The late economist John Maynard Keynes famously noted that “the market can remain irrational longer than you can remain solvent.”

As if Mr. Keynes were looking through a crystal ball into our present-day economy, this theory has been proven disastrously true. Although he was speaking from the perspective of an investor, nations globally are bearing the brunt of a fierce and unpredictable market as they attempt to climb out of fiscal holes that, on occasion, they themselves dug.

Now partway through 2010, it’s time to update our economic outlook for the next few months.

Though not an expert in the subject, I have the advantage of understanding the opinions of Main Street, whose human resources have been instrumental in the mending of this nation following a dreadful market downturn. I also study Wall Street, whose behavior throughout the recovery has been maddening to both citizens and federal agencies alike.

That being said, it will be interesting to see how financial regulation reform pans out this summer and into the November elections, as well as the size of the lasso that Washington hurls around our nation’s largest banks.

Previously I wrote about the impending regulation and its potential ability to curtail institutional fiscal irresponsibility in the U.S. and around the globe, but these laws cannot hope to govern the saving and investment of private citizens. The Bureau of Economic Analysis recently reported that, for the month of March, personal income climbed $36 billion while consumption swelled nearly $59 billion.

In other words, Americans are spending more than they are earning, even after a horrific recession that should’ve taught them otherwise. What Congress does anticipate, though, is the ability to stop firms such as AIG from exploiting taxpayer money and the capacity to keep Goldman Sachs and others out of fraud.

The revitalization of the U.S. economy is still apparent with the Dow Jones Industrial Average reaching ten and even eleven thousand points within the past few months, but this is overshadowed by the dark cloud that hovers over the world’s financial markets. In particular, Europe is experiencing an inability to pay its debts, specifically Greece and even Spain and Portugal. Greece exclusively has been given a $145 billion loan by the European Union and International Monetary Fund in order to stave off mass defaults on financial instruments, which has hurt its currency, the euro, tremendously. The euro of late has fallen to an annual low compared to the U.S. dollar.

The financial television network CNBC stated that gold could, in a sense, become the world’s new reserve currency. This could be a product of inflationary expectations pertaining to the U.S. dollar and weakening euro as a consequence of financial crises. The reasoning behind gold’s new found prominence is the fact that gold cannot be printed like currency: there is a finite amount. Therefore, it is a stable commodity and a safe haven for investors.

A recent article in The Economist explains “a cheaper euro hurts America, which will feel it is owed a chance for export-led growth after almost ruining itself as the world’s main consumer,” and earlier stating “the case for a further drop in the euro against the dollar has more than just momentum to back it. Business cycles favor it: the euro-area economy is picking up speed again, but America’s recovery is more advanced.”

Here at home, a weaker U.S. dollar–the euro aside–is not necessarily a bad thing. As referenced earlier, this makes us more attractive to foreign purchasers, thus reducing the trade deficit.

Moving forward, it may be prudent for countries around the world to heed the theory of Mr. Keynes and remember that the market doesn’t always play nice, and while conservative policy won’t make them a quick billion, it could just save them from collapse.