Bill Bonner, reporting from Johannesburg, South Africa...

Two bits of hot news on Friday - the employment report...and the action in the gold market. According to the government, there were fewer people out of work in the month of November than there were in October.

At least, that is the way the authorities tell it. The official jobless rate fell from its 26- year high of 10.2% down to a 26-year high of 10%. Good news, if you believe it's the beginning of a trend. The other big news is that gold fell $48. We'll come back to that in a moment...

Elsewhere in the news, we find that bankers are lightening up - at least in their loans to speculators. Tony Jackson in The Financial Times says they're at it again: "US bankers are resuming their carefree habits as in the days of the credit boom. In lending to private equity, it seems they are once more issuing so called covenant-lite and payment-in-kind loans, whereby borrowers are freed from irksome conditions and can pay their annual interest by simply borrowing more.

"All this at a time when companies acquired by private equity last time round are sliding into default in record numbers."

Oh to be young again...sans souci, sans scruple...without a worry or a regret...oh to be a banker! We're happy for them. Really. The bankers, that is... Well, we would be happier if they were really doing something to put the economy on the road to recovery. But what do you expect? So far, the 'recovery' is as phony as the boom that preceded it. A real recovery requires real savings, real investment, real jobs, and real increases in earnings. (Readers will recognize those as the same requirements for a durable boom in the stock market.) As far as we can tell, they do not exist.

But who cares? For most investors a phony recovery is as good as a real one. And if the economy is recovering in any shape or form, maybe investors don't need so much of that catastrophe insurance - gold - after all. The price of gold fell $48 on Friday. Most likely, the gold market was looking for an excuse for a breather. It's been up in 20 of the last 22 trading sessions.

As we kept saying, it was ready for a rest. But is this the correction we've been waiting for? Maybe. Maybe not. We won't know for a few days. If it is, we could see the price of gold slip below $1,000 again. We doubt that will happen...not with the stock market moving up. As long as stock prices keep rising, and bankers keep pumping up speculative investments, we're still in "phony recovery" mode. And phony recovery includes a fear of inflation...which pushes up the price of gold. Wait 'til we get in Real Depression mode!

Then, you'll see stocks collapse...along with gold. That will be the correction in the gold market we're waiting for. Hey wait...we own gold. Why are we waiting for a correction in the gold market? So we can buy more! Our "Trade of the Decade" is still the best trade around. Sell stocks on rallies. Buy gold on dips. We keep waiting for gold to dip; it doesn't seem to want to. Bad news...good news...it just keeps going up. But remember, there's still a fight going on. It's between the natural, de-leveraging cycle, following 50 years of credit expansion...and the unnatural forces of inflation that caused the big bubbles of the '90s and '00s.

The biggest of those bubbles blew up in '07-'09. But what did the feds do? They went back to blowing their little black hearts out. God bless 'em! They've been at it for so long that investors think they know what to expect. Here at The Daily Reckoning, we warn that a bubble is forming...and investors take it like news of an over-turned beer truck. They can't wait to get on the scene and score a few brews. It is as if they had learned nothing from the bust-up and credit crisis! It is as if they were morons...or worse...bankers! Or maybe we're the idiots.

So far, these latest bubbles are paying off pretty well...with US stocks up more than 60% and emerging markets more than double what they were at the bottom last march. Heck, at this rate...investors will be even in a few more months! How will the fight turn out? What will happen next? Inflation...or deflation? Exactly which foot will the feds manage to shoot? We don't know.

There are so many wrong answers and only one right one. We'd feel a lot better about the whole situation if the stock market would collapse in the 'second leg down' that we've been predicting. Then, we could buy more gold and await Armageddon. More important, we'd feel that we actually knew what we were talking about. Until that happens, we'll just have to guess along with everyone else. And our best guess this morning is that the rambling, shambling, Japan- style slump will continue...with Fed-inspired speculation in the asset markets...leading to various booms and busts... on-again, off-again recession...run-ups and run-downs in the stock market...hopes of recovery...followed by disappointments.

Meanwhile, the private sector struggles to pay down the debt from the go-go years...and the feds pile on more.

Food... The Trade of the Decade By Chris Mayer Gaithersburg, Maryland "If you can tell me something else where the fundamentals are so attractive...I'd be happy to put my money there," said Jim Rogers, the famed investor and self-made billionaire in a recent interview. "But I don't know of any other place." What's he talking about?

