The Mint

Copper Price per Lb: $3.67
Oil Price per Barrel: $93.32

Key Indicators for October 28, 2011

Corn Price per Bushel: $6.55
10 Yr US Treasury Bond: 2.33%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,743 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.3%
Dow Jones Industrial Average: 12,231

M1 Monetary Base: $2,071,500,000,000 RED ALERT!!!
M2 Monetary Base: $9,607,200,000,000 YIKES UP $1 Trillion in one year!!!!!!!

October 25, 2011 David Mint

The Three Ring Circus Begins

10/25/2011 Portland, Oregon – Pop in your mints…

What a difference a day makes. Yesterday, it appeared that the authorities had most of the problems that ail the world’s economy resolved. All they needed was a little more time, money and cooperation to implement their plans and the good times would be rolling once again! Today, instead of coordinated, determined action, it appears that a three ring circus of sorts is beginning.

In Ring 1, we have the European Clown Car: Yesterday, Europe looked ready to announce a plan to simultaneously solve the sovereign debt, banking, and resultant currency crises in one fell swoop. Today, it appears that Italy is balking at implementing a growth plan on moment’s notice and Germany and France will need a miracle to announce a credible Pan-European rescue package by tomorrow, their self imposed deadline. What a difference a day makes!

It should be clear by now to most sober persons that regardless of what is announced tomorrow, the Euro as a currency in its present form is not viable. It should also be clear that the countries who have adopted the Euro will give away what is left of their sovereignty in a vain attempt to preserve it.

Three Ring Circus — Step Right Up! The Three Ring Economic Circus Begins

In Ring 2, we have the American Elephants: The US is quietly completing three Bond auctions that will cause the national debt higher than the national GDP. The official total should eclipse GDP by the end of October. 100% of GDP is when the debt of a mere mortal nation (Greece, for example) has traditionally harkened national bankruptcy.

The only exception to this rule is in Ring 3, the Japanese Tight Rope Walker: Japan, where national debt is north of 200% of GDP. How do they avoid bankruptcy? Simple, they print money to pay the debt. As if to prove our point, today, the Bank of Japan decided that they have seen enough Yen appreciation and announced another five trillion Yen currency printing campaign.

When money doesn’t exist, the sky is the limit, which is why commodities and certain equities are set to explode to the upside. Bonds, while they may not fall in nominal value, will fall in relative value as they are repaid in severely depreciated currencies.

As if on cue, commodities took off today. How high and far they will fly this time is anyone’s guess.

As the circus gets underway, the sober amongst us are beginning to wonder, sometimes aloud, “if the Governments, banks, and monetary authorities cannot solve these problems, then who can?”

The answer, fellow taxpayer, is right under our fingertips. We, the People of the earth can solve it. The tool we have been given is our own wit and ingenuity. The only requirement is that we embrace True Capitalism, for better or for worse, for richer or poorer, until death do us part.

What is True Capitalism? It may be summed up as a deep, radical respect for life, liberty, and private property. It is an understanding that mutual cooperation is more often than not in our rightly understood interests (to use a Mises term). It is not simply a choice, it is the only choice. More to come.

Stay tuned and Trust Jesus.

Stay Fresh!

Copper Price per Lb: $3.41
Oil Price per Barrel: $93.17

Key Indicators for October 25, 2011

Corn Price per Bushel: $6.51
10 Yr US Treasury Bond: 2.13%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,705 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.3%
Dow Jones Industrial Average: 11,707

M1 Monetary Base: $2,056,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,570,500,000,000 YIKES UP $1 Trillion in one year!!!!!!!

October 24, 2011 David Mint

European Semi-Solution Extends the False Calm and indirect moratorium on Eurozone Investment

10/24/2011 Portland, Oregon – Pop in your mints…

Today after the western stock markets closed, the German lawmakers announced yet another plan in an attempt to stem the Eurozone’s tandem sovereign debt and banking crisis, which is rapidly accelerating. The plan, according to AP, would boost the European Financial Stabilization Fund from its current 440 billion Euros approximately one trillion Euros.

The one trillion Euro figure is an estimate due to the nature of the plan which involves enticing capital to invest in the Sovereign debt issues from Euro member states by creating an insurance fund to partially back sovereign debt issues that would otherwise attract little investor interest.

Think of it as a partial Fannie Mae guaranty for European Governments.

There is a reason that foreign capital is hesitant to invest in Euro sovereign debt, and it is not for lack of enticement. Greek, Spanish, Portuguese, and Italian bonds all offer fixed income investors a decent premium over other sovereigns for their perceived risk. The problem from the point of view of the investors is that the premiums are not high enough if considered against the likely event that they will not get their principal returned. The problem from the perspective of the Euro sovereign issuers is that they cannot realistically pay even these reduced premiums.

Once it is generally perceived that a nation state will default on its obligations, it is very difficult to attract capital, whether it be the purchase of sovereign bonds or investments in businesses located in the troubled country.

Default, while the most practical solution for any normal debtor, is apparently unacceptable for modern western nations. For this reason, the Eurozone leadership is moving in slow, measured steps to appear to do just enough to preserve the credibility of the debt issued by the weaker, peripheral states such as Greece, Spain, and Portugal.

Will this latest Eurocrat concoction be enough?

For the moment, it may be. The German Parliament must vote on their new obligations on Wednesday, just hours before the broader Eurozone working group is set to formally announce the plan, leaving no room for dissent, ala Slovenia earlier this month. Once the political drama in Germany passes, it will be smooth sailing for the Euro and its sovereign debt markets…for about a week.

