2/7/2012 Portland, Oregon – Pop in your mints…
We have been cooking up a project here at The Mint and have been remiss in our faithful correspondence to you, fellow taxpayer. For this, we offer you our humble apologies.
With our mission partially accomplished, we are back in the saddle and riding the monetary range. The days have been uncharacteristically sunny here in the Northwest, and it should come as no surprise that the outlook has cleared up, along with the skies. While Europe remains in the dual grip of debt and cold, the US is once again tying its shoes and heading out to dance.
Official unemployment is down and inflation is nowhere to be seen according to the government.
Yes, fellow taxpayer, all signs indicate that a Keynesian socialized monetary system has saved the day.
Yet no matter what the official statistics say, there is something much more important occurring as we write, something that will adversely affect every person who is long the current US Dollar via holding the currency directly or indirectly via some vague promise to have the currency delivered in the future (Read: Bonds, MBS, and any derivative of such).
The fateful occurrence is this: The US Dollar is about to carry out its suicide mission.
Suicide mission? Wouldn’t the Government inform us of something as important as the severe devaluation of the currency?
Yes and no.
Allow us to explain. First and foremost, the Government, who, behind the banks in the Federal Reserve system, gain the most from a weak dollar, have a tremendous incentive to devalue the dollar as well as a tremendous incentive to hide this fact.
However, the truth can easily be deduced by simply observing what the stated Federal funds rate is at any given time and waiting approximately three years for the effects of that rate to hit main street.
39 months, to be exact, but here at The Mint there are no extra points given for accuracy.
Where were we, something about a suicide mission, ah yes…
Join us, fellow taxpayer, on a journey back to the lazy days of August and September of 2007. The world could not have been brighter. Everything seemed to be turning up roses, which in retrospect should have been the first sign of trouble.
In early September, Ben Bernanke, the Chairman of the Federal Reserve, has just parked his avatar, “Benky” and logged off of World of Warcraft after completing a quest during his third day of “work” after a much undeserved vacation when the phone in his office rang.
“It’s time,” said the voice on the other end, and Bernanke slowly hung up the phone. Nothing more needed to be said.
The Federal Reserve was finished; it was only a matter of time. 100 years of subtle confiscation was about to go into the history books, and it was time to execute the plans which had been laid for its chief agent, the US Dollar, to go out in spectacular fashion.
Mr. Bernanke and his colleagues held a cursory open market meeting to say a tearful goodbye to the currency which they had been sworn to defend. They then set in motion a series of rate cuts which to this day have not been reversed.
The US Dollar was off on its suicide mission.
It had been on many similar missions before, all with overwhelming success in what were increasingly high risk operations against multiple targets, and it had always returned to its home shores with the spoils of war in its train, stronger and more arrogant for the experience.
But this mission was unheard of. Delving into short term interest rate depths never before attempted by a currency its size. Infiltrating foreign bases and confiscating wealth on an unimaginable scale. Only this time, it was not foreseen that it would return. A bigger, stronger, and more efficient model was waiting in the wings to swoop in and bring the spoils, which the US Dollar was to so painstakingly confiscate, home.
The mission, as in the past, was to take three years. Beginning at the FED, it would make a slow and steady descent through the short term funding markets and then plunge, in the span of 15 months, to the unexplored bottom. There it would lurk, setting mines and nets for the next 39 months which would confiscate the wealth of not just individuals and corporations, but of nations and multinationals as well.
It would be a grand climax to an illustrious career.
For their part, Bernanke and his colleagues at the FED would provide all of the cover fire they could muster in order to give the US Dollar as much time as possible to carry out its terrible work. In the end, however, there was little doubt that the currency would be found, tried, and executed during this tour of duty.
So certain was this fact, that neither provision nor measure was to be taken by anyone at the FED to rescue the US Dollar. No further resources would be used in its rescue, save the empty words of Bernanke and his colleagues.
The US Dollar’s orders were clear: To remain at the ultimate depths of short term funding markets, laying as many traps as possible, until it expired in this effort.
It is a grim mission, to be sure, with a grim outcome for those who are long the US Dollar and, ultimately, for the dollar itself.
Circa February 7, 2011, it appears to the greater world that the US Dollar has descended to the 1% level, the exact level it had been perceived to be at on that fateful day in late summer of 2007 when Mr. Bernanke got the call. For most people, it feels that all has returned to normal after four years of what can only be described as an economic nightmare.
Nothing could be further from the truth.
For in one short month, it will be clear that the US Dollar, rather than returning to base at the FED, as it has for nearly 100 years, has gone deeper and further into the pockets of the world than any currency has ever dared go before.
And it is about to pick each and every one of them.
If there was ever a time to own real assets instead of US Dollars, it is now.
Stay tuned and Trust Jesus.
Key Indicators for February 7, 2012
Gold Price Per Ounce: $1,742 PERMANENT UNCERTAINTY