Agricultural commodities like soybeans, wheat and corn. We begin our analysis with some simple "big picture" truths. The world's population has more than doubled since 1950 - from about 2.5 billion to 6.7 billion.

By 2050, there will be more than 9 billion people on the planet. Almost all of this growth will occur in the emerging markets like China and India. And their populations will all be doing one thing, for sure - eating. Now, hang on. I know that is a banal insight by itself, but this story has more layers than a tiramisu. After population growth, he second layer is the mix of food eaten, which is important. These undeveloped economies are becoming wealthier.

Predictably, as people everywhere have done and continue to do when they have a little more money in their pockets, they change their diets. They spend more on food. The average Chinese person spends 40 cents of every additional dollar earned on food. In India, it's about 70 cents of every additional dollar. What do they buy? They buy more meat, more fruits and more vegetables. Their calorie intake rises. That's why the UN says we'll need to boost food production by 70% by 2050 - a big task, given increasing restraints on water and quality arable land. How do we meet that demand? Here the plotlines start to thicken and things get interesting... Let's look at soybeans specifically.

China is the largest importer of soybeans and has been since 2000. China was once the largest exporter of soybeans, but flipped to a net importer in 1995. It may well be impossible for China to meet its demands for soybeans by producing more of its own. Passport Capital, an astute hedge fund, estimates that in order to grow enough soybeans to become self-sufficient, China would need to cultivate an area about the size of Nebraska. That looks impossible against China's arable land base, which has been in decline since 1988 - this despite the fact that China subsidizes agriculture. Another reason is the low level of water resources in China.

(See the nearby chart "Who Has Water... And Who Doesn't.") Soybeans require a lot of water - 1,500 tonnes of water for one tonne of soybeans. This chart is telling. Who has lots of water? Brazil. So it is no surprise to discover that the increase in demand for soybeans from China has largely been met by increasing soybean acreage planted in Brazil. (Brazil is the second largest exporter of soybeans in the world, behind the US and ahead of Argentina and Paraguay.) The easiest way for China to get around its water shortage is to import soybeans.

By importing soybeans, Passport calculates that China is effectively importing 14% of its water needs. It looks likes this trend will continue for quite some time. When you look across the world, arable land per person is in decline. (Arable land simply means land that can be used for farming; it doesn't mean that it is currently used for farming.) But one nation has more potential for converting arable land into producing farmland than anybody else, by a country mile. It's Brazil again. Brazil has a large tropical savanna known as the cerrado. You can think of it as the world's arable land bank. It's an area of about 250 million acres - about as big an area as all of the arable land in the US. It gets plenty of rainfall and sunshine.

The soil is very old and runs deep. But there is a problem: The soil is nutrient poor. You need to add a lot of potash and phosphate - two key nutrients - to grow soybeans there. According to estimates by SLC Agricola and Morgan Stanley, the average new acre of farmland in the cerrado requires 14 times the amount of phosphate and three times the amount of potash of a typical American acre. This means that it is expensive to grow grains here. You need a high soybean price to make it worth the effort - and there is more to it than just adding the nutrients. There is road and rail access, for instance. Someone would have to build all that out, too.

So now we are in a position to connect some dots on this story. China's increasing population and affluence will drive its soybean imports. These imports will come mainly from Brazil. And Brazil, as it converts more arable land to producing farmland, will need a lot more potash and phosphate. What is true of soybeans is also true of wheat and corn and rice and other agricultural commodities. All of them face the same challenges for water and land. All of them require lots of fertilizer. I've not mentioned the biofuel component. But this is another big pull on demand for grains. The US alone aims to produce 15 billion gallons of ethanol by 2015. All over the world, biofuel demand now competes with "dinner plate" demand for supplies of grain. This is not a gloom-and-doom scenario.

It simply means that there is a lot of support for higher prices for agricultural commodities. Inventory levels still remain low worldwide. Grain prices are all well off their highs. After adjusting for inflation, many of them are as cheap as they've been in decades. This is why Jim Rogers said he likes the agricultural commodities. I couldn't agree more. I also mentioned how this idea was hard to kill. In the Great Depression, purchases for jewelry and clothing and the like fell by 50%. But purchases for food - even for meat - held steady.

We've seen similar patterns in recent busts. In the Asian Crisis of 1998-2001, the demand for food held steady, even while other markets collapsed. Put it all together and you have a great case for higher grain prices. You also have an environment that is very good for fertilizers - in particular, potash and phosphate.

To be continued in tomorrow's edition ... Regards, Chris Mayer, for The Daily Reckoning