EU-flag — The illusion of viability and solvency

At that point, it will again become clear that the banks and sovereigns will require additional funds (currently the estimate is north of 2 trillion Euros) in order to continue the illusion solvency.

The problem of Euro solvency is no secret. This is why both banks and sovereign governments are having a great deal of difficulty getting credit from anyone other than other broke European governments, banks, the ECB, and the Federal Reserve. This latter list of entities have two things in common. First and foremost, they all have a vested interest in perpetuating the charade that the Euro is a viable currency. Second, these entities, by virtue of their activities, can only destroy wealth and therefore must coerce the productive class into lending its resources.

To make matters worse, no one in their right mind can invest real capital in the Eurozone under these conditions. With sovereign governments pushing austerity measures and increasing the confiscation of private assets via increased taxation, any further investment in the Eurozone must be properly seen as an act of charity.

Such is the paradox of solving debt problems by incurring more debt. Once one believes that the debt cannot be repaid, this belief becomes a self fulfilling prophecy. The Eurozone is becoming the world’s latest example of this inescapable truth.

Meanwhile, commodity prices, which reflect the fruits of productive activities, are on the verge of exploding to the upside, signaling a growing distaste for fiat currencies. Will this be the final, violent blow off in commodities?

Stay tuned and Trust Jesus.

Stay Fresh!

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.3%
Dow Jones Industrial Average: 11,914

Key Indicators for October 24, 2011

Copper Price per Lb: $3.46
Oil Price per Barrel: $91.60

Corn Price per Bushel: $6.51
10 Yr US Treasury Bond: 2.23%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,653 PERMANENT UNCERTAINTY

M1 Monetary Base: $2,056,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,570,500,000,000 YIKES UP $1 Trillion in one year!!!!!!!

Uncategorized

Watch “Harry Browne – Unavoidable Economic Consequences” on YouTube

October 24, 2011 David Mint

Brilliant explanation of the consequences of inflating the money supply:

Economics, Uncategorized

World Economy Collapse explained in 3 minutes – Mind Blowing!!!!!

October 23, 2011 David Mint

For anyone wondering what is going on in Europe this weekend and what it means, this video should clear things up nicely. Enjoy!

http://www.facebook.com/video/video.php?v=10150860012110261

Economics, Gold, Silver, The Mint

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part V – Final Catastrophe and Hope for the Future

October 21, 2011 David Mint

10/21/2011 Portland, Oregon – Pop in your mints…

As the western world braces for a full scale currency collapse, we have endeavored here at The Mint to offer an explanation as to why these events are taking place and, along the way, offering the obvious solution to the chief problem, mistaking credit for money.

For those of you who have missed Part I, Part II, Part II, and/or Part IV, you may read them by clicking on the following links:

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part I

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part II – Irony

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part III – Money or Credit?

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part IV – The Catastrophe at Hand

If you require only a brief summary, Part IV above offers a relatively brief and comprehensive summary of the previous three. Now where were we…

Ah yes, in the United States, circa 1968, a time not so unlike our own. The Vietnam war was becoming increasingly unpopular and the social climate was ripe for protest. The US had run up a large and increasing trade deficit with the rest of the world. It was becoming clear that if foreign dollar holders were to redeem a significant amount of their Federal Reserve Notes, which we now understand to be banknotes and not money proper, for gold, which we now understand to be money proper, the Federal Reserve would not be able to deliver enough gold.

The solution, if it can be called that, was to gradually increase the amount of Federal Reserve Notes required to obtain an ounce of gold from $35 to $41 between 1968 and 1971. Then, in 1971, with the US dollar collapsing in value and the Bretton Woods system falling apart at the seams, then President of the United States Richard Nixon announced that US dollars were no longer convertible into gold. The event is now referred to as the Nixon Shock.

And a shock it was. The US dollar, the benchmark of Central Bank currencies throughout the world, was now officially backed only by the faith that it would continue to be accepted in trade. The Federal Reserve had defaulted.

Most of the world still lives by this faith today, and if anything, the delusion that a banknote issued by a Central Bank which has defaulted on its obligation to deliver real money on demand has only grown.

The reason that the large scale catastrophe of modern Central Banking lies before us is that over the last 40 years, the lack of gold and silver to back the banknotes in circulation has been replaced by the expectation that governments, and by extension their subjects (citizens), will produce enough goods and perform enough services to repay the obligations represented by the banknotes. As the unrestricted quantity of banknotes and obligations to deliver banknotes in existence will always tend to exceed the stock of available goods and services, these obligations are impossible to satisfy.

Human beings are fallible. It is normal and should be expected that they will not be able to deliver on certain obligations. The natural beauty of banknotes redeemable in gold and silver was that, if it was suspected or observed that a person or entity would be unable to pay their obligations, the creditor would move to seize the gold, silver, or other assets that the debtor had pledged as collateral.

The seizure of collateral or the threat of seizure was often enough to correct the failed human action or decisions that were leading to the net loss of wealth incurred by the activity which was undertaken. In economic parlance, we would call this the correction of the malinvestment of resources.

Without gold and silver to act as a natural limitation on the supply of banknotes and other forms of credit, the bad decisions that lead to the malinvestment and the activities that lead to the destruction of wealth and resources can continue for a very long time.

The use of gold and silver as money had another, more important function that is often overlooked. Gold and silver are inert, non-consumable objects. Their hoarding and use as money will not generally cause starvation or want. In fact, the hoarding of gold and silver as money would have the effect of lowering general prices as productivity increased, naturally creating an incentive to decrease production which in turn would raise prices, making the expenditure of more silver and gold necessary and in turn raise prices, creating a natural incentive to produce.

