We returned from the United States this morning feeling low. Maybe it was just the effect of so much traveling. It could the delayed effect of attending a memorial for a dear friend. Perhaps it was our drive down to the family farm...or the result of the book we were reading on the plane.

We had not seen the family farm in Maryland in a few years. As we drove to it, we wondered again about this extraordinary period of prosperity in the United States. By the gross numbers, Americans added more to their wealth in the last 20 years than in any equivalent period in history. But something seems wrong. What kind of wealth is this, we wondered? All we could see on our drive was a wealth of opportunities to spend money badly. The countryside is being junked up with strip malls and highways.

You can barely throw a beer can out the window without hitting a collection of Chicken Fil's, WaWas, and Mr. Noodle's...not to mention muffler shops and car dealers. There are more cars and more roads to drive on, but there doesn't seem to be anywhere worth driving. And driving down the road itself is depressing. We remember as a child that our grandparents would get in the car on Sunday afternoon to "go for a drive." It was fun just to drive around and take in the sights. We can hardly imagine doing that now.

On paper, people are a lot richer than they were 20 or 50 years ago, but it doesn't seem as though the money has done them much good. Maybe our memory is giving out, but we don't ever remember the area looking so shabby, so crowded, or so disagreeable.

When we finally got to the farm, we were disappointed to find that even our own place seemed to have fallen into the same junky disrepair as the rest of the neighborhood. The fences are broken. Trees have fallen down and lay on the ground like unburied soldiers. Shutters bang in the wind. We worked for 10 years building it up; now, it seems like a lot of time and effort for nothing.

But maybe that was only our mood and who really knows what causes moods or what our moods cause?

That we have moods, no one denies. They react to the world around us, and then cause us to change the way we think and act.

And they affect entire nations. Of course, we see this in the markets. Sometimes people are buoyant and upbeat about the future. Other times, people are downcast and gloomy.

Sometimes a dollar's worth of earnings can be sold for $20. Other times, investors will turn up their noses even at a $10 price.

Sometimes moods sink - even deeper than stock prices - deep into the heart and soul of a people. Our reading on the flight was a book we found in an airport kiosk. It was a "social history" of the Soviet Army in World War II. Rarely has any group of people been so roughly handled as the Soviet soldiers in the '30s and '40s. If a soldier escaped being slaughtered by the enemy, it was only to be annihilated by his own government. Sometimes he managed to get lucky and get shot or he died from sheer incompetence...with neither proper gear...nor proper food...sans sleep...and sanitation.

And yet, why did these millions of armed men still not turn on their tormentors? Ah, that's where mood - the zeitgeist - of the country plays its part. The people of the Soviet Union were, for the most part anyway, believers. They believed in the Soviet ideology, in rational materialism, and in Stalin himself. That is to say, they believed in things most people today regard as delusions. Even those who survived Stalin's mass murders often still say his name with reverence...as if he were a national saint.

"You know what, I think the mood in the U.S. has changed a lot in the last decade," said a friend at breakfast. "I remember when I went to West Point, we were taught to respect the enemy. He was a worthy opponent. If captured, he should be treated as well as you could treat him. In World War II, that's what we did. That's probably part of the reason so many Germans surrendered to us at the close of the war. They wouldn't surrender to the Russians, because they knew they would be killed. And it's probably why we had a relatively easy time reconstructing our enemies after the war.

"But I have a friend with a son at West Point now. What I hear is that they regard the enemy as though he were inferior...and no longer deserves either respect or the courtesies of the Geneva Conventions. Of course, that could be just his opinion. I don't know...but I can't imagine that we would have put burlap bags over the head of our prisoners in World War II, or had WACs stripping them down and kicking them in their private parts."

How much has the mood of America changed in these last 20 years? In what direction? We know the average American will pay nearly three times as much for the same dollar of earnings. Why does he think it so much more valuable? What else has changed?

We don't know.

*** The war in Iraq costs $150 million a day, according to a recent USA Today report. Afghanistan adds another $27 million.

Meanwhile, fears over Iran sent the oil price up last week. And then came Venezuelan President Chavez, with a helpful remark. He said he'd shut down U.S. oil installations in the country and sell his oil to China and India, if America got on his nerves.

And these tensions over Iran's nuclear ambitions didn't only affect oil prices...gold, the "safe-haven metal" traded near 25-year highs today.

"It might even be a calm before the storm. I think we're going to see some further tests higher this week," said James Moore, analyst at TheBullionDesk.com.

"The market is going to remain a bullish trend and we will continue on towards the $600 (an ounce) level, probably over the course of the year," he said.

*** "The debt is exploding and the president isn't facing up to it," said Sen. Kent Conrad of North Dakota, the top Democrat on the Senate Budget Committee.

Dubya may not be facing it, but well-respected bond guru, Bill Gross, certainly is.

At a financial conference at UCLA last week, Gross "expressed concern that the game might be up - that foreign investors would decide that U.S. bonds and other securities weren't worth the money, leaving the American economy suddenly desperate for capital," notes the LA Times.

"In any case, the extent of foreign investor control over the U.S. economy's fortunes is a cold reality," Gross said.

Savings rates are at a 72-year low. Of course, back in the '30s people had lost their jobs. They couldn't save; instead they had to draw down savings simply in order to eat and pay the rent. Now, we just heard that employment is near a record high. So, now people don't save for another reason - because they think they no longer need savings.

There will always be jobs, ATM machines, and home equity lines, right? What a strange public mood! It's almost delusional. People cannot imagine that times could ever get so bad that they would need to draw on their own savings. There will always be someone ready to lend them money, won't there? What they don't consider is where the money will come from. If Americans no longer save, who will have savings to lend?

Well, that must be why God made foreigners.

*** Due to soaring deficits, the Bush administration will be forced to ask Congress to raise the national debt limit, which is now at $8.2 trillion...and counting.

But never fear - Bush has made a pledge to cut the U.S. deficit in half by the end of his term in 2009...and how exactly does he plan to do that? After reading a bit about his new proposed budget, to start October 1 of this year, your guess is as good as ours, dear reader.

In his budget proposal, Bush is asking Congress for $120 billion to pay for the wars in Iraq and Afghanistan, on top of 5 percent increases in the Pentagon and Homeland Security budgets.

With these increases, to meet his goal of cutting the colossal deficit in half in the next three years, the budget plan calls for $36 billion in Medicare cuts over five years, as well as putting "the squeeze on the one-sixth of the budget that funds the nonsecurity operations of government - everything from running the national parks to buying paper clips," CNN.com reports.

*** At the memorial service for our friend Thom, we got together as many surviving members of the old 'Ouzilly Band' as we could. Even at its best, the Ouzilly band was pathetic. Without Thom in the lead, it was worse. Still, it was a time for music, laughter and tears; that's what Thom would have wanted. A performance of the Ouzilly Band accomplished all three. When people heard us play, they laughed, unless they were real music lovers...in which case, they cried.

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