Category Archives: Economics

Economics, Events, Spain, The Mint

Adios Pesetas: A look back at adoption of the Euro in Spain


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3/18/2013 Portland, Oregon – Pop in your mints…

The following is an essay written by a dear friend of ours, Tom Baker, in February of 2002.  Tom and his wife have lived in the region of Catalunya for a number of years.  His observations regarding the currency transition which was about to take place in Spain from pesetas to the full adoption of the Euro may prove timely if and when a similar event takes place in your locale.  Enjoy!

Adios pesetas

A major milestone has come to Europe with the introduction of the common currency known as euros.  Actually the Economic Union of 12 countries (Trivia question–can you name the 12 countries? answer below) has been on the euro standard for the last 2 years, with exchange rates fixed permanently between the currencies of the member countries.  Everyone was really using euros, but they just looked different in each country.

Now in the last month, the last major hurdle has been addressed with the withdrawal of all local currencies from circulation, and their replacement with euro coins and bills.  Think of the problems involved in changing the currency of 12 countries (approximately the size of the US) with 12 different monetary systems simultaneously.

Prices for goods have been posted in both pesetas and euros in the larger stores for the last year to accustom people to thinking in euros.  It isn’t easy-we have gotten used to valuing items in pesetas, and even though the euro is close to a dollar in value, that hasn’t helped much.  So it must be worse for those that have lived with pesetas all their lives.

Spanish FlagThe schedule is for 2 months of dual circulation, with only euros after that.  Now for some details of the tactics used.  Most cash registers are electronic and have been reprogrammed to handle both currencies.  Banks had kits of euro coins available in December for their customers so people could start getting used to the feel and appearance, but they could not be used until Jan 1.

The big change-over day (Jan 1) was of course very quiet, the major change being that most cash machines only dispensed euro bills.  Then the tactic to force the change-over was that customers could pay in either currency, but always received their change in euros.  So all the stores were sucking pesetas out of circulation.

It was a bit chaotic in the first week, with small merchants having to do the conversions on calculators.  Lots of mistakes were made, lots of people were confused, but the pesetas were disappearing briskly.  A few operations had problems with machines that accept coins, especially the toll roads.  So they decided to shut down the automatic coin machines until the conversion period is over, giving them time to convert them to euros.  If you want to pay cash, you have to give it to a human operator, otherwise use a credit card for automatic payment.EU-flag

The use of credit cards in general was encouraged to reduce the demand for change initially.  There were some shortages of coins, especially when the big traditional sales kicked in on Jan 8.  Now after a month of usage, the euros are seeming more natural and the prices are starting to make sense.  Pesetas have disappeared-all transactions are in euros now.

[A cartoon that I saw showed a bank robber at the counter, and the cashier asked if the transaction would be in pesetas or euros].

In our house, and I’m sure in most others, there was a sweep to collect all the pesetas and get them spent.  Then you find another coat pocket with a handful of coins, plus an envelope with French francs, another with Italian lira, etc.  There are cans with slots in all the banks for those last few stray pesetas to help children around the world.  We’re going to haul our francs to France for one last meal there before the pumpkin-hour.  The lira we sent with friends that are visiting Italy.

If you are holding on to European currency, send it to me immediately :-).  No, just kidding, but you do need to change it.  Bills you should be able to change at major banks until March 1 when all local currencies will disappear; after that you will have to change the money at the state bank in the country of the currency.  They predict that at least a third of the currencies will never be turned in.  That is pure gravy for the governments.

A side effect of the change-over is its effect on black money.  Spain and other areas of Europe have a sizeable underground economy, with all transactions in cash, not reported to the government for tax purposes.  Now some people are stuck with bundles of currency that will soon be unusable.  So the sales of luxury items skyrocketed in December, especially expensive cars.

Also there seemed to be a lot of money being poured into new construction, and housing prices have risen dramatically in the last year.  We will see if they subside in the coming year.  The government has promised to look into suspicious purchases of luxury items.  There were reports of Germans hauling carloads of marks into Switzerland.

On your next trip to Europe, you will find things much easier, with only one currency to carry unless you visit England, Switzerland, Denmark, Sweden, or Norway.  I wonder how much this will affect tourism into these countries?

The last thought is the number of colloquial sayings that will disappear from the language.  “No vale ni un peseta” = “It’s not worth even a peseta”.  The common words used for money were duros (5 pesetas, or like a nickel), and pelas (1 peseta).  These will disappear.

Euro coins:

1, 2, 5 Cents, Centims, Centimos-Copper colored
10, 20, 50  Cents-Gold colored
1, 2 Euros-Gold outer band, silver inner section

The “front” side of each coin is unique to each country, while the “back” side is common to all.

Euro Bills: 5, 10, 20, 50, 100, 200, 500

Euro countries:  Spain, Portugal, Ireland, France, Germany, Austria, Italy, Greece, Holland, Luxemburg, Belgium, Finland

We wish to thank Tom for allowing us to share his essay with you, our fellow taxpayers.  It is both an interesting, first hand look at a significant event in the history of world currencies as well as an instructive guide as to how one may prepare and what to expect should the monetary authorities in your locale choose to swap their existing national currencies for some flavor of supranational currency, such as the Euro.

At the time the Euro was adopted, it appeared to have a number of benefits for the adherents despite the minor inconveniences and sometimes painful price adjustments (we are told that the typical café, which before the Euro went for 100 pelas (see above) was immediately repriced up to a round 1 Euro (roughly 162 pesetas), an instant 62% increase) that were experienced in its adoption.

Now, some eleven years later, five of the countries on the above list have experienced significant economic distress, while others teeter on the fine line between growth and solvency.

It is important to note, however, that the countries that are now in distress experienced substantial economic booms related to the Euro adoption.  Their governments were allowed to borrow at rates which were aided by the strength of their European neighbor’s finances and, as Tom pointed out, the Central Banks made a windfall profit on the quasi confiscation of nearly 1/3 of the currency in circulation.

Was it worth it?  In terms of currency history, 11 years is a bit too soon to make a call, but either way, we have a feeling that a similar sort of currency “consolidation” awaits many in the not too distant future.  It will not be some sort of conspiracy, as many believe, but simply an attempt by the desperate governments of the world to shore up their ailing finances.

It will ultimately fail, but that time may be farther off than it seems.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 18, 2013

Copper Price per Lb: $3.51
Oil Price per Barrel:  $93.21
Corn Price per Bushel:  $7.16
10 Yr US Treasury Bond:  2.01%
FED Target Rate:  0.14%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,596 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,496
M1 Monetary Base:  $2,466,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,499,300,000,000

Economics, Monetary Theory, Politics, The Mint

A Brief Reminder of the Function of Central Banks circa 2013

An economist explains quantitative easing for the uninitiated, brought to our attention via Zerohedge:

Just in case you missed it earlier, the sovereign bailouts explained:

That pretty well sums up the political and banking sector’s strategy for dealing with the present crisis.
To quote Alfred E. Neuman:
“What, me worry?”

Climate Change, Economics, Politics

On the myth of overpopulation

A series of videos refuting the myth of overpopulation:

Climate Change, Economics, Monetary Theory, The Mint, To Build up the Land

To Build up the Land part II – God Made a Farmer

2/5/2013 Portland, Oregon – Pop in your mints…

Today we continue with our exploration of the concept of building up the land.  We are using, as our living example of someone who dedicated their life to building up a harsh land, a Swiss settler of the sandhills of western Nebraska, Old Jules.

Yesterday, before we deviated into our normal rant about the monetary premium being attached to debt instruments being the root cause of widespread resource misallocation and, by extension, what today is called “climate change,” we explored the idea that mankind was created to live in balance with the earth.

He was neither to overly molest it via excessive development nor ignore it via draconian conservation methods.  Rather, he was to build up the earth, and in turn allow himself to be built up by it.

There are preconditions for man to be able to live in balance with the land.  First and foremost, he must live in relative peace.  If one is to invest adequate time in building up the land, he or she cannot spend an inordinate amount of time preoccupied for and tending to their personal safety.  This is why war, far from being an economic boon, is ultimately fatal to man’s efforts to build up the land.

How, then, can peace be encouraged?  By allowing uninhibited trade between communist style communities, such as families or tribes.  As we explored yesterday, the link between free trade and peace is so strong that it can be said that if goods do not cross borders, soldiers will.

