On August 1, the U.S. president announced that a deal raising the debt ceiling and cutting spending had been reached. The White House called it a “win for the economy and budget discipline.”

If it was such a win, why does it feel like we just got hit in the face with a clump of dirt?

The market obviously doesn’t think anything is solved. On Tuesday, the S&P got hammered for the seventh day in a row—making it the longest losing streak since the dark days of 2008. The Dow Jones was down too. So was the Nasdaq.

More than a trillion dollars in stock market wealth simply evaporated.

Coming after politicians supposedly saved the nation, the stock market crash was particularly ominous.

“I would have expected to see a (stocks) relief rally almost immediately upon passage in the Senate,” said Fred Dickson, chief market strategist at The Davidson Cos. in Lake Oswego, Oregon. “It hasn’t happened.”

Instead markets slumped hard! Why?

Simply put: The debt deal stinks. The compromising Congress may pay the immediate bills, but nothing has been done to even begin to fix the debt problem.

More ominously, no one believes anything Washington says anymore. Everyone can see what a farce it has become. Politicians on the verge of bringing the whole government to a halt over cutting a couple of hundred billion dollars a year over 10 years (most of it back loaded years into the future)—while the economy is going further into debt by the trillions. Fiddling while America burns.

And it is not just the average guy on the street who sees America’s peril. The big players see it too. The debt ceiling fiasco was played prime-time for the world to see.

What did the big players do? Just look at what went up and what went down.

As the stock market slid and the value of America’s businesses evaporated, one investment soared. Unfortunately, it is an investment that indicates more trouble ahead for America.

On Tuesday, gold prices blew through previous records. Then on Wednesday, they charged higher still—reaching $1,666 per ounce.

As American politicians were arguing who got the window seat on the Hindenburg, the Bank of Korea announced it was buying gold. Other big players evidently were too. Meanwhile, the dollar was being dumped—sending it toward its 2008 crisis lows.

“There has been a fundamental shift in the behavior of central banks,” says Natalie Dempster, head of government affairs for the World Gold Council. “Central banks on the whole have been net sellers of gold for the past two decades” (emphasis added).

What has changed?

For 20 years central banks believed the U.S. dollar was as good as gold. They sold their reserves and accumulated interest-earning treasury bonds instead. The dollar became the new global reserve currency.

But now, the world is realizing that the U.S dollar is facing a bonfire. Gold might get melted by the coming financial inferno, but at least it won’t go up in smoke.

“Fundamental reform of the world’s monetary system has begun,” writes Forbes’s Charles Kadlec. The world is trying to wean itself off the dollar.

The Asians are hard at it. Once Europeans gets their act together, expect dollar dumping and gold buying from them too. When the first major European central bank dumps dollars for gold, it will be the spark that lights up the hydrogen balloon.

The fact that America’s political class evidently has no idea what the term “budget discipline” really means is only adding hot gas to the explosive mix.

America is great at talking the talk—and telling other nations how to run their economies. But when it comes to walking the walk, that is a different story. At least that is what the debt ceiling spectacle conveys.

But soon, America isn’t going to have a choice in the matter. It has its own walk with reality looming.

On July 29, the government released revised gdp figures. Oops. Apparently, government statisticians overestimated the pace of recovery in virtually every single quarter over the past four years. The new numbers also show that the economy has not recovered to its post-crisis peak—even though for the past half-year the government has claimed that not only has the economy recovered, but it has been reaching new highs.

The gdp figures are one of the most important market-moving figures released by the government, so it was pretty convenient for politicians to have stats showing that all their “stimulus” spending was working. Now we find out that much of the recovery really was make-believe and all that extra deficit spending really didn’t do as much as advertised.

The shrinking gdp figures were confirmed by July’s jobs report. The economy produced 18,000 jobs in June, according to the Bureau of Labor Statistics. In a workforce of 153 million, that number is statistically insignificant—it could have just as easily been minus 18,000. The adp employment report for July suggests 100,000 jobs were created this past month. That may sound like great news, but even that number isn’t high enough to keep up with population growth.

The official unemployment rate, which is stuck at an economy-suffocating 9.2 percent, is heading higher again. But who knows what the real unemployment rate is. Will it be revised?

Reality is also coming home to the housing market. There is no housing market recovery. Nineteen out of 20 cities in the S&P/Case-Shiller index show house prices falling over the past year, Bloomberg reports. And now some politicians are pushing to cut the mortgage deduction as a way to increase tax revenue. What do you think that will do to prices, and thus sales, new construction and jobs?

Prepare to reduce your standard of living.

Tougher times are about to come to America. The new debt limit agreements have done nothing to fix America’s addiction to debt. Debt levels, already at dangerous levels, are set to rise far higher than even the most drastic cuts proposed so far.

There was no win for the economy or budget discipline on August 1. But it was a sad spectacle, soon to be eclipsed by an even more spectacular economic explosion.