This interview on BBC is making the rounds. A candid interview if I ever saw one. Protect your assets. Be prepared!
Monthly Archives: September 2011
Reports of the FED as “Only” Lender of US Dollars, The Definition of a System Collapse
9/28/2011 Portland, Oregon – Pop in your mints…
We have taken a small breather here at The Mint. What has occurred in the past week simply boggles the mind. Precious metals have taken a beating and it is our guess that they will continue through tomorrow. The most interesting reasoning for the drop in Gold and Silver that we have heard is that there will be an announcement on October 4th limiting short positions on the COMEX.
Guess who has a huge short position in silver that needs to be covered this week? JP Morgan, to the tune of 121 million ounces. We can only guess at the machinations but needless to say, it would be very convenient for them to be able to cover their positions at a discount. Hence the increase in margin requirements at the COMEX last Friday which has shaken out the weak long positions this week.
Across the board in commodities, current prices reflect a rush to cash, not changing fundamentals.
Some interesting reading on the current, sorry state of employment in the US from US News:
15 Stunning Statistics About the Job Market
It is much worse than most imagine.
Other than that, chaos is reigning as the dollar funding markets for banks in Europe are apparently non-existent. As September 30, 2011 approaches, banks are holding on to cash in the absence of clear direction from the Eurozone as to how they intend to bail out their large institutions.
In the meantime, the FED has apparently opened up swap lines (read printing presses) to provide dollars to these banks. According to a report that we saw from Bloomberg, the FED has gone from its role as the lender of last resort to a role as the lender of ONLY resort.
We take this to mean that nobody is willing to lend US Dollars at any price to the largest banking institutions in the world.
Does this indicate that, at long last, the US Dollar system has technically collapsed?
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 28, 2011
Copper Price per Lb: $3.21
Oil Price per Barrel: $79.95
Corn Price per Bushel: $6.30
10 Yr US Treasury Bond: 2.00%
FED Target Rate: 0.08% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,610 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,011
M1 Monetary Base: $2,010,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,541,800,000,000 YIKES!!!!!!!
Watch 180
This is a graphic, powerful 30 minute documentary which is an attempt to open the public’s eyes to the moral problem of abortion. It opened my eyes, will it open yours?
SilverDoctors: Silver Open Interest Drops Slightly to 108,858, Backwardation Holds Steady
Silver’s price manipulated, from $40 to $26 to ??? The blow off is nigh:
http://silverdoctors.blogspot.com/2011/09/silver-open-interest-drops-slightly-to.html?utm_medium=twitter&utm_source=twitterfeed&m=1
The Law of Diminishing Marginal Returns
Editor’s Note: Please welcome our guest contributor here at The Mint, Mr. Jason Holmes. Mr. Holmes is a regular contributer at Debt Consolidaton Care and various other financial websites and has authored several e-books. Without further adeiu, Mr. Holmes:
One of the popular laws in the theory of economics is the law of diminishing marginal returns. This law states that as the application of one factor of production is increased continuously, marginal product of that factor increases up to a certain point until it reaches a maximum and thereafter it begins to fall and eventually the marginal product of each additional factor of production becomes negative. When the marginal product reaches zero level, total production can be said to have reached the maximum level. When the marginal product of that factor is negative, total product starts falling. This particular theory, as with many economic theories, is framed under the assumption that all of the other factors of production are kept constant.
One of the classic examples of the law of diminishing marginal returns is the use of fertilizers in agriculture. Increased application of fertilizers augments agricultural production, but only up to a certain extent. Once that point is reached, increased application of fertilizers no longer increases agricultural output, rather agricultural output starts declining. Once the maximum amount of production is reached, the law of diminishing marginal returns starts operating and marginal increases in agricultural output begins to decline. In the case of fertilizers, this occurs because with increased application of fertilizers, the fertility of the soil increases up to a certain extent. However, as the application of fertilizer to the soil increases, the fertility of soil no longer improves, rather it starts degrading. As a result, the agricultural production of the soil starts to decline.
Another oft-cited example of the law of diminishing marginal returns is the addition of more workers on a car assembly line. Up to a certain point, the addition of more workers results in the production of more cars. However, after that point, the addition of more workers no longer leads to the production of more cars. In fact, quite the opposite may happen. Some workers may find others in their way making it difficult to perform their respective tasks while other workers may now have to wait to get access to a certain part, etc. In this chaotic situation, the production of cars may actually start falling relative to the additional inputs of labor.