It all seems ideal, doesn’t it?  Living in peace, in perfect balance with nature and our fellow man.  It doesn’t sound like much to ask of everyone.  Yet in practice, building up the land is a difficult endeavor.  It is so difficult, that most people, when given the choice between working to build up the land and enjoying the fruits of the land, naturally choose the latter.  The debt based money supply has allowed an unprecedented number of humans to spend more of their time enjoying the fruits than building up the land, and every day that this situation persists brings the actions of mankind further out of balance with the need to “build up the land.”

What type of person chooses to build up the land?  In gentle climates, like the one we currently enjoy in Oregon, where a minimal effort in planting often leads to an above average yield, gentle persons can build up the land.  As the land is strong, the people don’t have to be.

This has been true of the indigenous groups who inhabited the territories and, at the risk of offending our fellow Portlanders, we dare say that it is true of the population today.  If one can stand the rain, life is relatively easy.  A gentle, forgiving land will produce a gentle and forgiving people.

The corollary to this, naturally, is that a hard and unforgiving land will initially yield a hard and unforgiving people.  Or, as Sunday’s Dodge Ram truck Super Bowl spot reminds us, on the eighth day, God made a Farmer:

Again for proof of this, we turn to Mari Sandoz’s account of her father, Old Jules.  Jules Sandoz, our settler of 100 years ago, lived in a harsh land.  He lived peacefully with the indigenous peoples there, who were being forced away by the Federal Army.  He lived less peacefully with the bankers and cattlemen, who attempted to claim the land he was trying to build up by force.

Sandoz give us a glimpse into her rough, determined, and surprisingly refined father:

“Jules Sandoz was not a nice man, but he was smart and tough and talented, and he was a survivor.”

“Old Jules was always ready to serve as a “locator,” to help a new arrival stake out a claim and “find his corners,” locate the precise boundaries of his land.  For this, he charged little or nothing, as he wanted so badly to “build up, build up” the community.”

“His (Old Jules’) house was briefly the local post office, until he feuded with the officials and they took it away.  His place was the unofficial storytelling center of the community.  His skinny daughter, Marie (later Mari {the author}), would hang back in the darkness to stay up and listen to the immigrants and Indians {Indigenous peoples} and, less frequently, the cowboys tell their tales.

Old Jules maintained a well-stocked medical kit and was the unofficial frontier doctor to one and all.  He befriended the local Indians, some of the last Lakotas to live free in lodges, tipis, near his home.  They called him “Straight Eye,” honoring his shooting skill.  He spent windfall money he could ill afford on a Victrola {record player} and phonograph records, because he liked good music and thought he and his family should have it.  They loved it.”

“Old Jules became a nationally known fruit breeder and grower, a correspondent of Luther Burbank.  He was sure that this land was ideal for raising cherries.  He was wrong.  It wasn’t.”

Excerpts from “Old Jules” by Mari Sandoz

It took hard people, like Old Jules and the nomadic indigenous people who passed through the Sandhills following the ratings {bison}, to slowly build up a hard land.  As the land became softer, Old Jules became softer.  For this reason, Old Jules was passionate about bringing settlers to the Sandhills to build up the land.

Today, the sandhills of Western Nebraska are inhabited by kinder persons who have reaped the benefits of the efforts of pioneers like Old Jules.  He and countless others whom he encouraged have worked to build up the land to a point where the effort to build it up is falling into balance with the time spent enjoying its fruits.

In Oregon and the Pacific Northwest, the opposite may be happening.  Attempts to minimize man’s interaction with the land via conservation, essentially declaring the land off limits for development, is conserving countless acres of land as wilderness.  While the efforts are noble and well intentioned, this too will, over time, throw the efforts of man to build up the land out of balance with the time spend enjoying the fruits of the land.

For it is true that the land needs rest, just as man needs rest.  But rest must come in the right proportion for both man and the land to maintain their edge and to keep the dynamic between mankind and the land in a healthy balance, allow both to rest and production in a perfect proportion, providing for the future without robbing the next generation of the tools needed to continue building up the land.

More to come…

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for February 5, 2013

Copper Price per Lb: $3.74
Oil Price per Barrel:  $96.64
Corn Price per Bushel:  $7.29
10 Yr US Treasury Bond:  2.02%
FED Target Rate:  0.13%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,673 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,979
M1 Monetary Base:  $2,455,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,412,500,000,000

Economics, Monetary Theory, The Mint, To Build up the Land

To Build up the Land – part I

2/4/2013 Portland, Oregon – Pop in your mints…

“Then once more he raised his head, his face alive, his eyes far-focused, burning.  He began to talk slowly, as though his lips were metal, stiffening.  “The whole damn sandhills is deserted.  The cattlemen are broke, the settlers about gone.  I got to start all over-ship in a lot of good farmers in the spring, build up–build–build–“

Old Jules’ dying words from the biography entitled “Old Jules” by Mari Sandoz

Today at The Mint, we continue our journey, and we are glad that you are along with us.  With the inflationary fruits of five, nay, 100 years of loose monetary policy beginning to destroy the very currencies which gave birth to them, the world will all too soon be left to pick up the pieces and boldly move forward when all hope is lost.

When there is no hope, one must fight to become hope.  This is our charge to you, fellow taxpayer.  Fortunately, this is far from the first time that mankind has found itself in this situation.  For inspiration, we look back roughly 100 years to a man who had a vision for a place that was then, as now, a place that is difficult to inhabit, the sandhills region of Northwestern Nebraska.  (The sandhills have appeared in the news as a possible route for the long delayed Keystone pipeline.)

That man is Old Jules.

Old Jules was a Swiss immigrant who settled in the sandhills and, as our title implies, devoted much of his interesting life to “building up the land.”  What does it mean to build up the land?  Your idea of building up the land probably means something quite different than my idea of building up the land, and we would both probably have visions quite different for building up the land than someone living 100 years ago, like Old Jules.

Yet all of our visions have merit, for the idea of building up the land, while it may manifest itself in any number of different ways, implies working with the land to help it produce.

The whole idea of man being able to help the land to increase its production and that production helping mankind, in turn, to increase their own production (or reproduction, to be precise), is a miracle.  For those who inhabit urban settings, it may seem a mystery from a far off place.

Yet it is the command received by Adam and Eve at the dawn of creation.

Man was never meant to sit back and simply eat the fruits passively produced by the land, rather, the creation and mankind were created to have an intercourse, if you will, with the fruit of one producing fruit in the other, and vice versa.  Mankind’s activities were meant to be intimately connected to the land.  Mankind is to build up the land, and, in return, the land will build up mankind.

While the Victorian Yeoman farmer ideal may immediately spring to mind when one thinks of building up the land, it should be clear to any thinking person that the division of labor is a far more productive and resilient system by which to build up the land and to reap the benefits of such building.

Even in the Yeoman model, the division of labor existed.  One fetched wood, another dug and plowed, another prepared food, still another shelter, and another fetched water, and so on.

The division of labor could flourish beyond close knit communal groups, such as families or tribes, only via a system of trade.  The concept of trade, which further enables the division of labor to operate, is important not only for the concept of building up the land, but also for the maintenance of peaceful relations amongst communal groups.

The link between mutual trade and maintaining peace between groups is inseparable.  In the words of Frederic Bastait:

“If goods do not cross borders, soldiers will.”

If all of these things, building up the land, the division of labor, and the necessity of trade, are to operate, the concept of money, or what is better described as the emergence of a good of the highest order which carries a monetary premium, must be tacitly agreed upon by all groups that engage in trade.

Today, circa 2013, there is something desperately wrong with where the monetary premium is placed today:  Central bank credits, or what most of us know as currency, or money.  The problem is that they are debt, and not part of the natural world.

Because the monetary premium has been tied to debt, the operation of money, which should serve to build up the land, instead operates to tear it down.  The obvious effects of this purely monetary problem have led man, a la Al Gore, to react to effects the environment by treating a limitless myriad of symptoms.  The most extreme of which is the cry for conservation.  At its extreme, conservation seeks to cut off the intercourse of man and the land, ensuring the ultimate death of both.

What the land needs, however, is neither the over zealous building up which takes place in the debt based monetary system, nor the sterile, hands off idleness called for by extreme conservation agendas.

What both the land and mankind desperately need, is balance.  The only way to achieve this balance, is to return the monetary premium to things in the natural realm.

One of our many “inquietudes” (a Spanish word for which a rough English translation would be agitation) here at The Mint is that the concept of money has been removed from the natural realm of coin, currency, or anything physical and naturally occurring (at least at a base level), and has been elevated and attached to the enigma of a debt, which exists purely in the imagination, if not aspirations, of men and women.