Gold and silver allow the economy to naturally regulate itself and, by virtue of the difficulty in extracting them, cause the rest of the earth’s resources to be used in harmony with each other.

Finally, gold and silver are inanimate objects. Their recognition and possible seizure as collateral does not threaten the liberty or life of a person. However, because modern central banking has replaced money proper and placed credit in its place, it will become increasingly common to entire societies held as security for a debt that many of them had no direct hand in creating. This is the logical end of using credit as money.

It is the truth that will bring tragedy to the earth.

Without the natural counterbalance to trade and growth which gold and silver money had provided for over 9,000 years, man’s activities, whether productive or destructive, have continued nearly unchecked for the past 40 years. It is staggering to think of the catastrophe that awaits if man is truly on the path to destruction.

Man, by nature, is always on the path of destruction, but the use of gold and silver as money served to correct him before he strayed too far down it.

Most people alive today have been trained to believe that using Gold and Silver as money is an unnecessary and environmentally harmful process. Even Adam Smith believed that if the effort expended to mine metals to create money could be directed to other, more useful activities, that humanity would be better off.

What Smith did not realize was that man would not always direct its energies to useful activities. Like modern Socialists, he underestimated the power of self interest inherent in all human action. Today we are preparing to reap the consequences of 40 years of unrestricted and more often misguided human actions.

While it may be too late to avoid the catastrophe that Modern Central Banking may bring upon us, it is comforting to know that a return to the understanding and use of gold and silver as money offers hope for a future of truly infinite possibilities.

Stay tuned and Trust Jesus.

Stay Fresh!

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.3%
Dow Jones Industrial Average: 11,809

P.S. For more ideas and commentary please check out The Mint at www.davidmint.com

Key Indicators for October 21, 2011

Copper Price per Lb: $3.23
Oil Price per Barrel: $87.40

Corn Price per Bushel: $6.49
10 Yr US Treasury Bond: 2.20%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,642 PERMANENT UNCERTAINTY

M1 Monetary Base: $2,056,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,570,500,000,000 YIKES UP $1 Trillion in one year!!!!!!!

Economics, Gold, Silver, The Mint

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part IV – The Catastrophe at Hand

October 20, 2011 David Mint

10/20/2011 Portland, Oregon – Pop in your mints…

For those of you who have missed Part I, Part II, and/or Part III, you may read them by clicking on the following links:

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part I

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part II – Irony

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part III – Money or Credit?

Again, for those of you who are too lazy to click the links, here we offer a brief summary to get you up to speed:

Central Banking is the physical expression of Man’s need to safeguard his wealth and to increase trade. A Central Bank’s usefulness and scope were greatly increased when dual entry accounting could be employed to manage a Central Bank’s accounts.

The Central Bank’s role as a storehouse of wealth has generally attracted the attention of the Government, which is the physical expression of Man’s need to protect his life. The Government, in this capacity, does not generate wealth and must maintain itself either by taxing its subjects or borrowing funds.

The Central Bank, as the repository of wealth and facilitator of trade, by default creates a majority of the banknotes which circulate in a society. As such, the Central Bank becomes the natural creditor of the Government. Whether it lends funds directly to the Government or indirectly, the result is the same. That result is that the use of its subject’s wealth by the Government is greatly facilitated by the existence of a Central Bank.

Having established the fact that some form of both a Government and a Central Bank will naturally, in some form, come into existence and become increasingly interdependent, the only question is one of the size and scope of such entities.

Today, that the scale of modern Central Banking is excessive and that the potential for catastrophe is unprecedented.

The reason for the unprecedented scope of Central Banking is that money, as it is widely understood today, does not really exist. Rather, banknotes issued by Central Banks, which are by definition credit instruments, are misunderstood to be money proper by a majority of the people in the developed and semi-developed world.

This misunderstanding flies in the face of 9,000 years of human history, in which Gold and Silver in bar and coin form have been tacitly used as money proper. It is this misunderstanding which has set the stage for the greatest catastrophe in history to occur.

100-dollar-bill — Federal Reserve Notes Begin toReplace Gold and Silver as the concept of Money for a Generation

The misunderstanding of money and credit began, like many experiments, in Northern Europe with the establishment of the Bank of Amsterdam. Established in 1609, the Bank of Amsterdam is widely recognized as at least a precursor to modern central banks. For over 400 years since it was established, the use of banknotes issued by a Central Bank which are not directly convertible to coin has slowly but steadily increased.

Modern Central banks issuing banknotes were subsequently formed in Europe, England, and Japan. As these Central banks and their successors began to slowly absorb the true money supply and issue banknotes in their place, man began to slowly transfer the concept of money proper from Gold and Silver and attribute the qualities of money to the banknotes issued by the Central Bank.

This process of wealth absorption greatly accelerated in 1913 when the United States of America granted a 100 year charter to its third Central Bank, the Federal Reserve. The FED, as it is commonly known, was to act primarily as a reserve and to create “money” (read banknotes) as necessary. At the advent of World War I, the FED stepped in and issued bonds to finance the war and after the war the FED was granted exclusive control of the money supply in the United States.

In 1933, in the midst of what was to be the great depression in the US, President Franklin D. Roosevelt signed Executive Order 6102 which required citizens to deliver all but a small amount of gold coin and bullion held by them to the FED in exchange for $20.67 worth of Federal Reserve notes (the banknotes issued by the FED) per ounce.

Naturally, most citizens with large quantities of gold at the time had it transferred to Switzerland.

Then, by decree, the Government raised the price of redeeming gold from the FED to $35 per ounce. Redemption could only be made by Foreign parties as, naturally, it was now illegal for US Citizens to own gold.

