the truth is, THEY WERE NEVER WORTH AS MUCH as the sellers or holders of these investments said they were. We are going through a painful readjustment period where these asset values are being "marked to market," which is to say, "revealed to be worthless."

If your managed individual retirement account or your company pension plan or your municipal bond fund, etc., etc., ever invested in these types of securities in order to increase the profit-potential of your holdings, you are now finding out the cold hard truth about how bad government regulations will usually result in a thorough screwing of the people.

But don't worry! Under the fine, upstanding and fabulously ethical reign of Nancy Pelosi, Barney Frank and Henry Waxman in the House, Chris Dodd, Harry Reid and Chuck Schumer in the Senate over the President-elect Obama, you WILL find out what more and more ill-conceived government regulation, intervention and redistribution is going to do for the American people.

Don't forget to bring your personal tube of KY Jelly...