Government Says Stocks Can Only Go Up Now

Massive intervention in the markets over the past two weeks and it is continuously expanding. Most of the world has banned short selling during the past week - something that I would analogize to the Japanese internment camps during World War II or the witch trials back in the 1600s.

After creating the smoke and mirrors that it is the short sellers! that caused this crisis, the government is proceeding to take away more freedoms. The current proposal on the table is to delegate $700 billion dollars to Treasury Secretary Paulson so that at his complete discretion he can buy up what distressed assets he thinks are in the best interests of the banking system. Hmmm- I wonder if some of that money will float the way of his former employer Goldman Sachs where he owns about $400 million worth of common stock in the company?

Enough of the political stuff, I am going to cut straight to the point. Its clear to me the path that the US government has chosen to take. They will not allow an asset price deflation cycle to take hold. They are going to reflate and may mistakenly hyperinflate in the process depending on how much of the goodwill we use up with our foreign creditors.

What does this mean? Major goals for the next 2 years should be to preserve purchasing power of money (i.e. get your cash out of dollars and into something that will actually be a store of value). Gold and silver come to mind, so do more stable currencies - i.e. swiss franc.

What a mess......