Federal Reserve notes were now the only form of “money” that an entire generation of Americans were likely to handle. However, foreigners could still redeem the Federal Reserve notes for gold, though they rarely did, at $35 per ounce.

After World War II, the US emerged as the most powerful nation on earth. It was only natural that the western governments would peg their currencies at a fixed exchange rate to the US dollar (Federal Reserve Note) which was redeemable in gold at $35 per ounce. This is commonly known as the Bretton Woods system.

The system held together for around 20 years, accepting that $35 US Dollars were as good as gold until 1968, when things began to get dangerous…

Stay tuned and Trust Jesus.

Stay Fresh!

Copper Price per Lb: $3.06
Oil Price per Barrel: $86.34

Key Indicators for October 20, 2011

Corn Price per Bushel: $6.50
10 Yr US Treasury Bond: 2.18%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,622 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.3%
Dow Jones Industrial Average: 11,542

M1 Monetary Base: $2,056,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,570,500,000,000 YIKES UP $1 Trillion in one year!!!!!!!

Economics, Gold, Silver, The Mint

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part III – Money or Credit?

October 19, 2011 David Mint

10/19/2011 Portland, Oregon – Pop in your mints…

For those of you who have missed Part I and/or Part II, you may read them by clicking on the following links:

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part I

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part II – Irony

For those of you who are too lazy to click the links, we do not blame you. Below we offer a brief summary to get you up to speed:

Having established the fact that some form of both a Government and a Central Bank will come into existence and become increasingly interdependent, the only question is one of the size and scope of such entities.

Central Banking, like alcohol and socialism, may be a good idea when used in moderation. However, each one of these also represents a catastrophe waiting to happen. For if the circumstances under which they are created or used take an unfavorable turn, the wealth and lives of many may be lost in a very short period of time.

How, when, and most importantly why will this catastrophe take place? As mere mortals, we can only answer the why and speculate as to the how and when.

Why, then, will the current system of Central Banking come to an end which will cause wealth destruction on a scale which will make the weapons of war seem like child’s play in comparison?

The answer, fellow taxpayer, is that money as it is widely understood today does not really exist.

You read correctly. What a majority of the developed and semi-developed world uses as a store of wealth, unit of account, and medium of exchange, is a figment of the collective imagination.

Allow us to explain. It is generally understood today that the value of money is not necessarily in money proper, rather the value of money is found in the ability of the bearer to exchange said money for goods and services. What is often overlooked in this observation is that, for money to be exchanged for something of value between willing participants of a transaction, what is used as money in the transaction must be universally perceived to have value that is easily transferable between parties.

Following this logic, what society uses as money is, by definition, simply another good which is widely recognizable as useful in exchange and therefore carries a price premium (we will call it the monetary premium) of a certain amount usually far above what some economists would incorrectly* call the good’s “intrinsic” value.

* We say incorrectly because value judgments, while often influenced by what are known as “market” or “intrinsic” values, are by definition made by the individuals who willingly enter into a transaction, not disinterested observers. It is for this reason that it is more accurate to appraise value by observing price points of transactions on “the margin” (i.e. transactions that are actually taking place) as opposed to appraising value based on past transactions or transactions imagined to take place in the future. Many are the hypothetical gains and losses of those who refuse to enter into transactions because they are waiting for and offer at “market prices” or the “intrinsic value” of an item.

Regardless of the monetary premium that a good may carry, whatever is used as money, by definition, must be a tangible good. Otherwise, we are dealing with credit, which is a promise to pay in money at a future date. Credit may be given in exchange in the place of money and is often traded at a discount to money delivered immediately.

The distinction between money and credit is common knowledge to but it is important to make a clear distinction in order to properly understand what happens next.

Gold and Silver — Examples of Money Proper - Courtesy of Mark Herpel - www.dgcmagazine.com

In roughly 9.000 years of human history, it has been tacitly agreed upon that silver and gold, usually in coin or bar form, are the highest and most widely recognized goods used as money and that the accumulation of silver and gold represent wealth.

As you recall, the concept of a Central Banking arose in response to the need for man to protect his wealth. You will further recall that in order to both protect wealth and facilitate trade, a Central Bank creates banknotes which represent a claim on the wealth being protected by the Central Bank.

These banknotes which the Central Bank creates are, by definition, credit and not money. They are generally the highest, least discounted, form of credit which is traded, but this does not change the fact that the banknotes are credit and thus carry an implied risk of default. This risk of default places the ultimate limit on the circulation and acceptance of the banknotes in trade.

From time to time, when a Central Bank’s ability to protect the wealth entrusted to it came into question, banknotes would be presented to the Central Bank to be redeemed for the amount of silver and gold which they represented. If the Central Bank could not produce the amount of silver and gold that was being redeemed, the Central Bank was considered to be in default and, as word of the default spread, the banknotes in circulation would trade at an ever increasing discount to real goods.

This logic further supports the fact that banknotes are credit, subject to default risk, and not money proper.

Can you now smell the impending catastrophe? Or, to put the question more directly:

What’s in your wallet? More tomorrow,

Stay tuned and Trust Jesus.

Stay Fresh!

Copper Price per Lb: $3.25
Oil Price per Barrel: $86.11

Key Indicators for October 19, 2011

Corn Price per Bushel: $6.38
10 Yr US Treasury Bond: 2.16%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,671 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.3%
Dow Jones Industrial Average: 11,505

M1 Monetary Base: $2,201,800,000,000 RED ALERT!!!
M2 Monetary Base: $9,554,000,000,000 YIKES UP $1 Trillion in one year!!!!!!!

