Not surprisingly, the days following “mega-week” – as last week was termed by many commentators in recognition of its concentration of key events and data – have been characterized by unusually high volatility in many markets and also by unusually outspoken reactions from policy makers and pundits around the world.Although the main events of last week – the mid-term elections in the United States and the monetary-policy decisions from the central banks of the US, European Union, United Kingdom and Japan – were all pretty much as expected, the reactions to them were intense and, in some respects, extreme.The clearest example of this was in the largest and most important of the financial markets, namely the foreign-currency market. Here the trend of dollar weakness that had been under way since Fed Chairman Fred Bernanke initially mooted another round of “quantitative easing” (QE2 for short) by the Fed reached a climax, and the dollar fell sharply against virtually every currency on earth.In tandem, bond prices rose sharply (after all, the essence of QE2 is that the Fed will spend $600 billion buying bonds), and so did share prices. Commodity pries soared, led by gold and silver, as the belief that the Fed was intent on debasing the dollar, and hence that the dollar would lose its status as the reserve currency of the global financial system, seemed to be vindicated.But this intense reaction also proved to be short-lived.The Fed’s announcement was made on Wednesday afternoon (Washington time), and most of the market moves peaked on Thursday or Friday. Critically, the dollar hit bottom on Thursday, reaching almost 1.43 euro and 80 yen to the dollar. But since then (at least through Wednesday of this week), a sharp reaction has set in.This seems to stem less from any second thoughts as to the severity of America’s woes, rather to a belated recognition that those of Europe are even greater. In the European bond markets, prices of bonds issued by the governments of Ireland, Portugal, Greece and Spain all plunged, as doubts over these countries’ solvency re-emerged in even more intense form.Meanwhile, back in the US, bond prices stopped rising and started falling, seemingly spitting in the face of the Fed and its proclaimed plans to buy enough bonds to cover the US budget deficit next year. Although stock prices continued rising through the end of the week, they were weaker this week.Commodities pressed remorselessly higher, with silver leading the charge as its price went parabolic – forcing the commodity exchanges to impose higher margin requirements on the speculators in this market. The behavior of silver and, to a lesser extent that of gold, suggests a speculative blow-off, not dissimilar to the historic highs recorded in 1980, and makes it probable that an even more rapid collapse in prices will soon follow.But the speculative gyrations of silver and gold cannot detract from the quasi-religious status that the precious metals have. Perhaps this resurgence of gold-worship should be seen as part of a general swing away from rational thought and toward voodoo-ish, mumbo-jumbostyle religiosity – in Judaism and other religions and in society generally. In any event, the movement toward “dump-the-dollar” on the one hand, and toward reinstating gold via some new version of the gold standard on the other, is rapidly gaining momentum and prominence.The strongly negative reaction to Bernanke’s policies on the part of Germany, China, Brazil and most other big countries is certainly feeding the anti-dollar sentiment.But when Robert Zoellick, a veteran American diplomat and senior bureaucrat who is now head of the World Bank, pens an op-ed article in the Financial Times suggesting a role for gold in a new or revamped global monetary system, you know things have come a long way from anything that used to be considered normal and acceptable.It will, needless to say, get much worse. Volatility will be more intense and markets will do steadily weirder things.Policies will probably become even less coordinated between countries and blocs. Ordinary people will continue to search for stability and safe havens, almost certainly in vain, making them susceptible to “hot” new ideas. The times we live in will continue to become ever more interesting.