Scott,

 

    The traders, for the most part, are comprised of hedge fund managers, large nations like China, and institutional buyers like our insurance companies.  What sees its way to paper is reality on the ground.  Our demand is increasing and you are seeing the cusp of the global price war between our nation and the likes of China and India.  Until we begin to dig our own wells and cease to lean on the crutch of crude oil refinement, the prices are going to go higher.

 

    Amity Shlaes recently wrote a book called, The Forgotten Man about the encroachment of socialism and how it exacerbated and extended the Great Depression.  Milton Friedman also wrote a book in the 1960's called Capitalism and Freedom, which may help you get your head and heart around today's woes. 

 

    Frankly, since before the market hit 14,000 I foresaw this happening.  People are living in houses made of cards in a nation built on debt and IOU's.  If the socialist medical system introduced by Hillary and her allies come to fruition, it will cost, on their estimation, as much as it costs to run 6 of the Federal cabinet-level departments (including Homeland Security).  And just as FDR ran the struggling economy into the ground with increased government spending and taxation of income, so we are headed in the same direction.

 

    It was needful to lower the discount rate, but then our banking industry went to the discount window like a bunch of jonesing crack-whores and pulled out more money.  And with this Sub-prime mortgage bail out as introduced by President Bush, it was only inevitable that the interest rates would be cut.  Instead of being punished by market forces, we are rewarding the foolish and risky behavior of those who are now losing their homes.  Lowering the rates will bump the market a slight bit, but it will come back with larger negative force as false confidence leads people to rack up more debt, continuing the addictive cycle. 

 

    There were runs on the bank in Great Britain my friend.  We are one incident away from total collapse of the dollar world-wide.  This may be the incident: 

 

    History is repeating itself in spades.  Economically, we are in the late 1920's.  On the world stage, we are in the Fall of 1939 with Iran.  And we are in the heat of the Cold War again with China, Russia, Cuba, and Venezuela (all who have an hand in world trade and oil supplies).  Finally, here in the States, we are in an LSD flashback of the late 1960's and early 1970's, thinking we are fighting a war in which we can quickly retreat and cower and lick our wounds, instead of World War III, Act I, Scene I.

 

Loren