Many large scale examples of this law can be observed today. In an attempt to expand or develop at any cost, the countries of the world have engaged in a widepsread unmindful use of resources. The time is approaching where we may soon see the complete depletion of valuable natural resources. The tremendous proliferation of the usage of petroleum products and natural gas threatens the environment. Emissions of CO2, greenhouse gases and unchecked deforestation of timberlands have added to the danger of disruptive climate change. Meteoric increases in the usage of cars and electronic gadgets have created some negative side effects as well. As an indirect result, human civilization may be more vulnerable to various types of diseases and natural catastrophes.
These examples all point to the operation of the law of diminishing marginal returns. The law can also be applied to personal finance. If one takes on more and more credit card debt in order to pay off other existing debts, the consequences can indeed be grave and ultimately the individual may have to file for bankruptcy. One needs to be more disciplined and restrainted in their personal financial matters or they may also opt for credit consolidation to relieve the burden. Discipline and restraint are advisable in all fields of life. Otherwise, human civilization will continue to be threatened as the day of reckoning approaches.
Jason Holmes is a regular writer with http://www.debtconsolidationcare.com/ and is also a contributor at other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, ‘Take Creditors and Collection Agencies to Small Claims Court’ and, ‘My Story- From Depression To a Smile’.
Watch “Ron Paul: Gov. doesn’t have authority to tell us what to do” on YouTube
This is why Ron Paul will be the next President:
A run on BNP, Europe’s Financial Collapse begins in earnest
9/22/2011 Portland, Oregon – Pop in your mints…
While it was a rough day for equity markets everywhere, in light of what is occurring, they (the markets) were amazingly resilient. A testimony to how fast the monetary spigots at the Central Banks are running.
There are two events that appear to be on a collision course with destiny today (No, neither of them is the NASA space junk hurtling towards the earth). It feels as if the world is reaching a sort of inflection point in modern history. Perhaps a great awakening is about to occur. Will people’s faith in Central Banking finally be broken?
The colliding events are the Palestinian bid for official recognition by the United Nations, scheduled for tomorrow, and the emerging institutional bank run on BNP Paribas.
The Palestinian situation needs no further discussion. It is clear to most that it is an explosive topic to which the bid for recognition threatens to detonate, much in the way the Israeli Declaration of Independence ignited war in Palestine in 1948.
The Institutional run on BNP Paribas is an event that is occurring as we write and it is unclear how it will play out. Reggie Middleton at the BoomBustBlog, is chronicling this event in real time. If you are interested, we highly recommend following the event there.
We have read reports of Lloyds of London, the famous Insurance Marketplace, pulling a great deal of its deposits out of banks on the continent. We have also read reports of Siemens pulling deposits and parking them directly at the ECB.
Then there was the report of the ECB making an emergency loan of $500 million US Dollars to an unidentified bank (read BNP) with similar loans to other institutions in the cue. It is clear that the banking crisis in France is dwarfing the ability for the French government to deal with it.
There is no use pointing out the many lessons that society will learn from this, for only one is expedient at the moment. That lesson is that digital bits on a computer screen or numbers on a bank statement are worthless if the counterparty cannot make good on their commitments.
The run on BNP will intensify the focus on Western Central Banks, which have balance sheets that make BNP, BAC, and all of the other large sinking banks look good by comparison. This is important because a good part of the world is to some extent a counterparty to the Central Banks.
Need proof? Open your wallet. If you have US Dollars or Euros, you are a counterparty to (owed money by) the Federal Reserve or the ECB, whose management is currently buying every worthless paper asset on the planet with leverage that is unimaginable for mere mortals.
Dollar and Euros are about to become extremely hot potatoes, which makes trading them for potatoes, spuds, or anything real, a real good idea.
Let us pray for the peace of Jerusalem, and that tomorrow passes uneventfully on all fronts.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 22, 2011
Copper Price per Lb: $3.45
Oil Price per Barrel: $80.41
Corn Price per Bushel: $6.50
10 Yr US Treasury Bond: 1.72%
FED Target Rate: 0.08% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,736 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 10,734
M1 Monetary Base: $2,010,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,541,800,000,000 YIKES!!!!!!!
