The Yellow Brick Road Part One

After the tornado deposited her in the wonderland of "OZ," Dorothy looked at her faithful dog and said, "Toto, we arent' in Kansas anymore!" When gold recently broke through the $900 per ounce barrier, flirted with $1,000 per ounce and then retreated back to the high $800 per ounce range, its price performance seemed to correlate positively with the dollar hitting new lows against the Euro. It's a strange new world made even more confusing by the advent of $4 a gallon gas at the pump. Americans everywhere seem to feel the same confusion as Dorothy as she realized she was in a strange new land.

This may be a strange ecnomic landscape and nothing we counted on seems safe anymore, but what does it really mean to us as we live our daily lives?

During the last half of the twentieth century, we Americans grew up believing in the inevitability of our day to day reality. What was before would always be. The dollar was the "go to" currency of choice in a world of change and uncertainty. America only fought just wars. American "know how" would always save the day.

However, during the first decade of the twenty first century Americans look around and nothing seems quite so safe any more. The September 2001 attacks were a shock. The failure to find "Weapons of Mass Destruction" in Iraq after the intelligence community assured the President the presence of WMDs was was a "Slam Dunk" and their discovery inevitable, was disheartening. The subsequent failure to "win the peace" in Iraq after such an easy and triumphant invasion was hard to believe.

The seeming financial fall out of the cost of the wars, such as the credit meltdown hammering the banks and mortgage companies, the stock market stagflation, sticker shock at the gas pump and the economic malaise all seem surreal. The fact that the dollar seems to be weaker against other currencies, notably the Euro, and that a decent London hotel now costs $800 per night is simply unbelievable.

What does it all mean? What will happen next? How do we protect our families and ourselves and our business investments in the clinches, which are apparently the fall out of September 11th? This is now what most of us believe to be the relevant question.

But perhaps there is another explanation that doesnt't rely just on the events of September 2001 and has to do with funny stuff like currency management, going deeper into the basic structure of the American and world economies and how modern nations structure thier economies.

Next, the Rainmaker will explore those alternative explanations or our current unfortunate reality.