The world of money - oh, what a wicked world it is!

Let us check in on the Financial Times from whence comes a report on the sorry state of U.S. federal finances. The "President's Budget" shows a deficit of $319 billion for this fiscal year. But the president's financial intelligence is subject to the same persuasion as his strategic intelligence; his budget shows not what is, but what he wished were.

The U.S. Treasury Department also produces its own budget, called the "Financial Report of the US." It shows a budget deficit of twice as much: $760 billion. The difference between the two is that the U.S. Treasury Department prepares the budget more or less as every company must - on an accrual basis. It takes into account not only cash outlays, but contracts and commitments. The President's Budget is merely a statement of cash in, cash out. Were GM and Ford to account for their businesses that way, they'd be gushing profits, too!

The U.S. Treasury Department also comes up with a number for how much Americans actually owe, thanks to federal deficits. Are you sitting down? It's a chunky number: $750,000 per household. That's what you get when you take the total commitments of the feds - $49 trillion -and divide them by the number of families.

The Financial Times goes on to note that it took 204 years for the U.S. government to accumulate its first $1 trillion in debt. Now, it adds that much every 18 months. George W. Bush has added more debt than any president who ever lived. In fact, he's added more debt than all the presidents who ever lived...combined.

But as we keep saying, nature abhors a vacuum and it loathes a monopoly. When the Soviet Union collapsed, the United States stepped into a vacuum. It became the world's only superpower, with practically a monopoly on the use of state-sponsored violence. Nature must have found the United States too big for her britches, and decided to find a way to take her down a peg. She came up with George W. Bush.

How long can the world fail to notice? The United States has been running up debt as if it were a banana republic - only without the bananas, even though for the last 18 months or so, the dollar has actually gone up. But, how long could that trend last? Not long, was our guess. Looking at a chart today, it looks as though it came to an end in December. Since then, the dollar has trended down.

And last week, Ben Bernanke came out with a warning: maybe the Fed wouldn't keep raising rates after all. The currency markets shuttered. The dollar dropped, but what were speculators going to do? They looked around and found the anti-dollar. The one thing that has been rising relentlessly ever year of the Bush administration: gold. The yellow metal surged; June contracts rose above $638.

What can we say? There's a bull market in gold, and a bear market in paper. So far, only the dollar has been noticeably affected, but it is just a matter of time before other paper is, too - bonds, stocks, mortgages, and derivatives.

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