October 17, 2011 David Mint

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part II – Irony

10/17/2011 Portland, Oregon – Pop in your mints…

For those of you who have missed or long since forgotten Part I, please take a moment to review it here:

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part I

Our tale continues:

As the Fixed income markets continue to crumble, all eyes in Finance are now on a summit of European leaders that will take place next Sunday, when many persons will be watching sporting events, enjoying the outdoors, protesting, or toiling to eke out a meager existence on this earth.

What happens in Europe next Sunday may be simply another act in the game of extend and pretend that until now has been the only strategy employed by Western governments and their Central Banks in response to the bankruptcy of the world’s largest banks and governments.

On the other hand, it may be a Pearl Harbor type of event for the Euro and other currencies.

Since we do not know what will befall mankind this coming Sunday, we must endeavor to understand how the Western world has arrived at this critical juncture in history. We began last week, by exploring the often underestimated contribution of Luca Pacioli to the commonwealth of society: The dissemination of Dual Entry Accounting methods used in Genoa, Florence, and Venice circa 1492.

Today, we will explore the great irony that Dual Entry Accounting – what we call man’s greatest innovation, has made possible what we are calling man’s greatest catastrophe, Modern Central Banking.

In order to do this, we begin with a brief history and explanation of the concept of Central Banking and its relationship to government.

The concept of Central Banking is rooted in man’s need for security as well as his recognition of his co-dependence on his fellow man to increase his well being through trade. It takes time and energy to obtain and protect wealth. It also takes time and energy to barter with counterparties while trading differing goods without a suitable means of exchange.

A bank, in its simplest form, provides a secure place to store wealth. A natural extension of this activity is for the banker to extend credit and act as a clearing house for commerce by assuming a de facto role as an issuer of currency in the form of banknotes which represent a claim on wealth held at their bank. The existence and circulation of these banknotes greatly facilitated trade.

As trade and consequently the wealth of mankind increased both in volume and geographical reach, there was increasingly a need for a larger banking interest to store the excess wealth of the individual banks and to honor the banknotes emitted by the individual banks. This larger banking interest, formed by and for the benefit of the individual banks, is what we today call a Central Bank.

The complexity of maintaining banking accounts was greatly facilitated and made possible on a large scale by the use of dual entry accounting. The ability for individual banks to maintain accounts on a larger scale made possible the existence of a Central Bank to act as a clearing house amongst banks. Hence, our premise that Dual entry accounting enabled Central banking.

Now, on to the role of Government in relation to Central Banking. If Central Banks arose because man needed someone to look after his wealth, governments arose because man needed someone to look after his life. Governments were formed in response to the natural human need for a common defense.

It is not hard, then, to imagine that Governments, in whatever form, relied heavily upon and supported the formation of both individual banks and Central Banks.
Why would Governments need banks and Central banks?

Governments are generally given license by the members of society to use whatever means necessary to preserve their lives. As such, they assume the role as the apparatus of compulsion and coercion in that society.

As the apparatus of compulsion and coercion, the government, by definition, cannot generate wealth. At best, it can only create the conditions under which individuals may create wealth, but the activities of government as a provider of security never directly create wealth. Because they cannot create wealth, they must either borrow from or tax the populace in order to fund their activities of compulsion and coercion.

The Central Bank, as the ultimate repository of wealth, offers a convenient source of both credit and, in a later wave of Central Banks of which the Federal Reserve is a prime example, tax collection services.

FEDERAL RESERVE — Storage of Wealth and Tax Collection Service provided with a smile

As you can see, a Central Bank is an indispensible institution both for individuals in terms of storing wealth and facilitating trade, as well as for Governments who have an insatiable need for tax revenues and credit.

The existence of a Central Bank, for all of the benefits that it may bestow, unwittingly makes the wealth of those it serves a natural target for those who are anxious to obtain that wealth through unjust means.

Needless to say, the scale of modern Central Banking is beyond what would be advisable, and the potential for catastrophe is unprecedented.

How, when, and most importantly why will this catastrophe take place? We can only answer the why, and we will tackle it tomorrow as we are spent.

Stay tuned and Trust Jesus.

Stay Fresh!

Key Indicators for October 17, 2011

Copper Price per Lb: $3.35
Oil Price per Barrel: $86.24

Corn Price per Bushel: $6.40
10 Yr US Treasury Bond: 2.15%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,671 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,397

M1 Monetary Base: $2,201,800,000,000 RED ALERT!!!
M2 Monetary Base: $9,554,000,000,000 YIKES UP $1 Trillion in one year!!!!!!!

October 13, 2011 David Mint

Dual Entry Accounting – Man’s Greatest Innovation, Modern Central Banking – Man’s Greatest Catastrophe – Part I

10/13/2011 Portland, Oregon – Pop in your mints…

As we alluded to yesterday, the Federal Reserve’s latest attempt to goose the economy, “Operation Twist,” is not only failing to achieve its stated goals, it is also triggering an unmitigated disaster in the fixed income markets. These markets, once the bedrock of global finance, have now been conditioned to do nothing more than attempt to front run the FED and other Central Banks up and down the yield curve.

To continue our waterbed analogy, it is akin to a 300 pound Ben Bernanke (Central Banks) chasing an 800 pound gorilla (the market) around on a queen sized waterbed. The action is becoming completely unpredictable and downright dangerous.

Today, as the chaos continues to unfold, we want to take a moment to examine how humanity has arrived at this critical juncture in history, where a fat man chasing a gorilla on a waterbed can threaten to damage the wealth of nearly everyone on the planet.