Reflections on the Stump on the Park Blocks
The other day, as we strolled down the Park Blocks between NW Flanders and Glisan, we came upon a stump. Trees in this part of the Northwest are not uncommon. Neither are stumps, for that matter. Yet this was no ordinary stump; it was a large, low cut stump which bore a striking resemblance to Gondwanaland.
What was also striking about this stump was its location. The Northwest Park Blocks, stretching from Burnside to NW Hoyt street along 8th Ave, are home to a great many oversized trees. The trees stand, lining the blocks like a royal guard creating a corridor for kings and queens to pass. The kings and queens of Portland’s NW Park Blocks represent all ages and walks of life.
These grand trees have observed and endured many a changes in their surroundings as Portland the frontier town has grown into the pleasant city which we now enjoy. The trees, circa 2011, enjoy the delight of children racing through the playground, the musings of men and women as they commune on the many benches lining the blocks, and the gentle, respectful pace of both car and bicycle as they quietly traverse the paved portion of the blocks.
The trees serve as a constant reminder to the contemplative passerby that our noble lives are but a whisper on the winds of time. Much of what one does will be forgotten, and in an age where information is abundant but wisdom is in short supply, the trees offer a humble reminder that in order to stand tall, one needs roots which run deep and branches which extend to embrace.
This day, amongst the grandeur and wisdom which the trees continuously display, the stump served as a reminder that even the grandest of trees can be laid low on a temporal whim. There is nothing to gain by lamenting its passing. Rather, as with all loss, we must take the opportunity to pause and reflect on our daily actions. Perhaps the stump’s resemblance of Gondwanaland is not an accident, for it offers a glimpse of the eternal time in which everything around us yearns to live.
Markets go up, Slovenia goes down, Dissing the State, Embracing Anarchy
9/20/2011 Portland, Oregon – Pop in your mints…
The Stock market is absolutely resilient in the face of news ranging from bad to UGLY. Presumably, the slow motion debt market collapse occurring in Europe is priced in, and it may be this very collapse that is driving money into US equities. In the insane “debt is money” system, the money can only go so many places, and there is currently so much money sloshing around that it is a wonder everything isn’t going up in price.
Oh, wait, it is! The CPI came in at 0.4% for August. Nothing to write home about but at this pace the annual CPI could hit 5%, well above the FED’s 2% target.
And we haven’t seen anything yet. Tomorrow, the Federal Reserve will meet and be expected to “do something.” Lately, “do something” has meant that the FED offers to throw perfectly good Federal Reserve notes at various forms of bad paper issued by companies and governments who never intend to make good on them.
At this stage in the game, it is now a given that if perfectly willing market participants won’t buy the paper, surely the FED must do it. “So what?” say you, “Let the FED waste its own money!” If only it were that simple, fellow taxpayer.
Unfortunately, the FED’s money, by decree, is everybody’s money. Every bad decision by the FED reduces the purchasing power of every dollar holder on the planet, making nearly all of us involuntary shareholders of this worthless enterprise, and management at the FED has been making some very bad decisions with very large sums for about four years now.
As a concerned involuntary shareholder of the FED we are compelled to offer the following unsolicited advice: Why not just wait until January, when the 0% FED funds “trickle” their way down to Main Street? Then things will really be interesting. That is when the US Dollar in its present form will go the way of every other paper currency in the history of mankind.
Fellow taxpayer, prudence demands that one make immediate plans to replace anything that depends upon the value of the US Dollar with something real. By the time the FED gets around to doing it for you, by introducing a New Dollar, current inaction will have caused anyone with faith in the dollar to suffer horrendously tremendous losses in relative purchasing power.
Back in the rotting old world, to quote Nabokov, the Euro debacle just became more complicated as the Slovenian government failed a confidence vote. The President is now left trying to cobble together a government and the rest of the Eurozone will presumably have to wait at least 30 days to get Slovenia’s approval for the next round of good money to be thrown at Greece.
It is useless to point out that the Eurozone governments, like their American counterparts, are simply throwing good money after bad. As we have observed here before, throwing money at failing enterprises is their only solution. Besides, they have banking interests to protect. Soon they will be spreading propaganda that ATMs won’t spit out Euros and the world will end if the Greeks are not supported.
