The headlines are dramatic. Short selling banned for 799 financial institutions. $50bn injected into money markets. Plans for a massive bailout fund to clear the system of bad debt and stabilize the housing market.

The Unholy trinity – the Federal Reserve, SEC and Treasury – has pulled out all the stops this time. But while US stocks soar, Justice Litle says the government’s bailouts are a death blow for the dollar.

This makes real, tangible assets highly attractive. Justice says the most profitable investments going forward will be energy, infrastructure, hard assets and non-US growth plays.

More from Taipan Daily:

In the short run, it’s not clear how things will play out – the markets are an absolute circus right now. (As if you needed someone to tell you that.) In the long run, though, we are seeing the reality of the Austrian Endgame unfold, here and now, right before our eyes.

I’ve been pounding the drum for the “von Mises prophecy,” the crux of the Austrian Endgame, relentlessly and repeatedly for years now. So I might as well indulge and quote the key von Mises passage once again:

There is no means of avoiding the final collapse of a boom expansion brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

The final stage of the endgame, a multi-decade saga that began with Alan Greenspan, ushers in the corresponding “final and total catastrophe of the currency system involved.”

That’s what we are witnessing today.

The inevitable grand finale stems from the Hobson’s choice presented to the powers that be. (As far as they’re concerned, it’s really no choice at all.) When the crushing weight of the debt-laden financial system gets heavy enough, there is no other option than to print…. to print and print and print some more…. to spew forth paper billions like water from a fire hydrant, in a last-ditch effort to save the system from a yawning black hole of credit compression and depression.

Enter “RTC 2.0.” If this “entity,” or something else like it, is formed, there will be no more restrictions on the flow of emergency funds. The hundred-year flood of monopoly money will come. We will be fixed on an irreversible crash course, summed up by an old Civil War slogan: “I don’t give a damn about a greenback dollar.”

With the implosion of Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) , the government took over the mortgage business. With the implosion of AIG (NYSE:AIG), the government took over the insurance business.

If Morgan Stanley (NYSE:MS) gets 50% acquired by China (the current rumor du jour), then another government will be taking over one of the last remnants of the investment banking business. And the poor, old, debt-ridden American consumer, with an upside-down house, a maxed-out credit card, and a savings rate of roughly zero, hasn’t even been bailed out himself yet.

Free cash! Get your free cash here! No doubt the Big Three automakers in Detroit are cueing up, too. Michigan Governor Jennifer Granholm is already demanding a cut: If you can give those guys half a trillion, what’s a lousy $50-$100 billion for us, too? It’s only paper anyway… you’ll hardly miss it. Hand it over!

Hard-Asset Bonanza

So what’s next?

Well, gold saw the biggest single-day up-move in history this week – on the order of 10% in one session – and then settled back into a quieter routine on Thursday.

That surge is indicative of what’s coming.

As the Fed pumps a tidal wave of cash into the system, the central banks around the world follow suit, and the U.S. government prepares to underwrite the largest bailout ever, it’s finally sinking in that deflation will not be allowed to stand.

The market is too leveraged, the danger too great, to allow things to play out on a natural course. Damn the torpedoes, damn the taxpayer, and damn all last vestiges of fiscal discipline. Printing cash is the order of business now.

And thus, the investment areas I am most excited about now are these:

1. Energy
2. Infrastructure
3. Hard assets
4. Global growth plays with minimal U.S. exposure

All these areas have a few things in common. First, they were all hit extremely hard in the recent market meltdown. Second, they involve real “stuff” and real trends that can’t disappear in a puff of leveraged smoke.

You see, this week’s wild market action was brought about by a mass “run on the bank,” as investors shunned anything and everything with even the slightest taint of risk.

Wild action of previous weeks was brought about by a similar “run on the portfolio.” Hedge fund after hedge fund found themselves forced to dump assets in the face of panicky investor withdrawals. On top of that, the collapse of a multi-billion-dollar commodity fund — again brought about by a “run on the portfolio” — led to a deep and vicious feedback loop.

This mad rush out of hard assets (commodities, energy, etc) did not come about because “stuff” is suddenly much less attractive. It came about because someone yelled “fire!” in a crowded theater, a chain reaction kicked in, and countless overleveraged funds were forced to puke up their holdings at fire-sale prices. (Lesson to be learned: Leverage erodes staying power, so don’t use too much.)

In layman’s terms, the good stuff was getting whacked hardest because that’s what the smart funds owned. They got squeezed in the same manner, though on a lesser scale, as a Merrill or a Goldman.

Now More Than Ever

But the thing is, the worse the dollar looks and the bigger the bailout looks, the better hard assets look overall.

I mean really; let’s just get down to brass tacks here. Which would you rather own… a leveraged financial outfit that could hypothetically go to zero on Wall Street’s whim, or a company that owns a million acres of timberland, or rights to a big copper mine, or half a billion barrels’ worth of proven oil reserves?

A Lehman Brothers or an AIG can go to zero. But how does half a billion barrels of oil go to zero? How does a trillion cubic feet of natural gas go to zero? How does timberland (which they aren’t making any more of) ever become worthless? Are people going to stop driving or eating or heating their homes?

Companies with substantial hard-asset holdings look better than ever. The worse the dollar looks, the more I drool over these hidden gems that beleaguered hedge funds and panicked investors have tossed over the side left and right.

Source: Buckle Your Seatbelt – The Final Stage of Dollar Oblivion Has Begun