In order to understand this, we must travel back to the year 1492. Venice is the center of the western world and Christopher Columbus has set sail to find a new trade route to India. A Franciscan monk by the name of Luca Pacioli sits in his room and creates the outline for: Summa de Arithmetica, Geometrica, Proportioni et Proportionale.

Luca Pacioli — Summa de Arithmetica, Geometrica, Proportioni et Proportionale - Pacioli's great gift to Western Civilization

As part of what would have otherwise been simply another boring textbook on Mathematics, Pacioli sees fit to include a section on “Details of Accounting and Recording” in which he described the accounting practices used in Venice at the time. When Summa was published in 1494, it contained what is recognized as the first complete description of dual entry accounting.

To be clear, accounting in some way, shape, or form has always been practiced. What Pacioli accomplished, perhaps unwittingly, was to disseminate throughout Europe the accounting method which had made the merchants in Genoa, Florence, and Venice the most successful in the Western World.

What makes dual entry accounting so special? Dual entry accounting, in a nutshell, is the formal recognition that every trade has a net affect on the income statement and balance sheet of an individual or enterprise.

More to the point, it enabled merchants and producers to understand which activities created wealth and therefore make informed decisions regarding which activities to undertake with their limited time and resources.

While this now seems intuitive, it is hard to overstate the benefits that the dissemination and use of dual entry accounting has bestowed on Western Civilization by enabling a greater number of persons to engage in activities which increase the capital stock and allowing them to more quickly abandon activities which deplete the capital stock (accumulated wealth) of society.

This facilitation of wealth generating activities is why dual entry accounting may be considered man’s greatest innovation.

Yet, in perhaps the greatest irony since God sending His Son, Jesus, to die in our place, dual entry accounting enabled the existence of what we are calling man’s greatest catastrophe, Modern Central Banking.

We’ll explain this great irony tomorrow in Part II.

Stay tuned and Trust Jesus.

Stay Fresh!

Copper Price per Lb: $3.31
Oil Price per Barrel: $84.61

Key Indicators for October 13, 2011

Corn Price per Bushel: $6.38
10 Yr US Treasury Bond: 2.17%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,667 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,478

M1 Monetary Base: $2,201,800,000,000 RED ALERT!!!
M2 Monetary Base: $9,554,000,000,000 YIKES UP $1 Trillion in one year!!!!!!!

October 12, 2011 David Mint

The Bond Market Waterbed, Operation Twist causes the first of many weak US Treasury Auctions

10/12/2011 Portland, Oregon – Pop in your mints…

At this point, most FED watchers have heard of the FED’s latest move to appear to stimulate the economy while at the same time appear to control inflation, Operation Twist. In theory, the FED is simply reshuffling its bloated portfolio of worthless paper, exchanging the pieces of paper that have dates that are in the near future for pieces of the paper with dates farther off in the future.

Sounds simple enough, the FED is not directly increasing the money supply; rather, it is stepping from one end of the bond market waterbed to the other in an attempt to shake things up.

Now anyone who has ever jumped on or skipped along a waterbed knows it is a dangerous exercise.

Yiled Curve 10122011 — The FED prepares to Leap to the Long end. Where will the water go?

Why is it dangerous? Because the FED, whose balance sheet is leveraged 55:1 as of October 5th, is telegraphing its trades in bold letters everywhere it can and is bound to be front run and take some losses. Any mortal bank, bound by the restriction of marking its assets to market, would need to raise capital in the open market, beg the Government for a bailout, or increase its clients’ fees to cover these predictable losses.

Not the FED, they have the luxury of keeping their assets on the books at face value, running a negative capital balance, and printing the money necessary to absorb the losses. All of these strategies have the ultimate effect of robbing their depositors (anyone holding US Dollars) of purchasing power.

In the end, the Federal Reserve will become technically and later functionally insolvent.

They true tragedy in this gross, final expression of monetary madness by the FED is that they have no hope of achieving their stated goals. Ostensibly they are selling on the short end of the yield curve in an attempt to raise rates and somehow spur lending, yet at last check, rates on the short end are as low as they have ever been.

Meanwhile, long yields, the ones the FED is theoretically partnering with the “free” market in order to lower rates so that everyone can refinance their underwater variable rate mortgages, are rising.

Inconceivable! Yet true.

If today’s US Treasury auction was any indication of things to come (and there is no reason to think that it will not be), then the weakened demand for Treasuries that expressed itself today could overwhelm any attempt for the FED to lower rates and the logical end game is that the FED will be the ONLY entity bidding on long dated Treasuries.

Picture the waterbed. A 300 pound Ben Bernanke jumps from one end to the other, where does the water go? Follow the water, then race to get off the bed. As long is Ben Is jumping on the bed, the bed (i.e. the Government controlled bond market that it represents) won’t hold water much longer.

Stay tuned and Trust Jesus.

Stay Fresh!

Copper Price per Lb: $3.38
Oil Price per Barrel: $84.90

Key Indicators for October 12, 2011

Corn Price per Bushel: $6.41
10 Yr US Treasury Bond: 2.23%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,676 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,519

M1 Monetary Base: $2,144,500,000,000 RED ALERT!!!
M2 Monetary Base: $9,473,100,000,000 YIKES!!!!!!!

October 11, 2011 David Mint

Dexia Nationalized, Occupy Wall Street Appears to misinterpret the Monetary Roots of Widespread Discontent

10/11/2011 Portland, Oregon – Pop in your mints…

The big news over the weekend was the partial nationalization of the Belian Bank, Dexia. What? You’ve never heard of Dexia? Most people this side of the pond hadn’t up until a few weeks ago. This tiny $707 Billion hedge fund disguised as a bank, which just months ago passed the European bank stress tests with flying colors, has become the first official victim of the dearth of interbank funding in the Eurozone.