That may be true, but these unpleasant outcomes will eventually come to pass no matter what the Euro FEDs do.
This is how the State, which by definition can do nothing but destroy wealth, operates. Western societies, and dare we say, the entire world are now beginning to suffocate under the weight of the current form of welfare/warfare state which exists to make promises on behalf of its productive citizens to its unproductive citizens.
Then, after enslaving the productive citizens, the State then makes promises to support the banking and military interests in order to ensure that the productive citizens remain enslaved.
At some point, each citizen decides that they are either better off becoming an unproductive citizen, working for the State taskmaster as a banker or provider of “security”, or fleeing beyond the State’s ability to enslave them. Western society is quickly approaching the tipping point where a majority of its productive citizens will be forced to make this choice.
Faced with such facts, an intelligent fellow taxpayer such as yourself is surely asking (or should be asking, if we may prompt you), “Isn’t there a better way?”
In other words, is the State really necessary? Today we read a brilliant essay on this very subject by Stefan Molyneux. We encourage you to peruse it at your leisure. You can see it by clicking on the link below:
The Stateless Society – An Examination of Alternatives
If you are limited on time, it is enough to say that Molyneux lays out compelling, logical arguments about how the free market would more effectively take care of the tasks which are currently relegated to the State. Specifically, he examines three activities which pro-State apologists claim that the free market will not solve on its own, making the State’s existence a necessity: Dispute Resolution, Collective Services, and Pollution.
After reading Molyneux’s arguments, it seems that now more than ever that embracing Anarchy is the answer to what ails society.
Much more than simply the answer, it is clear that the true chaos in not created by the Stateless Anarchist model, rather the present chaos is a product of entrusting the State with too much power.
How else can one explain how every present effort the Government uses to ”improve” its citizen’s lives serves to collectively impoverish them?
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 20, 2011
Copper Price per Lb: $3.76
Oil Price per Barrel: $86.43
Corn Price per Bushel: $6.90
10 Yr US Treasury Bond: 1.94%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,805 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,409
M1 Monetary Base: $2,101,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,540,500,000,000 YIKES!!!!!!!
A taste of Autumn, Greece remains on the hot seat, the US budgets to end wars?
9/19/2011 Portland, Oregon – Pop in your mints…
We’ve had our first taste of autumn here in the Pacific Northwest. We found ourselves strangely welcoming the overcast sky and constant humidity. It is the type of weather that is pleasant for a month or two. Unfortunately, we get about 8 months of it here which requires some sort of escape to the sun, either Hawaii or California, for it to remain tolerable.
But still, the first taste was sweet and provided a warm feeling that all was well with the world, despite constant reports to the contrary. Fortunately for us, the sun looks as though it will return this week.
On the whitewashed shores of Greece, where the sun seems to perpetually shine, there is now intense pressure from which there seems to be no escape. The Prime Minister was called back from a trip to the US after receiving an emergency call from the Finance Minister as he stopped over in London. The poor chap had to be on a conference call with creditors and the troika and didn’t want to take the lashing alone.
As if to give the world a taste of things to come, the Greek Government passed an emergency property tax which is to be collected via the citizens’ electricity bill to help ensure compliance. Apparently the folks at the electric company are not happy about adding tax collection to their duties and are pushing back on the order.
The Greeks never have been good at collecting taxes, either that or their citizens are especially adept at avoiding paying them. Either way, the combination makes for low tax revenues which makes servicing public debt, well, difficult.
We offer a suggestion to the Greeks, privatize the electric company and then enact an enormous tax on consumption. At least then the riots would be staged at the electric company and not at parliament.
Meanwhile, before departing for New York in perhaps the least understood yet most important peace-keeping mission the US will ever embark upon, President Obama gave yet another clinic on teleprompter reading during his speech on, what else, government finances. His proposal was to save $1.5 Trillion over the next 10 years by in large part by ending the wars in Iraq and Afghanistan.
We do not have any statistics, but we are willing to bet that this is not the first time that ending these wars has been proposed as a deficit reduction measure. What is truly astonishing to almost every thinking person is that these two military adventures have continued for so long and have become such a drain on the public treasury that ending them now would save $1 Trillion.
Less war, more money, what a novel idea! It is as straightforward as it is unlikely to happen.