The disconnection, while giving rise to advances beyond our imagination, has thrown the earth’s resources wildly out of balance, via the unnatural transfer of control into few hands.

What many Keynesian trained economists praise as a triumph over the shackles of specie money, we lament as perhaps the ultimate delusion of our time.  Such is the delusion that nary one in a million men will understand these words.

More tomorrow…

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for February 4, 2013

Copper Price per Lb: $3.74
Oil Price per Barrel:  $96.17
Corn Price per Bushel:  $7.34
10 Yr US Treasury Bond:  1.97%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,667 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,880
M1 Monetary Base:  $2,455,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,412,500,000,000

Economics, The Mint

The GDP and Unemployment Red Herrings

2/1/2013 Portland, Oregon – Pop in your mints…

As we begin the month of February, it would appear that the US Economy has suffered from a couple of data shocks, which, taken at face value, would call into question the validity of the current rally in nearly every asset class (save bonds) and give rise to fears of the US slipping into another Recession or worse.

First, the Gross Domestic Product read came in at a negative 0.1% for the fourth quarter.  The GDP is mostly a bogus data point in an economy with a debt based currency.  At this point, the negative data, like most data that will appear this year, will give the Federal Reserve the statistical cover they need to continue QE and decimate the dollar.

The Unemployment rate, which inched up slightly, falls into the same category.  Given the paradigm shift that the US workforce is undergoing as the internet makes geography a non issue for anyone who works from a computer, and the demographic shift as the Baby Boomers ease into retirement make it hard to say what would constitute an appropriate amount of Unemployment at this time.

Full employment has always been a slippery concept, and at this point, the BLS statistics can be counted on to err on the side of covering the inflationary consequences of QE as well.

What has not changed is that people, when given the chance, will tend to spend more money than they have.  This tendency is again being allowed to manifest itself as credit restrictions are easing in the US and soon, even your cat will begin to receive credit card offers as they did in the good old days of 2005.

The Federal Reserve and every Central Bank on the planet have stuffed every orifice of the financial system with cash, so much so that they must lend gobs of it out to remain solvent.  The consumers are taking the bait, and the wave of inflation is now rolling through stocks and commodities.  It will not stop until QE stops.

And given the propaganda that passed as economic data prints this past week, QE will be with us for quite some time.  Plan and invest accordingly.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for February 1, 2013

Copper Price per Lb: $3.75
Oil Price per Barrel:  $97.77
Corn Price per Bushel:  $7.36
10 Yr US Treasury Bond:  2.01%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,667 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  14,010
M1 Monetary Base:  $2,455,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,412,500,000,000

ebooks, Economics, Monetary Theory, Of Money and Metals, The Mint

The Repo man goes Basel on funding markets

1/25/2013 Portland, Oregon – Pop in your mints…

We have been remiss in our regular correspondence to you, fellow taxpayer, and we pray you will forgive us.  We have completed and published the first two volumes in our series, called “Why what we use as Money Matters.”  It is our humble attempt to explain, well, why what we use as money matters.  The volumes are currently available on Amazon’s Kindle as wells as in various eBook formats on Smashwords and can be accessed at the following links:

What is Money? – Volume I – Free until February 7, 2013 at Smashwords

What is Money? By David Mint

Of Money and Metals -Volume 2 – Free until January 31, 2013 at Smashwords

Of Money and Metals by David MInt

Our objective in writing the series is to convince humanity of two truths:

1.  That if the activities of the earth are to be in balance with the available resources, money must be something natural, in other words, not debt or a sort of promise or idea.

2.  That Anarchy is an ultimate given, and that Capitalism is the best response to this given.

The governments of the world, as we have known them, are disintegrating, but this will be addressed in our upcoming volumes in the series.

We would be honored if you would give them a read and keep watch for the upcoming volumes, for these ideas are exceedingly important.

Back to finance

While the Fiscal cliff and subsequent fallout have taken a toll on the average working American to the count of 2% right where it counts, there is a something altogether wonderful and dreadful knocking at the door:

Inflation

The wave of inflation that has been on the horizon ever since Federal Reserve monetary policy gave us new acronyms such as ZIRP and QE, appears to be breaking and will soon wash ashore.  Now that it is breaking, the only thing that stands between it and the average working American is some flavor of collective default by the nation’s banks.  Thanks to the programs which are represented by the above mentioned acronyms, this is highly unlikely.

At this point, then, the only entities whose default could cause such a chain reaction are the Federal Reserve, US Treasury, or possibly the ECB.  However, here at The Mint we believe that the tidal waves of cash that have been unleashed may even make the default of one of these institutions manageable.

The Federal Reserve has succeeded in the sense that they have flooded the system with so much cash and have repeatedly stated in no uncertain terms that they will backstop the Treasury and MBS market until the US Dollar’s last dying breath.  While for a time, maturing debt obligations were mopping up the liquidity that the FED was pumping in, most consumers have now moved to extend maturities via refinancing or, on the conservative end, have closed out both cash and debt positions by paying off mortgages with savings which had been “ZIRPed” into dormance as an income producing asset.  This collective action has put the economy in a sort of warped reset where the fiat currency debt monster can run amok for the foreseeable future, with the attendant fatal real world consequences.

Oddly enough, as the FED begins to claim victory over the financial crises which its own policies have made possible, the double whammy of the Basel accords and Dodd-Frank regulatory regimens may eventually eliminate many of the financial institutions which today are household names.

The Repo man cometh

In what is perhaps an unintended consequence, the afore mentioned regulations have given what is known as a REPO contract its walking papers.  In our oversimplified understanding of the matter, for simplicity is a virtue here at The Mint, the REPO arrangement, which is a glorified demand deposit, has allowed banks to hold their client’s funds on their balance sheet as Tier I capital.

In 2017, these arrangements will be forced to be properly classified as demand deposits, and many of the wiser financial institutions, who already have a long way to go to reach the Basel Tier I requirements, are already steering their clients away from these arrangements.

How much capital will this pull out of the banking system?  Nobody knows.  But what is for sure is that unwinding these REPO positions will leave some institutions exposed and unprepared.  They will probably become aware of their exposure via the classic individual financial panic mechanism:

The margin call.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for January 25 2013

Copper Price per Lb: $3.64
Oil Price per Barrel:  $95.88
Corn Price per Bushel:  $7.21
10 Yr US Treasury Bond:  1.95%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,659 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.8%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,896
M1 Monetary Base:  $2,397,900,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,501,100,000,000

ebooks, Economics, Education, Gold, Monetary Theory, Of Money and Metals, Silver, Teaching

Of Money and Metals: The Operation of a Free Money Supply Explained

We’ve been at it again!  Be the first to download our newest e-book,  now available on Smashwords and Amazon’s Kindle:

Of Money and Metals: The Operation of a Free Money Supply Explained

Of Money and Metals: The Operation of a Free Money Supply Explained is Volume II in the “Why what we use as Money Matters” series. Of Money and Metals presents the fallacies of the current day practice of circulating debt in the place of money and explains the urgent need for and the operation of a free money supply. This volume also explores the phenomenon of Bitcoins and digital currencies.

It is available to our dear readers for free until January 31, 2013 at smashwords.com, just enter coupon code: MA65L

Thank you for your support!

Of Money and Metals by David MInt

 

Economics, Gold, Silver, The Mint

Open Debauchery of the Money Supply

12/21/2012 Portland, Oregon – Pop in your mints…

As the world carries on we offer a glimpse of what is to come.  Two playful headlines that have appeared in the past two days which is essentially an advertisement that inflation has taken hold and will not soon go away:

U.S. Mint testing new metals to make coins cheaper

This article confirms what metals watchers have known for some time now, that the US Mint will have to change the content of pennies and nickels, at a minimum.  The Nickel inflation hedge we’ve mentioned before is about to go into effect.  You can read the gory details in the US Mint’s 2012 Biennial Report to Congress on the matter.

Next, we see that, strangely it seems, demand for $100 bills has begun to pick up.

Cash is King:  Printing of $100 Bills Soars

It appears that the dollar debasement is hitting main street.  To keep tabs on the matter, we refer you to the M2 money supply which we present below in our Key Statistics.

The debauchery of the US currency is now hitting the street, which may mean its days are numbered.  Once the moronic Fiscal Cliff and the upcoming Debt ceiling redux in March 2013 are resolved, the party will begin in earnest.

