With the imminent birth of “RTC 2.0,” the dollar is headed for oblivion -- and profit opportunities in hard assets are about to explode. It’s times like these when fortunes are made...

Man, oh man. Wow. This has been, bar none, the nuttiest week for markets I have ever seen. I can’t help but think of the late great baseball commentator Harry Caray, calling a back-to-back triple play and ninth inning grand slam against the Cubs.

Ho-leee COW!

I’m holed up with a bunch of fellow writers at the Chateau de Courtomer in France. My old pal, Chris Mayer, and I are the U.S. contingent. We’re here with editors from Britain, Ireland, France, Australia, Panama, Mexico, South Africa and a few other countries that currently slip my mind.

U.S. markets don’t open ‘til 3:30 in the afternoon in France, and close around 10 o’clock at night. It makes for an interesting schedule.

For the past few days, we’ve all been gobsmacked by the incredible events of this historic, insane week. On Thursday night we all gathered around my laptop, post-dinner glasses of wine in hand, to see how things were progressing in the states.

It just seems to get nuttier by the day. Lehman Brothers goes to zero! Merrill Lynch snapped up! AIG bailed out! Gold’s single biggest one-day move in history! Dow down 500, Dow up 400 -- twice! And now, the mother of all bailouts: a new “Resolution Trust Corporation” to write the BIG CHECK for EVERYTHING!

It’s like Dr. Peter Venkman laying things out for the mayor in Ghostbusters. “Human sacrifice, dogs and cats living together... Mass Hysteria!”

(By the way, I normally frown on the excessive use of exclamation points, and I try to avoid the use of all caps like the plague. But if there were ever a week to indulge, this it.)

On Wednesday I asked the rhetorical question, “Where Is the Plunge Protection Team?” and off-handedly threw this out:

In our case, here in 2008, a measly $15 billion might not do the trick. In fact, it might take more like $500 billion to get the U.S. market feeling chipper again. Maybe a trillion, just to be safe... who knows?

And lo and behold, here we are. Half a trillion sounds just about right. News of a possible “Resolution Trust Corp 2.0” -- plus the most globally coordinated central bank efforts the world has ever seen -- sent markets skyrocketing on Thursday.

The original Resolution Trust Corporation (RTC) was a government-owned entity brought in to address the out-of-control Savings & Loan crisis of the 1980s. It was basically a vehicle for Uncle Sam to lay out $150 billion at taxpayer expense. (The costs could easily be three or four times that today; Lehman alone had liabilities of $680 billion.)

So markets rallied big-time Thursday on word of “RTC 2.0,” a new “entity” to mop up all remaining fallout. If the deal goes through, it means the Plunge Protection Team can ride forth in full unfettered glory.

Cue “Ride of the Valkyries”! Set the printing press to ludicrous speed! Let the great reflation begin!

Paper Mania

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 multidecade 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 and Freddie Mac, the government took over the mortgage business. With the implosion of AIG, the government took over the insurance business. If Morgan Stanley 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 multibillion-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.)

As we watched prices plummet earlier this week, Chris M. and I joked that there was almost a positive correlation between the quality of the name and the size of the decline.

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.

Yields Galore

By the way, for those of you who are unaware, I recently took over Safe Haven Investor and became the publication’s sole editor.

I’ll still be fulfilling my editorial director duties (and still writing to you three times a week in Taipan Daily). but I tell you what: It feels good to be back in the saddle again. Especially right here, right now.

I am just blown away by the number of incredible investing bargains out there. As I said and will say again, hard assets have been beaten senseless by a short-term “run on the portfolio” just as the printing press rollout makes hard assets more long-term attractive than ever before.

If ever there was a window to load the boat, this is it. Not just today or tomorrow, but for the next little while. Whether the window stays open longer before hard assets head skyward again, I don’t know.

So I’m going to be scooping up high-quality, high-yielding assets left and right for Safe Haven Investor readers. We’re going to have the chance to sit on our butts and collect fantastic dividend yields ranging from 7% to 15%, comforted in the bedrock financial condition of everything we own, even as the same bargains we snap up offer triple-digit return potential over the next 18 to 24 months.

It’s an insane time... but it’s also an exhilarating time. Markets like these, opportunities like these, are the stuff of legend. Fifty years from now we could still be talking about “the panic of 2008,” just as the panic of 1907 is still mentioned and referenced today. A few brave souls built fortunes back then, and a few more will build them this time around, too.

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Other Related Topics: Bank Bailout , Gold , Justice Litle