We sense that both this speech and bath time for Greek creditors will be interrupted by the Palestinian bid for statehood at the UN this week. The Middle East has not seen a moment like this since Israel vied for statehood in 1949. Let us pray that this moment passes in a peaceful manner.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 19, 2011
Corn Price per Bushel: $6.92
10 Yr US Treasury Bond: 1.94%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
10 Yr US Treasury Bond: 1.94%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,779 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,401 TO THE MOON!!!
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,401 TO THE MOON!!!
M1 Monetary Base: $2,101,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,540,500,000,000 YIKES!!!!!!!
Ron Paul’s Foreign Policy: Peace & Respect – Not Intimidation, Bribes & War
In this video Ron Paul eloquently lays out his foreign policy. As one viewer comments, it is poetic.
Watch “Ron Paul: FREEDOM Provides More Prosperity & HC Than All The Socialism & Welfarism In The World” on YouTube
A great Ron Paul interview:
A pending Eurozone implosion and How Inflation appears in disguise: The Euro/Peseta price of Spanish Coffee
9/14/2011 Portland, Oregon – Pop in your mints…
What a week it has been, and we are only halfway through it! Societe Generale, BNP Paribas, and many other European banks are bracing for the impact of a pending Greek default which would likely be followed in short order by an Irish, Spanish, Portuguese, and possibly Italian default as club med prepares to give the collective finger to their German, ECB, and IMF taskmasters.
There were rumors that BNP could not borrow dollars yesterday and today we saw why. The large French banks, of which BNP at $2 Trillion in assets is the largest, collectively hold assets of $8 Billion, which is four times France’s annual GDP. This, in theory, makes nationalization of these banks impossible and the meager, strings attached handouts offered by China are of little comfort.
Zerohedge.com posted an excerpt of a report by Jeffries which spelled out a probable endgame scenario in Europe which involves sloppy nationalizations of the financial sector and a repudiation of the Euro by the defaulting countries in order to print the drachmas, pesetas, liras, etc. necessary to make good on the newly nationalized banks’ liabilities.
The PIGS have nothing to lose at this point and it will be EUROUGLY for those who cling to the Euro.
We are all preparing to learn a great lesson about faith in paper currencies and it looks like for the Europeans, class is in session.
Yesterday, we were attempting to explain the concept of inflation coming in disguise. We speculated that the disguise would come in the form of a “10:1 reverse split” being declared for the current USD. In other words, a new US Dollar would be introduced which would be worth 10 old US dollars. We left off with a question, “What’s the big deal? Why does this matter?”
At this point, our rational readers are thinking to themselves, ”Big deal, so we get rid of the penny and nickel production cost problem, learn to move the decimal place in our thinking, and happily move along with life, right?”
This, of course, is what most monetary and governmental representatives think as well. It makes the move almost a no-brainer.
We must beware of the money changers! They seem innocent, yet are wolves in sheep’s clothing.
Yes, fellow taxpayer, under the reverse split scenario, dollar holders will be robbed. Quietly, and, if not for the following humble explanation, completely unaware. It is as Keynes famously said:
“The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens”
(Editor’s note: today inflation is accepted as “sound” economic policy thanks to meddlers such as Mr. Keynes.)
How, then, will dollar holders have their wealth confiscated? A change like this initially robs those who can least afford to be robbed, the poor. And the thievery is made all the more sinister because the thieves employ unwitting merchants and tax collectors with which to fleece them.
The following is a practical example of how the theft will take place:
One would be hard pressed to find a more suitable and pleasant example if instant price inflation than that of the Spanish cup of coffee, pleasantly sipped at mid-morning with friends and colleagues.
This cup of coffee, a constitutional right of Spaniards for generations, could be enjoyed for a mere 100 pesetas circa 1995, in the era before the peseta was to be pegged and converted into the then conceptual Euro currency.
This 100 peseta price held more or less firm until the Euro coins began to circulate in 2002. The Euro/Peseta conversion rate had been pegged at 166.386:1 in 1995. In 2002, the same cup of coffee was now 1 Euro, an overnight 66% increase.
The numbers may not be exact but you get the point. Currency changes offer a grand opportunity for price adjustments at the lower end. While on the surface, it appears that a cup of coffee that costs 1 monetary unit compared to one that costs 100 monetary units is an improvement. In fact, considering that many wages remained stagnant, it represented a considerable deterioration of overall purchasing power.
