It’s remarkable how different the tone of politicians and pundits, especially of the left leaning variety, has become on the economy. The Dow is reacting to the new sweet talk from Washington with a Bear market rally that might make even Peter Schiff smile and I suspect the rally will continue today and maybe even until the end of the week. Reality will set in however. Tax hikes will add to the already out of control unemployment and the government printing presses working overtime will lead to inflation at the very least.

Cap and Trade and new Ethanol mandates will meanwhile create grocery inflation and eat away at what little worth our devaluing dollar has. But for the moment as the Dow reacts to the new found Hope of the Obama administration gold and oil will go down enough that people will start buying those in quantities large enough to convince people who want to believe everything is fine that the recession is over.  It isn’t.

The higher than expected consumer spending so many people are talking about is driven by food, gun and ammunition hoarding. The better than expected performance of banks that started the optimism was little more than bankers waving taxpayer money while claiming they were rich. The underlying weakness of our economy is still gnawing away at our finances and the stimulus package is only prolonging the cure.

We can no longer look at debt as wealth, we need to start saving and building wealth the old fashioned way. This will destroy the global economy as our consumption of world goods lies at the base of the world’s prosperity but that will happen anyway. Americans must change the way they think about money to weather the storm that is coming.

Forget what Obama and company are saying about recovery,”greenjobs” and cutting taxes for the little guy. You will be paying higher taxes, much higher taxes, in the form of more expensive products and consumption taxes. Housing prices will go up but the value will remain at normal levels, in other words your house is no longer an investment, it is a place it live so get comfortable.

Learn some new skills, if you have land start gardening, take up hunting and fishing and stock up on long lasting non-perishable foods now. Next year you can expect to pay double at least what you are paying for food so if you can provide your own, even just a few meals a week through gardening or wild game, you’ll be saving money. Likewise buying beans, rice and other long lasting staples now while they are still relatively cheap.

Pay off your debt, and unless you have cash to burn and the ability to react quickly stay out of the stock market. Gold is a nice investment if you can take physical possession, as is silver. Think about investing in arms. An SKS was selling for $200-$400 a couple of years ago, now they can run three times that.

Keep cash on hand and if you use a credit card try one with “points” you’ll use. Pay off debts and don’t make any new major purchases. Your 2008 car will run fine for the next couple of years so learn to love it.

Above all don’t let the media tell you about the economy, learn to look at the data yourself and interpret it. We are going through a monumental shift in this country, one that entails people used to having great prosperity getting used to living in a world where credit doesn’t fall from the sky and wealth becomes harder to come by. It won’t be pretty but it’s an adjustment the market has to make, and it will whether Obama wants it to or not.