We reckon that over the next few months there will be a narrow window to get precious metals at what, in retrospect, will be a bargain price.  We look for the price to rise in fits and starts from early January through March, then take off through May.  Part of this is seasonal, and part of it is the debauchery related above.  However, it is the debauchery which will punctuate the upcoming move.

We would like to take this opportunity to send you all a big hug and wish you and yours a Merry Christmas and a Happy Holiday Season from us here at the Mint!

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for December 21 2012

Copper Price per Lb: $3.55
Oil Price per Barrel:  $88.66
Corn Price per Bushel:  $7.02
10 Yr US Treasury Bond:  1.75%
FED Target Rate:  0.17%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,657 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  13,190
M1 Monetary Base:  $2,374,000,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,428,000,000,000

Economics, Politics, The Mint

Federal Reserve Effectively Forgives US National Debt

12/11/2012 Portland, Oregon – Pop in your mints…

Last week, we made a vague promise to provide data to back a claim that the US Debt at the FED had already been largely cancelled via the various quantitative easing (QE) operations that have been realized over the past several years.  This fact makes any talk of solving the moronic “Fiscal Cliff” via extreme methods such as minting platinum coins with $1 Trillion face value unnecessary.

In an attempt to illustrate what amounts to an effective forgiveness of a portion of the US National Debt by the Federal Reserve, we offer the following graph, which plots the both the official US National debt as well as the official US National debt net of the Federal Reserve’s holdings as a percentage of GDP.

US Debt GDP QE Graph

 

As you can see, the real US National debt to GDP is closer to 94% rather than the projected 105% which the official US National debt figures would suggest.  The Federal Reserve, at last count, holds roughly $1.6 Trillion of US Treasury debt.  While this debt is still theoretically on the books, it can essentially be removed from consideration when arguing about the need to solve the debt problem, vis-a-vis the moronic Fiscal Cliff debacle that is playing out in Washington.

94% is an alarming level, but according to our projections, the current US Government current account deficit cycle is about to end as the waves of new currency released into the global economy by the Federal Reserve and other central banks begins to run through the coffers of the US Government.

Despite the desperate proclamations by Congress that it will be difficult to solve their (yes, this is their problem) impasse, indicators such as an EFT that tracks the Defense industry, XAR, which would theoretically be the hardest hit were the US to fail to address portions of the Fiscal cliff such as suspending the sequestered spending cuts agreed upon as a result of the infamous Debt ceiling debacle, are not showing any signs of trouble.

In other words, the financial markets are assuming that the US Congress and Executive, when push comes to shove, will wind up and kick the can a mile down the road, as they did when the debt ceiling was bearing down on them.

According to our projections, there is no debate, the Fiscal Cliff does not even exist, rather, it is a figment of the collective imagination.

We do not believe in money, at least not in the form of money that is currently used in America today, and it appears that the US Congress is beginning to come around to our point of view.  If the Federal Reserve will simply finance deficits ad infinitum, why even bother with the Fiscal Cliff charade?  We are still working to answer that question, and leave it for you, fellow taxpayer, to ponder along with us.

The real question, the one which we wrestle with every day here at The Mint, is when will the faith in the Federal Reserve be destroyed?  With the advent of the various QEs beginning in 2008, the Federal Reserve system effectively collapsed.  The creation of credit was no longer self sustaining in the economy.  The FED has been living on borrowed time.

As December 21 approaches and those who have misinterpreted the Mayan calendar wonder if December 22nd will come, we look forward to the 22nd of December, when the Federal Reserve’s charter is rumored to expire, and YouTube’s “Man of Truth” famously prophesied that the Federal Reserve would go bankrupt. Technically, he said “December 2012”, but, after 99 years, why split hairs?

Chances are that the world will wake up on December 22nd and carry on.  However, if you see the words “Force Majeure” in the financial headlines, get ready to calculate prices in a new currency for 2013.  For the US may swerve to avoid the Fiscal Cliff, but sooner or later it will drop off the currency cliff.

That is when things will get very interesting indeed.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for December 11 2012

Copper Price per Lb: $3.65
Oil Price per Barrel:  $85.84
Corn Price per Bushel:  $7.24
10 Yr US Treasury Bond:  1.65%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,710 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  13,284
M1 Monetary Base:  $2,457,800,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,275,200,000,000

Economics, Financial Dashboards, Services, Strategy, The Mint

What is a Virtual CFO?

12/3/2012 Portland, Oregon – Pop in your mints…

What is a Virtual CFO?  At The Mint, we like to sum it up in the words of one of John Travolta’s greatest characters, Chili Palmer from the classic Get Shorty:

“Bo Catlett: Harry called you his associate.  What exactly does that mean? I mean, I never heard your name, or read it in Variety, or The Star, or anyplace.

Chili Palmer: It’s what he said, I’m his associate.

Bo Catlett: You must bring something heavy to the deal.

Chili Palmer: I do: me.”

To help readers to fully grasp this captivating analogy, we have prepared the following legend to accompany the above movie quote:

Harry:  You, our client

Bo Catlett – Any banker, vendor, potential investor, potential partner, government regulator, tax collector, client, CPA, attorney, or loan shark.

Chili Palmer:  The Mint (us) as your Virtual CFO.

Associate:  The Virtual CFO.

If you need a CFO, but don’t want or need to pay one full time, we’re here to help.

As your Virtual CFO, we take care of your high level number problems, plain and simple.  As an entrepreneur, you know your business like the back of your hand, and you can tell by feel when things are going well, and when they are not.

However, there comes a time when every Entrepreneur begins to panic.  They understand that they have generated a flurry of activity in which money changes hands.  They may even have a vague understanding of which of their actions are profitable and which ones cost them money, on net, to perform.

The entrepreneur is also painfully aware that their time is limited.  In order to take their vision to the next level, they need to know, with absolute certainty, that what they are doing is scalable, meaning that it will continue to be profitable as it expands.

What many entrepreneurs do at this point, in the midst of this all to common panic attack, is to engage a CPA to help with their company’s financial management.  The CPA, in turn, begins to bill on the order of $150 per hour as the entrepreneur passes along problems to the CPA that most well trained bookkeepers can handle, or worse, the entrepreneur begins to spend their priceless time mired in the details of the accounting of their organization.  Again, a task generally best left to the well-trained bookkeeper.

As the CPA fees begin to mount, the entrepreneur then relents and decides that they need a CFO.  They are not certain why, but they believe that this magical individual can help to reassure them that the numbers are working in their favor as well as eliminate their CPA bill.

What the unhappy entrepreneur finds, once the CFO is hired, is that not only has their CPA bill not gone away, but they now have a staff person who, all in, represents between $100,000 to $200,000 USD of direct annual costs and any number of indirect costs as they begin to hire their friends, recommend large investments in accounting software, and create incessant demands on the already overworked and underpaid, above mentioned, well-trained book keeper, the non-key position that it seems always needs to be filled by an expensive recruiting agency by someone who sees it as a stepping stone to their next gig.

As a result, the unhappy entrepreneur is left rolling the dice with the integrity of their financial data and often must resort to hiring an expensive consultant to piece together the rubble of his or her precious financial data, from which they had hoped, before the nightmare of the full time CFO began, to glean useful information from by which to guide their entrepreneurial activities.

There must be a better way.

Enter The Mint’s Virtual CFO service, where we offer all of the benefits of having a CFO, without the high direct and indirect costs, which are often associated with the creation of a position that all too often morphs into a sinecure.

Our value proposition is simple:  For $1,000 each month that you engage our services, you and your company receive 10 ours of our undivided attention, with no strings or golden parachutes attached.

What will we do for you in those 10 hours each month?  Depending upon your needs, we will take the financial statements produced by your happy, well-trained bookkeeper on a monthly basis and perform one or all of the following:

– Create a detailed ratio analysis in the form of a dashboard containing ratios and other financial metrics specifically tailored to gauge your company’s financial health and forward looking prospects.

– Benchmark your dashboard data against that of your competitors to the extent possible.

– Participate in on-going Strategic Planning.

– Make specific recommendations for improving profitability.

– Perform risk assessments for proposed transactions.

– Perform information systems assessments and oversight for finance, operations, and administrative systems.

– Provide a framework for and assistance in the enterprise budgeting process and create related forecasting activities.

– Create projections of results, cash flow and cash positioning.

– Assess organizational structure and create recommendations for optimization.