In a world full of potential butterfly effects, Dexia’s staggering juggernaut could have a knock-off effect for the US Municipal bond market.

Following a familiar script into unfamiliar territory, the Governments of France, Belgium, and Luxembourg jumped in and provided guaranties (ala Fannie Mae and Freddie Mac, which ironically are currently regurgitating their guaranties back onto US Banks) to the tune of $122 Billion until things settle down.

Unfortunately for France, Belgium, and Luxembourg, things will not settle down in time for their governments to remain solvent. Chalk another set of Eurozone governments up to the “effective loss of sovereignty club.” Surrendering sovereignty to international banking interests seems to be working out well for Greece, Ireland, Portugal, and Italy, so why not join the fun?

Slovakia appears to be the only nation willing to stand up against the wave of bailouts and subsequent loss of sovereignty as the bailouts costs crush already strained government balance sheets. It appears that they may hold out a couple more days, enough time to find a compliant government (the current one was voted out in a confidence vote tied to the EFSF earlier today).

The situation in Europe is giving the world a frightening message: When push comes to shove, the governments can be counted on to work in the interests of the banks. How long this untenable situation can last is anybody’s guess, but if the Occupy Wall Street movement continues to gain traction, it is clear that the situation, if properly understood, could change very quickly.

Observant fellow taxpayers will note that we have qualified our previous statement with the words “if properly understood” because, at the moment, the Occupy Wall Street movement appears to misunderstand the roots of their many and varied forms of discontent.

Protesters apparently see nothing wrong with the government selectively fleecing the productive class as long as they receive their “fair share.” If we have correctly identified the Socialist tendencies of these protests (as last check they had not adopted a manifesto), then the logical outcome is simply the ouster of one form of parasite, the banking interests, for another.

The problem, of course, lies in what we use as money. Placing the power to create money in the hands of a Central Bank and then turning a blind eye as they shamelessly debauch the currency, giving an inordinate amount of purchasing power to those closest to the money printing operation (banks and government) and placing an inordinate amount of regulatory and tax burden to those farther away from the money printing operation (that would be you and I, fellow taxpayer), is perhaps the surest way to destroy man’s faith in the capitalistic system, and in the process lay the blame for every evil unleashed by the debauching of the currency on the capitalistic system.

Rothchild, Marx, and Keynes understood this. They also understood that only one man in a million would be able to understand how debauching the currency serves to concentrate power in the hands of few at the expense of many.

Are you one of them?

Stay tuned and Trust Jesus.

Stay Fresh!

Copper Price per Lb: $3.30
Oil Price per Barrel: $85.81

Key Indicators for October 11, 2011

Corn Price per Bushel: $6.45
10 Yr US Treasury Bond: 2.16%
FED Target Rate: 0.07% ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce: $1,663 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,416

M1 Monetary Base: $2,144,500,000,000 RED ALERT!!!
M2 Monetary Base: $9,473,100,000,000 YIKES!!!!!!!

Events, Portland

All Aboard the Cow Train at the Pumpkin Patch on Sauvie Island

October 11, 2011 David Mint

The Harvest Season is in full swing at The Pumpkin Patch. The time of year when this Sauvie Island mainstay draws swarms of city-dwellers to its gourd-filled fields and welcomes them with a combination of activities and hospitality which have made it a great Northwest pumpkin patch experience for a generation.

The pumpkin patch, apart from serving as a warm up for the all important Christmas tree selection season, is a wonderful family tradition in its own right. It involves, in no particular order, eating, hayrides, climbing hay pyramids, tromping through corn mazes, petting farm animals, and of course, locating the perfect pumpkin to display on one’s front porch.

The Pumpkin Patch on Sauvie Island — A Beautiful Autumn Day at the Pumpkin Patch on Sauvie Island

On Sauvie Island’s Pumpkin Patch Farm, located at 16511 NW Gillihan Road, the regular festival fare is supplemented by their outstanding produce market and, what just may be the highlight of the pumpkin patch season, the Cow Train.

What exactly is the Cow Train? In literal terms it is a small tractor pulling about a dozen modified barrels with names like Bessie and Chloe over a course through pumpkin and corn fields at moderate speeds to give the rider the perfect balance of velocity and agitation.

Who thought cows and tractors could be so much fun?

If it is not in your autumn plans already, we encourage you to participate in this Great Northwest tradition at The Pumpkin Patch on Sauvie Island or any of the other great family farms in the area which open their fields annually to give the city dwellers a taste of fun on the farm.

Your pumpkin is waiting!

Events, Oregon Politics, Politics, Portland

Occupy Portland: Widespread Discontent meets Acceptance in Portland

October 7, 2011 David Mint

On October 6^th, Portland joined other US cities by kicking off its own version of the increasingly popular Occupy Wall Street protests with approximately 5,000 people amassing at Tom McCall Waterfront Park where SW Ankeny meets Naito Parkway. While no specific manifesto has come forth, the group generally comes across as unified against corporate greed and corruption.

Approaching Occupy Portland’s ground zero, it became apparent that the perhaps the only thing that unified this loose coalition of protesters was a general feeling of discontent. It was equally apparent that general discontent can be a powerful unifying force, and that as the marches and occupation got underway, the protesters found in one another the camaraderie that is inherent in common struggle and sacrifice.