To this day, many Spaniards think of prices for larger items such as cars and houses in terms of pesetas. It is one thing to be duped on the value of a cup of coffee, quite another to be duped on the value of a car or house.
For a time, asset prices there did indeed rise as an indirect result of people fleeing the inflation caused by the change to the Euro. However, the devil of inflation is in the details. An overnight 66% increase in a cup of coffee can eat into a laborer’s stagnant wages quickly.
Once the transitory asset price increases have been burned through at the café, one is left with a nation that is collectively poorer and unable to make economic decisions because of these types of stealth price shifts.
Returning to the probable US Dollar reverse split, we can see that a 10:1 change from old to new dollars would likely result in a cup of coffee going for a nice round quarter (or 25 new cents). Which sounds like a trip back to the 70’s until you consider that we are talking about $2.50 of the old dollars for a plain cup of coffee which could be had for $1.50 before the switch.
One can rest assured, employers will be mindful to move the decimal point and nothing more on wage calculations. Voila! Overnight poverty, all with the stroke of a pen.
While one may hold out hope that any change in the monetary unit will be price neutral, the Spanish example shows us that lipstick on a pig does not make it any prettier, and coffee at 1 Euro is no tastier than it was at 100 pesetas, just more expensive.
We pray that you will prepare yourself by saving in gold and silver coins, which will retain and perhaps increase their relative value under such a scenario. Under current conditions (and probably more so after the G-7 begin to their coordinated action) anything that cannot be created by government decree, to paraphrase Michael Pento, will be preferable as a savings vehicle to the US Dollar.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
P.S. For more ideas and commentary please check out The Mint at www.davidmint.com
Key Indicators for September 14, 2011
Copper Price per Lb: $3.90
Oil Price per Barrel: $88.94
Corn Price per Bushel: $7.24
10 Yr US Treasury Bond: 2.01%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,815 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.5%!!! UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average: 10,992 TO THE MOON!!!
M1 Monetary Base: $2,181,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,456,000,000,000 YIKES!!!!!!!
The Disguise, Greece plays roulette with the Eurocrats, How inflation will express itself in USD Prices
9/12/2011 Portland, Oregon – Pop in your mints…
The moment of truth is approaching for Greece. Today the headlines flashed that the markets were pricing in a 98% chance of the Greeks defaulting on their sovereign debt. A great lesson is about to be learned. Is anyone paying attention?
The great lesson is the following: Reliance on governmental and/or central bank action to stave off a default is not a sound strategy. You may get lucky once, twice, even three times. If one is particularly unfortunate, the strategy may even work many times in succession.
The government reliance strategy is like idly watching spins a roulette wheel with all your chips on red. With enough spins, the ball will eventually drop on a black. Think of it as the governmental version of a black swan.
In the case of Greece, who abandoned its 2,000 year old currency to join the Euro club, there seems to be a lack of political will to ink the rubber stamp which approves the Greek’s next ration of Euros. The taskmasters of the Eurozone are starting to realize that each time the stamp is inked, the sewage of Greek finances leaks a little further into their well.
The populace is starting to get sick to their stomach, as are large banks on both sides of the Atlantic. The French banking giants are queasy because much of the Greek debt is on their books. In the New World, where about half of Greek debt is insured, the banking giants are getting nauseas. It is the nausea of a drunk man realizing he will be stuck with the bar tab after his buddies sneak out of the tavern.
Meanwhile, as the politicians and central banks continue to bungle their way through this information, the market has already priced it in.
“Priced in?” Astute, shocked, and astounded readers are surely thinking, “Then where is the crash in stocks and bonds?”
Astute readers, of course, are right. There is a crash occurring right now in stocks and bonds. However, bond yields are down and the stock market is up because the crash is occurring against the backdrop of rapidly depreciating currencies and as such, the debauched currencies are disguising the crash.
The Disguise
Astute readers now have a collective light bulb in their head illuminating as they clearly see that inflation in consumer prices is set to accelerate in the near future. Naturally, this obvious inflation would not be tolerable and as such must be masked in order for the general public to peacefully accept it.
For this acceptance to peacefully take place, the inflation must come in disguise. Here is what is likely to occur once the loosened up monetary policies of the FED, ECB, BoJ, and BoE are in sync (with apologies to the 1990’s boy band):
A new dollar will be introduced with a convertibility ratio from old dollars of 10:1. In other words, each current dollar will be the equivalent of a new dime.