– Assess our company’s capital structure and make recommendations for optimization.

– Perform business valuations and financial due diligence for potential acquisitions.

– Review of contracts.

– Create requests for proposals to engage banking, credit, audit, tax, accounting software, payroll software, and treasury management services to ensure you get the best value and a product that works for your company when engaging these services.

– Act as a true, independent advisor.

– Much more.

In short, as an Entrepreneur, we’ve got your back so that you can do what you do best.

What we don’t do:

– Sign contracts on your behalf or act as a direct agent for your company (unless you explicitly request us to and then, only under parameters which you set and are comfortable with.)

– Day to day accounting entry, accounts payable, bank reconciliations, and data entry.  This is what you pay your well-trained, happy bookkeeping staff to do at a fraction of the hourly cost of our services.

– Tell you how to run your business.  You are still the boss and the one with the most skin in the game, after all!

– Take an equity stake in your company in exchange for services.  We work on a fee basis, which helps us to better help you with the objectivity required to act in your best interests.  Granting equity stakes, while ultimately being an incredibly expensive way to finance expansion, often comes with the nasty side effect of unnecessary hard feelings and, or, the destruction of your precious enterprise.  Tempting as it may be to be to get in on the ground of the next IBM, we generally advise against granting equity stakes unless it is part of a well structured and documented equity financing plan which is crystal clear to all involved.

What if I require more than 10 hours of your time?

We generally work very efficiently and strive to over deliver to every client.  At a minimum, you will receive a financial dashboard, benchmarking and ratio analysis, and a brief state of the financial union memo with recommendations and relevant forecasts.

However, if you are contemplating a large acquisition, negotiating a merger, senior debt sale, bond issuance, or restructuring existing debt, converting a software system, etc, we will do whatever humanly possible with whatever time remains.  Anything over the allotted 10 hours we bill out at $150 per hour.

We are efficiency freaks, which is good when it comes to numbers and finance, and many production processes (save wine, cheese, and the like).  With the proper data, equipment, and communications devices, we can generally accomplish in 10 hours what many CFOs accomplish in a month.

Finally, if you need us to bring something heavy to the deal, we will help you to make sure that the deal is valuable enough to you that our $150/hr fee will be a pittance compared to what is gained by our involvement.

 

What industries do we serve?

Over the course of our professional career, we have had the good fortune to gain a wide variety of experience in the areas of Accounting, Finance, Information Systems, business valuation, Auditing, and Tax matters for a wide variety of companies, both for profit and non profit, in industries as varied as translation and writing to Health Services, Real Estate Development, Property Management, Social services, and packaging.  We have even done a stint in the barricade business.

Intrigued?  Contact us today for a free consultation to see if your company would be a good fit for our services.  Our joy is in your success.

After all, $1,000 a month is a small price to pay for piece of mind as your business grows.  It looks even better when you run the numbers on hiring a full time CFO.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for December 3 2012

Copper Price per Lb: $3.63
Oil Price per Barrel:  $88.92
Corn Price per Bushel:  $7.49
10 Yr US Treasury Bond:  1.63%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,719 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  12,966
M1 Monetary Base:  $2,377,300,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,302,300,000,000

Climate Change, Economics, Freedom, Politics, The Mint en Español

Carta abierta dirigida a Su Excelencia Evo Morales Ayma, Presidente del Estado Plurinacional de Bolivia

Carta abierta dirigida a Su Excelencia Evo Morales Ayma, Presidente del Estado Plurinacional de Bolivia,
Evo Morales - President of Bolivia in Brazil 2007
Evo Morales – President of Bolivia, photo taken December 17, 2007 in Brazil by Marcello Casal Jr. of Agencia Brasil http://www.agenciabrasil.gov.br/media/imagens/2007/12/17/1840MC44.jpg

Permítame expresar mi más sincero saludo a Usted, señor Presidente, y a las honorables autoridades de la gran República Andina de Bolivia. Que puedan vivir y prosperar en la tierra bendita que habitan en la que goberna hábilmente como su humilde servidor.

He observado, tanto de cerca como de lejos, su pasión por liberar y elevar a los pueblos que habitan en las tierras que hoy conocemos como el Estado Plurinacional de Bolivia. He observado con admiración la valentía y determinación que usted ha demonstrado al llegar a su posición actual y al continuar con el trabajo diario por la liberación y la dignidad de aquellos que, durante demasiado tiempo, han sido víctimas de la opresión injusta.

Le escribo hoy por dos razones. En primer lugar, para animarlo en su lucha noble. Todos los grandes líderes, como usted sabe muy bien, enfrenten la adversidad, la crítica y la oposición de los que se ven amenazados por lo que representan. Estas fuerzas sólo han aumentado en intensidad a medida que tome medidas para reparar siglos de injusticia.

Sepa que a pesar de el ruido que hacen algunos quienes le insultan por tomar acción mientras ellos se sientan con los brazos cruzados, hay muchos, aunque sus voces sean suaves, que piden a Dios por su salud, fortaleza y sabiduría.

El segundo motivo para escribirle a usted es para ofrecerle tres principios que, a la medida que están permitidos a operar, permitan que los pueblos de la tierra conocida como Bolivia podrán sobresalir económicamente. Bolivia ya es una tierra rica. En las manos de la gente, se hará mas rica.

Junto con usted, rechazamos los principios neoliberales que han causado la destrucción de los pueblos que las han ciegamente implementado. Nuestro objetivo es brindarle las herramientas con las que no sólo Bolivia, sino todos los habitantes de la tierra, puedan lograr observar los diez mandamientos para salvar el planeta que usted ha contribuido generosamente al mundo.

Mientras que los títulos de estos principios pueden aparecer en conflicto con el primero y sexto mandamiento, le pedimos que lea atentamente las explicaciones ya que vera que el funcionamiento de estos tres principios permitirá la realización de sus diez mandamientos para salvar la tierra de la explotación.

Una palabra de precaución, es extremadamente importante que estos principios económicos operen juntos, sino, no funcionaran en absoluto:

Libertad:  Mucho se ha escrito y hablado sobre el tema de la Libertad. Pues, es el precursor de la dignidad y la piedra angular de todas las sociedades civilizadas. La Libertad, desde la perspectiva de la política económica, significa que los pueblos prosperarán a la medida en que las restricciones artificiales sobre su capacidad de trabajar, producir, e intercambiar esten eliminadas. La correlación entre la libertad económica y la sociedad civilizada es tan fuerte, que el coro del himno boliviano resuena con gran significanza:

“Morir antes que esclavos vivir”
El concepto de la libertad no debe limitarse sólo a la libre expresión y movimiento, situación en la que se encuentran la mayoría de las sociedades que pretenden que sus habitantes son libres, sino extenderse a la capacidad de una persona de participar en tanto el comercio como otras actividades sin restricciones artificiales, siempre y cuando el hecho de participar en la actividad no impide la libertad o dañe la propiedad de otros. Esta es la clave de la libertad, ya que mantiene la tierra en equilibrio. Desequilibrios peligrosos se producen cuando las Libertades de un grupo están subordinados a los de otra. Nuestro tercer principio, la igualdad ante la ley, se ocupa de que esto no suceda.

Quizás lo más importante hoy en día, la libertad debe extenderse a la esfera bancaria y a la moneda, dejando la decisión del medio mas aceptable y métodos de comercio más expedientes en manos de la gente.

Propiedad Privada: Para todas las virtudes que el principio de la libertad otorga a un pueblo, el principio no es más que una idea intangible a menos que su consecuencia natural, el principio de la propiedad privada, es respetada por igual por todos los miembros de la sociedad. El concepto de la propiedad privada es la base de cualquier actividad productiva que se desarrolla en la tierra, desde la siembra de un campo a la construcción de pozos para proveer un acceso al agua potable.

Más allá de la propia persona, una persona o grupo de personas deben tener el derecho de poseer propiedad, tanto real como personal, de la que pueden trabajar y compartir de la manera que más le plazca, con la expectativa de que van a tener la capacidad para emplear y disfrutar de los frutos de sus labores.

De la misma manera, el principio de la propiedad privada viene con la obligación de cuidar y mantener la propiedad que uno tiene a su cargo. El principio mismo es el incentivo para que las personas se animen a mantener la propiedad bajo su control, ya que la misma tiene el derecho de disfrutar o preparar para su venta a otro individuo libre dicha propiedad.

