Justice sees the economy heading toward stagflation – the combination of sluggish growth and inflation…

Gold isn’t going to $2,000 an ounce. Before you gag on your coffee or suffer chest pains, allow me to explain.

Happy days are here again! Enjoy them while they last… “Optimism builds,” says a headline in the Financial Times. As predicted, the world markets are enjoying a bounce. People who had no idea there was anything wrong with the world financial system two years ago, now say the problem has been fixed.

Economist Robert P. Murphy at the blog Free Advice must have heard me screeching with Total Mogambo Disrespect (TMD) about Congress and Obama deficit-spending almost $2 trillion this year, and he says, “If fiscal policy is a disaster, monetary policy is even worse.”

“The tax code is a mess, no, make that a nightmare,” says Tom Herman. The long-time tax expert is stepping down after over 40 years at the Wall Street Journal.Our own tax expert, Raife Neuman, says that although Herman’s message may be a no-brainer for any of us who have tried to navigate the labyrinth of the U.S. tax code, it’s an important reminder of the deep problems in tax law.

The extent of the government’s involvement in the markets has reached scary levels. It is our humble opinion here at Notes that you cannot stop the will of the real economy. That doesn’t stop the feds from trying.

We have had our suspicions about the current stock rally ever since it kicked off by ‘leaked’ memos by Citigroup, BoA and JPMorgan Chase announcing a return to profitability.

Contrary to the prevailing analysis, we believe that the Obama and Bush administration insistence on protecting banks at the expense of the taxpayer is the result of a Machiavellian effort by Goldman Sachs and other major banks to influence U.S. economic policy by infiltrating the corridors of power.

Anyone who has been in the military knows what SNAFU means. For those who weren’t in any of the armed services, the polite version is, Situation Normal, All Fouled Up. That seems to sum up perfectly the year 2008. It doesn’t get any worse than what we have just been through.

Friday FY08 Week 49: Quote of the week: Every tree and plant in the meadow seemed to be dancing, those which average eyes would see as fixed and still. – Jalāl ad-Dīn Muhammad Rūmi

Here are four thoughts to trip over as we round yet another sharp corner on the path to economic recovery.