Heads up: our Crash Alert flag is flying again. More about that in a minute.

Our old friend and Editor in Chief of The Fleet Street Letter, Lord Rees-Mogg, writes in The Times:

“Daniel Webster's opinion should never be forgotten. Of paper money he says: “We have suffered more from this cause than from every other cause or calamity. It has killed more men, pervaded and corrupted the choicest interests of our country more, and done more injustice than even the arms and artifices of our enemy.”

“In the 1930s some nations tried to beat the slump by competitive devaluations. In the present crisis, Britain has already experienced a very big devaluation of the pound, taking it down by a quarter against the dollar. Every country, led by the United States, has been issuing money, often in very large amounts, in order to bail out its banks. No one knows the total value of these national injections of cash into the banking systems. As the earlier injections have not restored stability to national economies, further injections inevitably will be made. All will be made in unconvertible currency, and over-issue will occur.

“Governments need to create a new world system, in which gold, as a stabiliser, should play its part. For individuals, gold remains the best insurance against future shocks and the best store of value.”

Yesterday, the Dow fell another 297 points...as the market continued to react to Obama's $787 billion bailout. “Too little,” say some. “Too late,” say others.

But the worst may not be over for this market. Earnings are falling...for the very simple reason that people are spending less money. People spend less. Business makes less. Lower revenues; lower earnings. As we mentioned yesterday, for the first time in history, S&P stocks are losing money.

To read the Daily Reckoning in full, click here.

Best wishes,

By Bill Bonner,
http://www.fleetstreetinvest.co.uk

Editor's note: Theo Casey is the investment director of The Fleet Street Letter. His team is currently warning of four financial “time bombs” about to go off – and why not ALL stocks are a good buy right now. To see how you can protect yourself from these dangers – and which shares to buy right now – click here.

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