Con el fin de ser a la vez productivo y bien mantenido, la propiedad privada debe realizarse a nivel individual, familiar o comunitario. Si la propiedad se encuentra en manos del gobierno u otra entidad grande, será explotada de la misma manera que la propiedades están hoy explotadas por las grandes corporaciones, que no tienen incentivo para cuidar de él después de haber extraído la riqueza de la misma.

Igualdad ante la Ley: Los principios de la libertad y la propiedad privada deben ser asegurada para todos por medio del funcionamiento del principio de igualdad ante la ley. Para que las personas puedan prosperar económicamente, deben saber no sólo cuales acciones están permitidas, sino tambien que las leyes que hayan aplican de la misma forma a todos los miembros de la sociedad, independientemente de su nivel economico, raza, sexo, color, u origen. Sólo si existe la percepción de una igualdad ante la ley pueden las personas planificar y llevar a cabo sus actividades diarias.

La igualdad ante la ley es la base de una sociedad justa en la que las personas pueden prosperar de acuerdo con sus esfuerzos en atender a las necesidades más intensamente sentidas por su prójimo. Por lo tanto, todas las leyes en una sociedad debe centrarse en la protección tanto de la vida como en la propiedad legítima de la persona o grupo. Cualquier ley que extiende más allá de estos dos campos necesariamente sirve para limitar tanto el derecho como la libertad y la propiedad privada que deben ser considerado sagrados y permitidos a operar sin obstáculos para que el máximo de bien material pueda ser extendida a todos.

Le ofrecemos estos tres principios, sabiendo que en su sabiduría y benevolencia, los pueblos que se encuentran bajo su cuidado se beneficiarán por ellos y convertirse en la envidia de las naciones de la tierra, no por la riqueza natural que cuidan y producen, mas en la nobleza de sus convicciones.

Su dedicación y servicio al pueblo boliviano es una inspiración para toda la humanidad. Nuestro deseo es ver a todo el pueblo boliviano, y los pueblos del mundo, vivir en equilibrio y libertad con Dios, la naturaleza y entre sí.

Que Dios le bendiga a usted y a toda Bolivia.

Le deseo todo lo mejor,

David Mint

Economics, Financial Advice, Gold, Silver

The last four years have been good for silver

The Obama Presidency, despite the Change rhetoric, was simply a backdrop for the larger debt crises which will continue to unfold over the next four years, regardless of who assumes the role of the scapegoat when the polls close tonight.

As such, the following chart, courtesy of the money game, is instructive in that silver investors can rest assured that the next for years will be even better as the underlying trends, which began circa 2000 CE, are about to accelerate.

image

Is the trend your friend? We sure hope so. If not, visit your local coin shop and get to know him soon.

Climate Change, Economics, Empire, Freedom, Gold, Monetary Theory, Silver, The Mint, True Capitalism

Free Banking – The Ultimate Solution

11/2/2012 Portland, Oregon – Pop in your mints…

In our recent open letter to Evo Morales, we brought up three principles which must operate together in a society for the greatest amount of material good to come to the greatest possible amount of people.  While most assume that the principles, Liberty, Private Property, and Equality before the law, can only operate via the apparatus of government, we argue that the exact opposite is the case.  By necessity, the operations of government, an ultimate sovereign, would necessarily hinder the operation of these essential principles.

The reasoning is this:  These principles are so important that they must be learned and respected by every member of society.  At the same time, they are so basic to human nature that they are most effectively learned by simply living amongst one’s fellow human beings.  As such, the more a person is exposed to the anarchic environment in which we all ultimately live, the more quickly they will master these essentials.

Free Banking - The key to Liberty
Free Banking – The key to Liberty

The apparatus of Government can only retard the most effective teacher:  Hands on experience.

The recognition of the vacuum of power called Anarchy, which all systems great and small operate under, is extremely important when trying to understand the world as we know it.  However, it is not the focus of today’s Mint.

Today’s Mint is focused on Free banking.  Within our three great principles, Free banking generally fits under the principle of Liberty.  However, as banking and currency circulation, circa 2012 is perhaps the least free area of enterprise, it deserves special consideration as we examine what true freedom consists of.

Important as it is, the concept of Free banking may seem foreign to you, fellow taxpayer, as it is to nearly every other person, great and small, on our beloved earth.

However, the concept of Free Banking is perhaps the most important thing that men today can dedicate themselves to, for it is the lack of Freedom when it comes to currency and credit which has lead to stripping of the earth’s resources and the resulting environmental problems which a number of developing nations suffer from in a disproportionate manner.

Specifically, the suppression of Free Banking has caused the activities of man to create what is an unsustainable imbalance with the demands of the earth’s natural systems.

So what is Free banking?  As the name may suggest to many in the developed world, it is not a lack of monthly charges on a bank account, rather, it is the freedom for banks to compete as issuers of credit and safe keepers of currency in any form.

The Free Lakota Bank - Free Banking in action
The Free Lakota Bank – Free Banking in action

The current slave banking system’s fatal flaw is that it is obligated to issue credit and accept deposits in currencies which are nothing more than debt issued by a Central Bank.  This constraint causes the currency created by the Central Bank to be the basis of all of man’s activities out of a necessity to pay a tax to the government in said currency.

To compound this fatal flaw, the issuing Central Banks actively manipulate the interest rates, which affect the price of the flawed currency and credit, making the value of both the credit and savings of everyone completely subject to the whims of the Central Bank.

If the currency which everyone was working for had been created legitimately by the labor of another man and its price, via the interest rate mechanism, allowed to respond to real supply and demand signals, a natural balance would be struck between credit and savings in society.  This balance would express itself as conservation and eventual increase of the earth’s resources.

However, the currency which everyone is working for is nothing more than a piece of data created by a computer and printed onto a piece of paper and, via the active suppression of the interest rate mechanism, is not allowed to be properly discounted.  As such, all of the labors of man are set towards destroying the earth, turning it into more pieces of paper, and depositing them into a bank in order to close out the credit account created by the computer.

We observed the zeal with which Evo Morales and other revolutionary leaders have implemented reforms by closing down a majority of the ministries of the government almost immediately upon gaining the power to do so.  It is a swift move in which they attempt to consolidate their power.  However, as one studies these cases, they will see that often there was one notable exception that was allowed to continue operating:  The Central Bank.

The Central Bank is often seen as a sacred cow, even by those who vehemently opposite it, on the grounds that the currency and interest rates are too important to day to day life to be to the incapable hands of the people, which is what the concept of Free banking is all about.

However, it is for this very reason, the indispensible role of currency and credit in society, that currency and interest rates CANNOT be left in the hands of any one entity, no matter how much clairvoyance is attributed to them.

No one would argue that grains and fuel are important to everyday life in nearly all the earth.  However, even hard core Marxists would be hard pressed to admit that all peoples would be better off were only one entity given the ability to produce and set the price for either.  As such, it has been proven over and over again that the expansion of the ability to produce such indispensible items not only provides them in sufficient quantities to satisfy demand, it will do so at a price that is more or less tolerable for all (this argument, of course, is null if the price is controlled by a single entity).

While free market proponents are quick to recognize the benefits of the freedom to produce grains, fuels, and healthcare, for example, they become hardcore Marxists when it comes to currency and credit.  What those who fall into this trap fail to realize is that all of the virtues of free markets are worthless if the most basic economic common denominators of currency and credit are not allowed to operate in as nature intended.

Free banking would allow free markets to solve all the problem of scarcity in currency and credit in the most efficient way possible.  Why, then, is Free banking seen as the ultimate boogeyman by those in authority?  It is for one reason and one reason only:

Control of currency and credit represents the ultimate authority in the material world.

While free market reforms can go a long way towards liberating the peoples of the world, the task and to close down the Central Bank and allow both the banks and the people to choose in what currency they will issue credit and maintain their savings.  Far from leading to anarchic chaos, the basic need for exchange and the issuance of credit amongst humans would cause all of society who wished to trade with one another to arrive at a tacit decision as to what is best suited to serve as currency.

While in most cases, this tacit decision has arrived on Gold and Silver, the British and American empires, the most recent examples of empire, grew so wealthy that lesser metals, such as copper, were thrust into use as currency.

As a practical matter, it must be admitted that closing down the Central Bank would be a shock.  For this reason, we look to solutions such as those seen in the actions of Canupa Gluha Mani, the Ithanchan of the Free Lakota Bank, as a path to free banking and the ultimate freedom of the peoples of the world.

