I usually savage the doom-and-gloomers, because most of the time, they are just wrong. Being a constant font of desolation tends to make others see the morose one as more intelligent, but it doesn’t make him right.

However, I’ve been thinking about the markets more lately, and I’m seeing many structural problems that just weren’t there before. Banks are still not revealing just how badly the sub-prime boondoggle has damaged them, and again, many probably don’t even know. The FOMC seems to be determined to inflate its way out of the crisis by lowering interest rates, when they should be raising them. (Actually, they should have raised them drastically a long time ago, but that’s another matter.)

Imports are getting more expensive. Food is getting more expensive, and will only get more so. Gas is never going to be any cheaper than it is right now. There absolutely will be more wars over this dwindling resource. Global warming is altering climate and rainfall patterns, and this will only get worse.

Back to the purely financial problems, though. There’s a pretty good chance that these things could combine multiplicatively and get very bad in the next few years. Even though I’ve heard the doom-and-gloomers chanting this my whole life, I’ve always laughed at them, and rightly so. They were wrong. The world did not end when they said it would, and in fact most things got better for most people during the time they asserted that we would all surely die.

Now, though, we seem to be living on fantasy and wishing, while the financial markets, manipulated by Wall Street types who are no better than common criminals, are in a unicorn-filled land a million miles beyond Oz. The simple fact is that financial “products” backed by no assets, or even worse, fake assets, are always doomed to failure over the long term. And from where I am sitting, it appears that a good portion of our current financial system is made up of pure fiction, and we’ve only just begun to sort out the fiction from the fact.

No currency will be immune, but it’s probably a good idea to get some assets out of the dollar now, if you can. I’m working on doing this myself. I wouldn’t buy precious metals, because I think those have seen about as much appreciation as they’re likely to for a while. (However, as a hedge, sure — for appreciation, no.)

I wouldn’t avoid stocks, but the market is probably going to fall a lot more. Wait a little, and see what happens.

Severe inflation is a real possibility here in the US. Don’t buy anything with a fixed interest rate anytime soon. You’ll lose money. However, when inflation is very high, that’s a great time to buy certain long-term investments (not debts) with fixed interest rates.

If you’re actively managing your assets, keep a lot of cash around right now. Buy in slowly as the market falls. Buy some euros, if you can. Australian dollars are also pretty good, if you can get them. If you really think things are going to go down the toilet, buy gold bullion in coin form and keep it close.

I don’t think the situation is going to get that bad, though — but for the first time in my life, I wouldn’t discount it. The doom-and-gloomers actually have a small possibility of being right this once.

What I suspect, though, is that the US, and much of the rest of the world, will experience a double-dip recession and a long time of slow growth as we do a renewable energy re-tool, with pretty high inflation.

If the above prognostication comes true, having non-dollar-denominated assets is still a good idea, as well as progressively buying into CDs and other such vehicles if inflation hits above 10 per cent.

And anyone who takes my advice is a fool, because I’m just some anonymous dude on the internet.

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