Voila! No inflation here. The new and improved dollar now buys more than ever!
Why choose a 10:1 ratio? There are two compelling reasons for the US Currency to go through a reverse 10:1 split. First and foremost, it is simple. Since a majority of the world’s commerce is conducted in dollars, the disguise must be mathematically simple. What could be simpler than moving a decimal place?
The second reason is less obvious but perhaps more compelling from the point of view of the monetary authorities. The disguise would immediately eliminate the need for pennies and nickels and increase the demand for dollar coins.
At this stage in the game, it costs the US Mint more to create pennies and nickels than they are worth. While we are not certain of the exact numbers as of today, some estimates have the value of the metals needed to create a nickel valued at $0.07 while the metals needed to create a penny are valued at $0.012. This is before considering the energy and equipment necessary to strike the coins and distribute them.
At current metal prices, which are unlikely to drop in the near future, the US Mint is producing nickels and pennies at a loss.
This embarrassing detail makes the purchase of nickels and pennies a better risk free investment than US Treasury Bonds, the world’s current safe haven of choice. The metal premium for Platinum, Gold, and Silver coins is widely known. At some point, nickels and pennies will disappear from circulation and their metal premium will take precedence over their face value.
Still, one may ask, “What difference does it make? This 10:1 switch sounds like a great idea. I’m sick of pennies!”
Oh, if only the switch were price neutral, it would make no difference at all. How, then, do the stock, bond, and almost every other market continue to rally in the face of questionable macroeconomic fundamentals?
Tune in tomorrow.
Trust Jesus and Stay Fresh!
Email: davidminteconomics@gmail.com
P.S. For more ideas and commentary please check out The Mint at www.davidmint.com
Key Indicators for September 12, 2011
Copper Price per Lb: $3.97
Oil Price per Barrel: $88.19
Corn Price per Bushel: $7.34
10 Yr US Treasury Bond: 1.93%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,814 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.5%!!! UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average: 11,061 TO THE MOON!!!
M1 Monetary Base: $2,181,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,456,000,000,000 YIKES!!!!!!!
Forgiveness, the FED, Bank of England, Bank of Japan, and ECB to coordinate actions, will they formally peg exchange rates?
9/9/2011 Portland, Oregon – Pop in your mints…
Much ink is being spilled today in anticipation of what may or may not happen as the 10th anniversary of the events that occurred on September 11, 2001. Here at The Mint, we take the somewhat radical view of the Amish in response to tragic loss. We must forgive. An important part of forgiveness is to avoid making or observing a memorial to the offense. Memorializing an event is to keep it present before us.
As the US Empire is now conducting at least three extremely expensive military adventures which have their origins in the events that occurred that fateful day, forgiveness is probably not on many people’s minds this weekend. Meanwhile, millions of dollars are being spent to memorialize it.
We must forgive. It is our opportunity to choose the tree of life over the tree of the knowledge of good and evil. To repair the fateful error made in Eden.
Under the cover of this memorial, we sense that an extraordinary event will occur which will impact the fortunes of many in the US, England, Japan, and Europe and others outside their borders with exposure to their respective currencies.
Debauchery
The Event which we refer to is the coordinated debauchery of their currencies.
For the past four years, the FED, BoE, BoJ, and ECB have been engaged in a desperate attempt to debauch (devalue) their currencies. They have had the predictably mediocre to poor results that one would expect from efforts made by this rare hybrid of an agency which combines the laziness of the banking class with the incompetence of the governing class.
The goal seems simple enough. Print money to pay existing debts and encourage people to spend and to take on new debt. So simple, that each of these Central Banks is currently running at their own pace down this calamitous path with little regard to how the outside world is reacting.
Guess what? The outside world is not reacting as expected.
What they did not take into account, at least until now, was that there is quite a bit of money to be made from the fact that they are all running at different paces down the same path. The nature of international finance is such that one Central Bank’s unbridled effort to debauch its currency leads to an opportunity to profit by borrowing in that nation’s currency and purchasing one of the other three currencies, which undermines the debauchery of the currency that is being purchased.
This is commonly known as the carry trade, and these large Central Banks have taken all of the guess work out of it for the past four years.