The Lakota people declared their freedom from the sovereignty from the Government of the United States government in 2007.  As an important part of this process, they knew that it would be necessary to establish their own monetary system.  Further, they recognized that to simply choose another currency would again make them slaves to the creators of that currency.

To solve this problem, they opened the Free Lakota Bank and adopted what is known as the American Open Currency Standard, which is attempt to return to a balanced system of metallic weights and measures to use as currency which is recognized and traded internationally.

While this may seem now like an impossible step to take, the Peoples of the earth must enjoy free banking if they are to enjoy Liberty, Private Property, and Equality before the law in any meaningful way.  For the lack of options in currencies in favor of the Central Bank’s monopoly on the issue of credit will keep the Peoples of the earth and their governments in the bonds of financial slavery until the Freedom of Banking is restored.

Free banking, by its very nature, does not obligate a people to adopt a currency standard, as the native Lakota people have.  While the most likely outcome of the liberation of the currency and credit markets is for all involved to quickly settle on a new currency standard, it is necessary to guarantee that all Peoples the right to choose which currency they want to hold and to bank in.  This is the only way that man can live in harmony with one another and with the natural world.  This freedom is the spirit of the principle of Free Banking.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for November 2, 2012

Copper Price per Lb: $3.48
Oil Price per Barrel:  $84.86
Corn Price per Bushel:  $7.39
10 Yr US Treasury Bond:  1.73%
FED Target Rate:  0.17%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,677 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,093
M1 Monetary Base:  $2,394,100,000,000
M2 Monetary Base:  $10,168,900,000,000

Economics, Events, Politics, Uncategorized

Margaret Thatcher’s Last stand against Socialism and Clairvoyance on the Euro

Margaret Thatcher is truly one of a kind.  This brief clip, besides depicting a session of British Parliament at its best, shows Thatcher rebutting the Socialist leanings for her ideological adversaries with classic lines such as, “by lowering the income gap you mean to say that you wish the poor to be poorer, if only the rich would be poorer as well,” and, “I condemn your Socialist policies along with the millions in Eastern Europe who have suffered under them.”

What is perhaps most striking about this discourse, which took place in 1990, is the final part of the clip where Thatcher saw clearly that the Euro currency would mean the end of democracy and Parliamentary sovereignty for the countries who adopted it, a prophecy which has begun to play out in Greece, Italy, Ireland, Portugal, Spain, and even the economic juggernaut Germany, where all branches of government are at the mercy of the whims of the ECB.

Enjoy the Iron Lady at her best via YouTube:

  

Climate Change, Economics, Freedom, Open Letters, Politics, The Mint

An Open Letter to Evo Morales

10/29/2012 Portland, Oregon – Pop in your mints…

While we have taken the decision, along with a silent majority of Americans, not to vote in the upcoming national elections, this does not mean that we have given up hope for change, quite the contrary.

Here at The Mint, for better or worse, we have opinions that cannot be confined to a dot on a pre printed scantron form.  They require words and dialogue.

Enter the open letter.  If one is to effect change in this world, it is important to correspond with those who are in the seats of power and therefore have the ability to effect positive change in this world.  If we can change their mind, they can change the world.

When writing world leaders, it is important to both acknowledge their authority and use terminology which we understand to be important to them.  We must recognize them as an ally for we share a common aim, the good of themselves and their people.  Finally, as people who are derided daily for serving their populace, they need encouragement.

The following is a copy of our open letter to Evo Morales, the President of Bolivia.  A proper Spanish translation will be forthcoming.  Enjoy!

 

Evo Morales - President of Bolivia in Brazil 2007
Evo Morales – President of Bolivia, photo taken December 17, 2007 in Brazil by Marcello Casal Jr. of Agencia Brasil http://www.agenciabrasil.gov.br/media/imagens/2007/12/17/1840MC44.jpg

 

October 29, 2012

An open letter addressed to His Excellency Evo Morales Ayma, President of the Plurinational State of Bolivia,

Allow me to extend my warmest greetings to you, Mr. President, and to the honorable people of the great Andean Republic of Bolivia.  May they live long and prosper in the blessed land that they inhabit which you capably govern as their humble servant.

I have watched, both from near and far, your passion to liberate and elevate the Peoples which inhabit the land known today as the Plurinational State of Bolivia.  I have watched with admiration your courage and determination as you have risen to your current position and as you continue to labor daily for the liberation and dignity of those who have, for too long, been victims of unjust oppression.

I write you today for two reasons.  First, to encourage you in your noble struggle.  All great leaders, as you know all too well, face adversity, criticism, and opposition from those who are threatened by what they represent.  These forces have only increased in intensity as you take steps to repair centuries of injustices.  Know that though there may be some with loud voices who heap insults upon you for taking action while they sit idly by, there are many, though their voices be soft, who pray for your health, strength, and wisdom.

Our second motive for writing to you is to humbly offer you three principles which, to the extent they are followed, will allow the Peoples of the land known as Bolivia to excel economically.  Bolivia is already a rich land.  In the hands of the people, it will be made richer. 

Together with you, we reject the Neo-Liberal principles which have wrought destruction on those Peoples who have blindly employed them.  Our aim is to provide you with the tools with which not only Bolivia, but all of the inhabitants of the earth, can strive to observe the ten commandments to save the planet which you have generously contributed to the world.

While the titles of these principles may appear in conflict with your first and sixth commandments, we ask that you carefully read the explanations and see that the operation of these three principles will allow for the accomplishment of your ten commandments which to save the earth from exploitation.

A word of caution, it is exceedingly important that these economic principles operate together, or they will not operate at all:

Liberty:  Much has been written on the subject of Liberty.  Truly, it is the precursor to dignity and the cornerstone of all civilized human societies.  As it applies to economic policy, liberty means that Peoples will prosper to the extent that artificial restrictions on their ability to work, produce, and trade are removed.  The correlation between Liberty and civilized society is so great, that the chorus of the Bolivian anthem rings especially true:

“Morir antes que esclavos vivir!” {For those reading this in English, it translates as: “We will die before living as slaves.”}

The concept of Liberty, to be productive in society, must not be limited merely to speech and movement, as it is today in most societies which pretend that their inhabitants are free, but rather extended to the ability for a person to engage in trade and other activities at will to the extent that engaging in the activity does not infringe upon the Liberty or property of another.  This is the key to Liberty, as it keeps the earth in balance.  Dangerous imbalances occur when the Liberties of one group are subordinated to those of another.  Our third principle, Equality before the law, deals with this.

Perhaps most importantly today, Liberty must be extended into the banking and currency realm, leaving the decision of the most acceptable medium and methods of trade in the hands of the people.

Private Property:  For all of the virtues that the principle of Liberty bestows upon a people, the principle is nothing more than an intangible idea unless its natural byproduct, the principle of Private Property, is respected equally by all members of society.  The concept of Private Property is the basis for any and all productive activity which takes place on the earth, from sowing a field to building a wells to provide access to clean water.

Beyond the ownership of one’s person, which should go without saying, a person or group of persons must be able to lawfully possess property, which they may choose to work and share as they please, with the expectation that they will be able to both employ and enjoy the fruits of their labors.

In the same way, the principle of Private Property comes with the obligation to care for and maintain the property that one is entrusted with.  The principle itself provides the incentive for the property to be maintained as persons will naturally care for something that they will either enjoy themselves or prepare for sale to another free individual.

In order to be both productive and well maintained, Private property must be held at the individual, family, or community level.  If property is held by the government or another large entity, it will be exploited in the same way that property is today exploited by large corporations, who have no direct incentive to care for it after they have extracted the wealth from it.

Equality before the Law:  The principles of Liberty and Private Property must be secured for all by the concurrent operation of the principle of Equality before the Law.  For people to prosper economically, they must know not only which actions are permitted, but that the laws which are enforced are administered in the same manner to all members of society, regardless of perceived wealth or lack of wealth, race, sex, color, or origin.  Only if there is a perceived equality before the law can persons plan and carry out their daily activities.

Equality before the law is the basis for a just society in which people may prosper in accordance with their efforts to help their fellow-man by serving their most intensely felt needs.  As such, all laws in a society should focus on protecting both the life and rightful property of the individual or group, any law extending beyond these two realms necessarily serves to limit both the right to Liberty and Private Property which must be held sacred allowed to operate unhindered so that the greatest possible amount of material good can come to the greatest possible number of persons in a society.

