Today’s Daily Reckoning will be a bit light. First, we don’t have much to say...and second, because we have no time to say it anyway.

As to the first issue, nothing much happened yesterday. The Dow retreated only 39 points. Oil slid only $3, to $115. The dollar rose slightly – to $1.55 per euro. Only gold seemed to want to go somewhere – down $18.

As near as we can figure, most investors think the worst is over. After a correction, stocks are going back up. The dollar too. Gold, meanwhile, is going down. Bernanke, Bush and the whole company of angels and archangels who watch over our economy and our money are winning, they believe.

But the more they win...the more you lose, dear reader. Because there are mistakes that need to be corrected. There are errors that need to be punished. Truth needs to be discovered.

And the longer the correction is delayed...the more we live in darkness and error, and the more it costs to fix things. You don’t have to be an economist to figure this out. It’s just the way the world works.

We ended yesterday’s note by reminding ourselves what money really is. When a bank makes an electronic transfer, electrons are the only thing that crosses a street. But those electrons represent pieces of green paper...which, in turn, represent wealth. And what is wealth? It is limited resources...the potential to take up some of the world’s coal, iron, plastic...anything from a ton of wheat to a brand new Mercedes...to some working man’s time. The problem, fundamentally, is that the credit expansion of the last 25 years gave too many people too many claims against those limited resources. Then, when they went to exercise those claims – against stock market earnings in the ’90s...then against houses in the early ’00s...and now against oil, rice and gold – prices rose. The rising prices sent a phony signal. They convinced investors that there was more demand for dotcom stocks and houses than there really was. And today, they’re signaling an outsize demand for commodities and gold. As money pours into the bubble sector...more and more resources – time, capital, things – are misdirected away from things people really want and need and into the bubble. Eventually, the bubble pops...losses are taken...and rebuilding can begin a firmer foundation.

‘But wait,’ we anticipate your question, ‘are you saying that commodities are going to crash too?’

Yes...of course. Every farmer in the world is working hard to make it happen. Lured by high prices, they are bound to overproduce. They always do. Over-production is, by definition, a mistake. It will need to be corrected, eventually...just as overbuilding of new houses is being corrected...and just as overinvestment in NASDAQ dotcoms needed to be corrected.

*** The correction in the housing market made its sharpest move ever in February, with houses nationwide down 12.7% from 12 months earlier. In Las Vegas, Miami and Phoenix prices were down 20%. Foreclosures doubled in the first quarter, with Nevada leading the way.

The falloff in housing has cast a shadow over the whole consumer economy. Consumer confidence is at a 5-year low. The LA Times tells us that people who live on tips – such as waitresses and bellhops – report that clients are tighter with their money than they used to be. Even the big spenders are less willing to part with their money. Says the Rocky Mountain News : “millionaires are singing the recession blues too.”

But let’s go back to commodities, oil and gold. Just because there will eventually be a correction in these markets doesn’t mean it is going to happen tomorrow.

Let us turn to the case of gold, for example. Yesterday’s close left the price at $876. If we’re right, a lot of investors and speculators are beginning to worry. We bought most of our gold when the price was below $500. But many of these guys got into the gold market at $800 and above. Some have already lost money. Others are worried about preserving their gains. Even a few of the old-timers are recalling the terrible bear market in gold of ’80-’99. They lived through it; they won’t live through it again, they say to themselves.

But even at $900...or $1,000...gold has still not gotten to the silly stage of a bull market. That is, it is a bull market...but not a bubble. The charts show a steady rise in the price, but no vertical spike.

And, as we’ve pointed out many times, a lot has happened since ’80. Simply adjusting the ’80 price to inflation, gold would have to sell for nearly $2,500 in today’s money to return to its previous high. But inflation of the dollar is only a part of the picture; a bubble in the credit markets has led to trillions of dollars worth of derivatives ...trillions of dollars’ worth of new debt...trillions worth of dollar reserves in China, Japan and Russia...dizzy prices for “works of art”...madcap building projects in the Mideast...breathtaking growth in China...and more debt than the planet has ever seen. Many of these prices and projects must be mistakes. Many will have to be corrected.

The Fed should raise rates...and bring on the correction. But that’s not going to happen, because another very important difference between ’80 and ’08 is the difference between Paul Volcker and Ben Bernanke. Volcker protected the dollar – which is why gold entered a 2-decades long bear market. Bernanke has no interest in protecting the dollar – which is why this bull market in gold has a long way to go. Instead of correcting the mistakes of the last 20 years, the Bernanke Fed is determined to help people make more of them.

*** What the United States lacks, Europe seems to have. A positive trade balance, for example. Savings too. A rising currency. And a central bank chief more like Volcker than Bernanke.

*** “The U.S. is doing most of what it told Asia not to,” writes William Pesek. “It counseled higher interest rates, stronger currencies, fiscal belt-tightening, avoiding fresh asset bubbles and limits on bailing out investors. These days, the U.S. is reminding the world it's better at giving economic advice than taking it.”

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.