We suspect that these four Central Banks see the immediate need to eliminate interest rate spreads amongst their currencies which will force those who ply the carry trade to purchase currencies outside of this group.
In effect, this ultimate coordination of interest rate policies will cause these four currencies to “peg” to each other, which should assure that the debauchery of their respective currencies will continue unchecked and likely accelerate.
According to Bloomberg, there is speculation that this type of coordination, a de facto currency peg to the dollar, could begin this weekend at the G-7 Meeting.
Will another stealth disaster befall the US this weekend? If these Central Banks somehow coordinate their collective debauchery of the currency, the economic devastation of millions will march on.
Perhaps this is why Juergen Stark has suddenly stepped down from the ECB. It will be more than any caring Bundesbank official can stomach.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 9, 2011
Copper Price per Lb: $4.00
Oil Price per Barrel: $87.20
Corn Price per Bushel: $7.26
10 Yr US Treasury Bond: 1.92%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,856 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.5%!!! UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average: 10,992 TO THE MOON!!!
M1 Monetary Base: $2,181,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,456,000,000,000YIKES!!!!!!!
The Ron Paul Revolution Reaches Oregon
The Swiss throw in the towel, Decide to Enter the Fiat Currency Battle Royal
9/6/2011 Portland, Oregon – Pop in your mints…
We spent the weekend attacking sections of our yard that had, until now, remained a wilderness reserve due to our inner laziness. Trees, shrubs, ivy that had been allowed to grow unchecked all fell victim to our saw and lopper (which must be the best tool ever invented). The yard now appears more barren, if not civilized, than before.
Like everything, it came at a price. Our back may never be the same and working in such close company with the pines seems to have triggered a latent allergy which nearly floored us for the balance of the weekend.
Fighting nature is not a long term strategy, but it has provided a strange sort of satisfaction in the near term.
This is the same sort of satisfaction that the Swiss National Bank must be feeling after they arbitrarily decided to cap the Franc:Euro exchange rate at 1.2:1, effectively throwing their lot in with the doomed Euro. From the Wall Street Journal:
“The SNB said Tuesday that it would “no longer tolerate” the euro falling below the minimum rate. In a statement, it said it will enforce the limit with “the utmost determination and is prepared to buy foreign currency in unlimited quantities.”
While this type of action should come as no surprise to our readers, it is significant because the Swiss have traditionally been a sort of neutral safe haven on a number of fronts, not the least of which being money and banking.
Their abstention from joining the Euro in the first place was a testament to this. Their capitulation today simply gives more credence to the extraordinary pressures that the competitive devaluation of all fiat currencies is placing on those Central Banks which for one reason or another have chosen not to compete.
The Swiss currency has been under siege ever since its neighbors embarked on the Euro currency experiment. Being the ingenious people that they are, the Swiss, with their mountain bunker airbases and underground buildings, were able to hold out for a long time.
What finally sent them over the edge? We are not certain but we can only imagine that, as the Franc soared unwittingly towards parity with the Euro, the intelligent Swiss flocked across the border to purchase whatever they could from their unwitting neighbors who are all unequally yoked to the Euro’s fate.
In other words, why shop in Geneva when your Francs go further in France?
Having seen enough, the SNB is has now crossed the ropes and is entering the Battle Royal of fiat currency devaluation. Who will be standing at the end?
This is a trick question, as our equally intelligent fellow tax-payers will quickly point out. There are no winners when something with no value is widely recognized as such. Only mayhem, yelling, pile drivers, body slams, blood, and drama.
Most investors are now waking up and realizing that it is time to hold currency reserves (household savings) in Gold, Silver, Pork loins, anything but fiat currencies.
Get out of the arena and avoid the ensuing traffic jam. This sort of mayhem is better enjoyed from the comfort of one’s home and the quicker one gets there the better!
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 6, 2011
Copper Price per Lb: $4.06
Oil Price per Barrel: $86.49
Corn Price per Bushel: $7.47
10 Yr US Treasury Bond: 1.98%
FED Target Rate: 0.08% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,880 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.5%!!! UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average: 11,139 TO THE MOON!!!
M1 Monetary Base: $2,108,800,000,000 RED ALERT!!!
M2 Monetary Base: $9,473,600,000,000 YIKES!!!!!!!
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