It has been the habit of the United States, in its capacity as a nation of investors and consumers with a highly developed sense of entitlement when it comes to returns and little or no tolerance for corrections of any kind, to sate the appetite of the cult of buoyancy by inflating various bubbles. This is particularly so when it appears the national vessel is beginning to sit low in the water. Loyal readers will know that finem respice does not go so far as to call for the abolition of the Federal Reserve, or make bleating noises about fiat currencies, but, without a doubt, it is worth looking at the role of various institutions as we confront the next gas-filled, surface-tension-bound, expanding topography. That sort of reflection, culminating in exactly nothing, is about all we can expect. The tools of the Federal Reserve and the Treasury are a grant of immense power to the executive, and he or she is unlikely to relinquish it without the sort of battle that resembles a protracted land war in Asia. So serial-bubbology will prevail. Junk Bonds to Dot-Com to Real Estate, for instance. Of course, this means we don't exactly have a large sample size with which to draw conclusions (n=3 perhaps) but it stands to reason that the longer we delay correction and manipulate markets with bloody sacrifice to the minions of buoyancy, the worse the wrath of the deleveraging.

Having taken great pains to ignore this lesson, and to obfuscate it completely no matter form with which it attempts to make its presence felt, it is pretty obvious that the present administration intends to bubble its way out of the latest opportunity to reset prices and moderate debt. Moreover, our leaders intend to do so via massive borrowing to pay for about every government program of any size ever conceived going all the way back to that one that crossed the kickback-addled mind of some flaccid congressman while waiting in line at Disney World back in 1972.

Small sample size or not, it is so clear that the next bubble is on the horizon, or, perhaps, already upon us, that a great deal of time and effort is spent speculating as to which asset class will be next. Oil or energy in general is a popular theory. Gold has its advocates. James Simons likely points to high beta stocks when asked. A few clever commentators have suggested Treasuries. This last is closest to the mark.

Of course, the next bubble (and perhaps the last for a while) is government. The state government bubble is beginning to burst even as you read this. The federal government bubble is next. You might want to open your mouth and plug your ears.