We offer you these three principles, knowing that in your wisdom and benevolence, the Peoples who find themselves under your care will benefit greatly and become the envy of the nations of the earth, not for the natural wealth they care for and produce, but for the nobility of their convictions.

Your dedication and service to the people of Bolivia is an inspiration to all of humanity.  Our desire is to see all of the Bolivian people, and the Peoples of the world, live in balance and freedom with God, nature, and each other.

Be encouraged and may God bless you and all Bolivia.

All the best,

David Mint

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 29, 2012

Copper Price per Lb: $3.49
Oil Price per Barrel:  $95.54
Corn Price per Bushel:  $7.37 
10 Yr US Treasury Bond:  1.75%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,710 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.8%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,107  
M1 Monetary Base:  $2,334,000,000,000
M2 Monetary Base:  $10,199,400,000,000

Anarchy: Athiesm with Regards to Government, Economics, Freedom, Politics, The Mint

Our Theory of Economic System Fluidity: Marx and Rand together in perfect harmony

10/22/2012 Portland, Oregon – Pop in your mints…

In the realm of economic thought, there are two extremes.  On one end of the spectrum sits the economic equivalent of Karl Marx’s workers’ paradise, known as Socialism.  On the other end sits the economic expression of Ayn Rand’s rugged individualism, known as Capitalism.  As anyone who has studied these philosophical extremes can tell you, the operation of real world seems to constantly fall somewhere in the space between the two, making strict adherence to either an indefensible position.

While apologists for these extreme positions do a wonderful job of explaining why complete adherence to their ideals by all would lead to an utopia on earth, a careful examination of the arguments, along with a quick glance at how things operate in the real world, lead one to conclude thatevidence of both Socialist and Capitalist ideals can be found in nearly any system.

How can this be?  If the extremes are both correct in their reasoning, they msut be mutually exclusive of each other.  However, we look around at the world around us, as well as into the depths of our own souls, and we invariabley find an uncomfortable coexistence of ideals that is difficult, if not impossible, to reconcile.

That is, until today.

Our aim today is to reconcile this age old dilemna.  Fret no more, fellow taxpayer, for the answer is simple:  Socialism works for local systems, while large scale systems are best served by embracing Capitalist ideals.

How can this be?  The answer is simple.

Socialism, with its embrace of community property and centralized decision making, is a superior policy for systems until they reach a critical mass.  Socialism unwittingly provides the framework in which society cares for its economically weaker members.  It is a system which is entered into with the understanding that at least a portion of one’s actions will take the form of altruism, that is, they will work for the benefit of others without the expectation of material compensation.  In fact, socialism is the basis for the family unit into which a great deal of humanity enters the world.

Karl Marx
Karl Marx

Given the barbarities which are justified in the name of profit, it can be said that the basis for morality and human decency most frequently occurs in a Socialist setting.  Given the inherent requirement of altruism, Socialism is the system which asks the individual to look beyond themselves.  However, as we touch on later, Socialism on a large scale tends to bring out the worst in human beings, as the inevitable onset of poverty quickly diminishes any moral advantage that small scale Socialism may enjoy.

We digress on the question of morality for a moment and instead submit to you an insightwith regards to the corporate structure.  It is the revelation that Corporations, entities which are held out as the champions of Capitalism, are, in fact, Socialist institutions (the stunned silence is deafening, please do read on, fellow taxpayer, it will make sense, trust us.)

It is for this reason that wages do not fit well into free market pricing mechanism and instead lend themselves to the “Labour theory of value” which is a base concept of Socialist philosophy.

The logical proof is the following:  The employer, employee relationship is based on a set rate per time period of work.  Once it has been agreed upon, the wage rate ceases to adhere to free market theory and bcomes a component of the Labour theory of value.  The top level managers in corporations that employ persons in an employee capacity become the centralized authorities in what is a socialist realm.

Another proof of this can be found in that property, which is held in the name of the Corporation, is cared for and used by employees.  As such, corporate property, as its name would imply, is held in common by subjects who themselves have no property rights in said property.  They may be offered shares in the corporation themselves, but this does not directly effect their day to day use of the Corporation’s (their employer’s) real and personal property.

A majority of human beings today find themselves as part of a Socialist entity of some sort, be it a family, household, corporation, or governmental employer (which, for purposes of analysis, behaves in a similar fashion to a corporation).  It is within these systems that we have most of our day to day interactions.  It is understandable, then, that most people would see a form of Socialism as the basis for a utopian ideal.

However, the members of these same Socialist organizations, the heads of household, CEOs, heads of government, members of Boards of Directors, salespeople, security personnel, customer service agents, and a host of others, well know that the “esprit de corps” which may exist in their organization is thrown aside in their dealings with the outside world.  The outside world, where individual corporations collide, is marked by brutal self interest and the protection of private property rights which are the hallmarks of Capitalism.

What gives?

Capitalism, the system which honors private property rights and glorifies the pursuit of self interest, must be embraced and allowed to operate in an unhindered state as the basis for the interactions between the small scale Socialist systems (families, corporations with employees, and those brave individuals who choose to face the Anarchic system of the world alone.)

Ayn Rand
Ayn Rand

The reason that Capitalism must be embraced by the smaller systems is that its principles, namely the laws of supply and demand and the Golden Rule, must be allowed dictate their day to day activities so that the smaller systems can better adapt and survive in a harsh, unforgiving environment.  To put it another way, Capitalism is a superior response to the Anarchy in which we all find ourselves, whether we are willing to admit it or not.

However, apart from its invaluable contributions to understanding the material world, even hard core Capitalists would agree that blind adherence to the Capitalist creed would not only lead to a trampling of those less fortunate in society, but the potential isolation of the individual from human warmth, feeling, and dare we say, loss of the ability to love.

For all of the virtues of Capitalism, its potential frigidness at the individual level and lack of a clear moral compass make it unpalatable to the majority as an absolute ideal.

So the answer is simple.  Socialism operates on a small scale, Capitalism on a large scale.  Marx asks Rand to dance, she accepts, and the world makes sense.  As the theory of biologos attempts to bring harmony to the polarization of two views of the world’s origins, our theory of economic system fluidity allows the economist and politician to embrace both the virtues of the Socialist ideal as well as the Capitalist economic imperative.

The final question which begs to be asked is the following:  In terms of size, at what point is it appropriate for a system to stop being guided by Socialist principles and to break up into units better able to cope with the Anarchic surroundings, meaning a leap to the Capitalist model, which naturally defines the size limitation of what may be called a functional Socialist system?

While there is no firm answer, it is clear that a Socialist system has reached its limit when it is corporately bankrupt and unable to fulfill its commitments, either morally or financially, to its members.

In the case of the corporation, it must adjust its productive activities and/or release either property or employees into the capitalist system until it finds equilibrium.  The released Employees then find themselves, albeit for a moment, in what may be called the free market for labor.  In it, they will either learn to compete perpetually in the capitalist environment and form their own small scale socialist entity, or link up quickly with another socialist entity, be it another corporation, state welfare, or the generosity of a family unit.

The fact that both families and corporations can accumulate wealth are proof that socialist entities can and do compete and thrive in a world where capitalist thinking and political structures are an imperative.  It is the ability of each unit to adapt to changes and to seize opportunities which makes the difference.

There is much more to say about this but it will have to wait for another day.  We leave you with what should now be obvious.  When Socialism is employed on large scales, it looses both its ability to compete as well as any moral superiority which it may have enjoyed.  When persons are thrust headlong into poverty, which is the logical economic end of large scale Socialism, what were once moral imperatives are tossed aside in pursuit of purely Capitalistic aims in a desperate attempt to eat.

Anyone who has lived such an event will attest that it is in these unfortunate circumstances that the rotten core of humanity is laid bare for all to see.  While unbridled Capitalism has its own faults, which are daily brought to light in the media as a reminder of when it has been allowed to run too far.  It is this consciousness, and the human desire for mercy, which work to keep the evils of Capitalism in check.

The beauty of the theory is that the normal operation of each system keeps the proliferation other in check, any attempts by government or sovereigns to impose or preserve one system over the other will end in disaster.

Rushing to extremes is for fools, for the Kingdom of God is one of perfect balance.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 22, 2012

Copper Price per Lb: $3.64
Oil Price per Barrel:  $89.16
Corn Price per Bushel:  $7.61 
10 Yr US Treasury Bond:  1.80%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,729 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.8%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,345  
M1 Monetary Base:  $2,334,000,000,000
M2 Monetary Base:  $10,199,400,000,000