Amongst the many and varied grievances that could be observed by reading the protesters’ signs, flags, and slogans, were: support for the cause of the Palestinians, pleas to tax the rich, outrage against corporate greed, and long-suffering environmental concerns. While these grievances have been longstanding for certain sectors of the population, what was most striking was the breadth of demographic and socio-economic makeup of those gathering to launch Occupy Portland.

: Protesters of all Stripes Gathering to kick off Occupy Portland on Thursday, October 6th 2011

While students resembling John Lennon and Guy Fawkes masks tended to stand out in the crowd, the presence of veterans, college students, retirees, and stay at home mothers spoke to the wide ranging discontent that has gripped Americans who are increasingly identifying themselves as the “other 99%” in sharp contrast to the top 1%, the label that has come to represent the wealthy and corporate interests.

As the exuberance of the protesters grew and their numbers at Waterfront Park began to swell, a few blocks away, up Burnside and 5^th, the mood was quite different.

Despite assurances by both the protesters and Portland Mayor Sam Adams that the protests would be peaceful, financial and governmental institutions, which imagined themselves in the path of the unannounced route of the march, were taking precautions. Banks planned to lock their doors and the increased Police and private security presence in the neighborhood was conspicuous.

There were rumors of Anarchists from Eugene coming to cause trouble. Adding to this perceived threat was the uncertainty of the effects on transportation in the downtown core. Needless to say, on this autumn day, Portland did not feel like the relaxed City in which we dwell.

Thankfully, these fears were unfounded. Both Protesters and Police are to be commended for tacitly working together to maintain the peace and dignity of the protest. Mayor Adams went as far as to waive the City’s no camping ordinance so that protesters could pitch their tents and stay the night.

Whatever the outcome, it is refreshing to see that Occupy Portland is helping so many people to find their voice and the City of Portland, true to form, welcoming them with open arms.

Events

Watch “Ron Paul: We Have Crossed the Rubicon towards Empire and Tyranny” on YouTube

October 6, 2011 David Mint

Ron Paul further expounding on his platform of Liberty at the National Press Club. Brilliant:

October 5, 2011 David Mint

Sumo Wrestling in Europe, Can America afford to be Frugal? Not as long as Debt = Money

10/5/2011 Portland, Oregon – Pop in your mints…

In Europe, the sumo wrestlers have resumed their battle royal on the edge of the cliff. In this metaphor, the wrestlers conveniently represent the various banks, semi-sovereign governments, central banks, and other unproductive, parasitic organizations with the words “Monetary Fund” in their name.

Up until now, with the exception of some jeering from the spectators, the battle royal has been good natured fun. Each time one of the wrestlers has tumbled towards the cliff, several of his benevolent fellow competitors have come to his rescue.

First Greece, then Ireland, Northern Rock, Anglo-Irish, and The Bank of Ireland. Now Alpha, Spain, Caja del Sol, Portugal, Italy, and Dexia.

Each time, they get up, dust each other off, and go back at it.

But the competitors are getting weary, as are the spectators. With each new stumble towards the cliff, more competitors and even some spectators are required to jump in to avert certain disaster. If this continues, when one of the weary wrestlers finally tumbles over the cliff, it is increasingly likely that he will take the rest of his competitors and a decent number of well meaning spectators over the edge with him.

Now things are starting to get interesting as BNP Paribas, SocGen, and France herself began to stumble towards the edge. Who will save them? Certainly not the Swiss National Bank, which last month stumbled to the edge of the ring and ironically may be the first to fall off.

Any sober observer will quickly point out that this is an insane pastime. Why would a group of sweaty fat men repeatedly try to push each other from a ring along the edge of a cliff?

We can only venture a guess, and our guess is along the lines of “they somehow believe that they must.”

SUMO WRESTLING — Why ask Why? Just stay away from the edge!

It doesn’t make sense, neither do a great number of things that occur in the current, insane, “debt is money” currency system in which we live.

People and institutions are trained to make decisions regarding money based on the assumption that money in and of itself has value. This assumption, under which the world currently toils, was debased along with the US Dollar back in 1971. Money today has very little in common with the money our fathers grew up with. Peter Schiff, the outspoken CEO of Euro Pacific Capital, has gone as far as to call modern currencies the “hidden portfolio risk.”

Our father’s money was based on the assumption that men were dishonest, and what they used as money (gold and silver) served to keep them honest. Today, money is widely assumed to be honest, a fact which has served to make a great number of men dishonest.

Debt is not money, the proof

The only way that the illusion that debt is money can be perpetuated is when debt, and therefore the perceived money supply, is increasing. First of all, who has ever been known to turn down free money? When the exponential increase in the perceived money supply is occurring, it creates the welcome illusion of wealth.

Second, people quickly learn that the easiest way to make money is to position oneself as close as possible to the creation of new debt. This is essentially the business model of Goldman Sachs and every other consumer and investment bank on the planet.

The money is so easy that no one stops to consider what would happen if aggregate debt were to begin to decrease, in turn decreasing the money supply by the same multiples with which it was created.

It will never happen, right? People will never turn down free or almost free money.

Yet they are. It turns out that people have a propensity for austerity when they have no choice. If money were based on something real, austerity would be extremely healthy for the economy which would be accumulating a capital base from which to make the next series of technological advances.

In the current, insane, debt is money currency regime austerity (the reduction of aggregate debt) removes the life blood from the monetary system and causes the underlying economy to die a slow, then sudden and altogether painful, death.

The mirage of the debt fueled economy quickly vaporizes and the debtors and creditors in the system find themselves in the middle of an economic desert with a long road ahead of them.

There will be much struggle along the way, and their only hope is to walk together.

Stay tuned and Trust Jesus.

Stay Fresh!