It is factually correct to believe the U.S. consumer must embark on a protracted period of savings and reduced consumption in order to reconcile the decades of imbalances encouraged by the Fed and banking system. Unfortunately, the very idea of a newly-frugal consumer is a complete farce.

Listen to two quotes from the administration about their desire to re-inflate the credit bubble that wreaked havoc on our economy earlier this decade. Barack Obama said on March 17^th that his $15 billion move to bolster the securitization market will be “a jolt in the arm for community banks.” With his own exhortation, Treasury Secretary Tim Geithner urged banks “to go the extra mile” regarding increasing lending and that they have a “special responsibility” to assist in the recovery. And the administration is actually going to force the 21 largest banks getting bailout money to provide a monthly report on how much they are lending to small businesses.

On March 2^nd, FDIC Chairman Sheila Bair made some remarkable statements in defense of the Insurance Corporation’s decision to raise fees and increase revenues. She said in a letter sent to the over 8,300 insured banks that, “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”

So why would the government allow such a deal to occur? The answer is to gain more control over Citigroup (with other major banks next in line) in order to garner complete control over the money supply. The Treasury’s preferred holdings in Citigroup carry no voting rights, whereas the common shares will. After conversion, the government would own 36% of the common stock. The government does not need to be the largest shareholder in the company to dictate policy, but it does greatly facilitate the process. The power grab will increase the Administration’s and Fed’s ability to direct bank lending, which can lead to an abrogation of the system of checks and balances that control our money supply.

As many know, the company is involved with the procurement, processing, transportation, storing and selling of agricultural commodities and products. To begin with some good news about ADM, let's review some of the financials; in the first nine months of fiscal 2008 sales are up 51%, gross profit up 20%, net earnings up 18% and earnings per share up 21% in the same period as fiscal 2007. On the other side of the ledger, looking at the balance sheet we find that short term debt increased to $4.9 billion in March '08 from just $468 million in June '07. In an environment of rising rates, investors should be wary of a company that takes on such a staggering increase in debt that must be rolled over in a short period of time.

What we do best in this country is technological innovation, and there are few enterprises that exemplify that better than the world's largest company focused on seeds and traits. I spent a few days last week in the Midwest and had the opportunity to visit Monsanto's headquarters in St. Louis Missouri. While getting a tour of their impressive laboratory and greenhouses, I was given a course in the company's technology and offered a look at their product pipeline.

This sophomoric conclusion focuses on just the increase in commodity prices, yet ignores some key factors that must be present for a bubble to exist. For an investment to reach bubble territory there must first be a dramatic increase in the quantity of the investment in question. Once demand contracts, an environment ensues where a massive oversupply imbalance in the investment out strips intrinsic demand by a great degree.

It is ironic, then, that the only true investment to ever bake in a negative return after inflation is Treasury Inflation Protected Securities-ironic because the very purpose of TIPS existence, of course, is to provide for a guaranteed real return. In fact, TIPS recently yielded a negative return for the first time since their inception in 1997. The 5-year TIPS note ended February 29th at a -.043% and remained negative through most of the month of March.

Wall Street pundits are cheering last week's $100 sell off in the price of gold, and investors have turned their back on the gold miners, betting on their downfall. Short interest is up 16% for Barrick Gold (ABX), 22.2% for Agnico-Eagle (AEM) and 22.4% for Goldcorp (GG) between the end of February and mid-March.

There can be only two possible conclusions reached when viewing this disparity, shown in the chart below. One is that commodity prices are no longer an indication of inflationary pressures, a ridiculous contention that cannot be taken seriously. After all, the CRB Index contains 19 commodities that include precious metals, base metals, agriculture and energy, broad measures of the pricing pressures that exist in today's economy.

Global Plusses and Minuses

However, a closer look at these food production companies reveals troublesome negative correlation to rising agricultural prices. In spite of the bull market in soft commodities, Kraft Foods (KFT) is down nearly 15% and Tyson Foods (TSN) is off 20% in the last 52 weeks.

Much has been made recently of the increased planting of the corn crop witnessed this year. However, even with the increased production (13.3 billion bushels) demand has kept pace, consuming nearly all the added supply (12.8 billion bushels), and future demand for this commodity looks strong. Today 16% of the current corn crop is used in the production of ethanol; in just two years it will consume 30%, according to USDA estimates.

However, his band aid approach to the credit crunch should prove to be an inadequate cure for what this ailing economy needs. GDP has registered 2% growth in the last 3 quarters, below the 3% trend. Non-farm payroll growth has been averaging 136 thousand new jobs, which is below population growth. And productivity has averaged 1% for all of 2006 and has averaged 1.2% for the first 2 quarters of 2007, below the 2% average for the past few decades.