Category Archives: The Mint

Why Cash Costs the U.S. Economy Real Money

10/2/2013 Portland, Oregon – Pop in your mints…

Why What We Use as Money Matters
Why What We Use as Money Matters

We recently came across an article by Diane Brady at Businessweek which touched on a theme that is near and dear to us here at The Mint:  The “cost” of money.

The reason that things like this interest us is that we believe the point of something acting as money (more accurately, the monetary premium) is that it has a cost.  Not only a cost, but a cost which, if allowed to be set by free market conditions, provides the perfect, tacit governance of the activities of humankind on this earth.

Brady’s article, as you can see, fell short of our high philosophical ideals and, instead of analyzing why cash has a cost, degenerated to the default position held by many that money should be free:

Why Cash Costs the US Economy Real Money 

Disappointing but not entirely unexpected from the Senior Editor of a financial publication.

The truest saying in all of economics is that there is no such thing as a free lunch.  There may be a lunch that costs you nothing but the time spent to approximate oneself to the plate and consume it, but rest assured that the cost of the ingredients and preparation of the lunch itself have been borne elsewhere.

The same dynamic is at work in the monetary realm.  Whether or not one needs to go to an ATM or simply swipe their credit card or tap their mobile phone is of consequence only to that person, but the cost of the production and exchange of money is being borne not by the economy, as Brady suggests, but by the earth itself, which is daily thrown further out of balance by the misguided actions of humankind.

This state of affairs will continue as long as we use debt as money.

Key Indicators for October 2, 2013

Copper Price per Lb: $3.24
Oil Price per Barrel: $101.55
Corn Price per Bushel: $4.39
10 Yr US Treasury Bond: 2.65%
Mt Gox Bitcoin price in US: $137.07
FED Target Rate: 0.06% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,288 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*: 0.25%
Unemployment Rate: 7.3%
Inflation Rate (CPI): 0.1%
Dow Jones Industrial Average: 15,192
M1 Monetary Base: $2,470,500,000,000 ANOTHER MARKED DROP
M2 Monetary Base: $10,789,400,000,000

 

 

Why the FED will Increase the Target Rate Before Tapering and the DC Budget/Debt Ceiling Paralysis Matters Not

9/27/2013 Portland, Oregon – Pop in your mints…

Autumn is upon us here in the Northwest.  As in most places, it is a refreshing return to the dance of life that we will live together over the next nine months under the requisite cover of rain and cloud.

If occurrences in nature can be trusted as future economic guidance, we are setting up for a phenomenal year in terms of production.  Salmon runs up the Columbia basin, which were once nearly extinguished altogether, are crushing all previous records this year, and word is that the Tuna catches in terms of quantity are staggering.  Corn yields further east in Minnesota are on pace to increase even on a decrease in acreage planted.

Even the Mushroom pickers are reporting a bumper crop.

Mushroom picking; illustration to III tome "Pan Tadeusz" circa 1860 by Franciszek Kostrzewski
Mushroom picking; illustration to III tome “Pan Tadeusz” circa 1860 by Franciszek Kostrzewski

Nature is doing its part to provide for us on any number of fronts, despite what Malthusian apologists and central planners may say, the only thing holding humankind back are the restrictions that it places upon itself.

Chief among these restrictions is the unnatural monopoly that exists with regards to the production of money and credit, which paradoxically are one in the same in the current “debt is money” scheme under which the entire financial world operates.  For the uninitiated, the monopoly that we speak of is that of the Central Banking institutions, which have been given unchecked authority to manipulate (notice our choice of terminology in place of the more quaint verb “setting” which is normally propagated) short (and now long term) interest rates as well as to determine what serves as legal tender.

Add to these monopolistic practices the ultimate authority to collect taxes and the extent of the monopoly which Central Banks have been granted becomes clear.

Given the existence of this monopoly, it is little wonder that those who make their living by working closely with money and debt, as we do, or those who hold a large amount of money and debt instruments examine the actions of the Central Banks with a great deal of anticipation and scrutiny.

The Central Banks are not to be watched because they have anything special or relevant to offer in the form of clairvoyance or enlightenment, rather, they are to be watched in the same way a pack of dogs must be watched when boarding an airplane, for their movements, while unproductive, tend to bother and in the worst of cases, cause harm to the rest of the passengers.

Against this backdrop, the captive watchers of the Federal Reserve were somewhat surprised this past Thursday that the Central Bank decided to delay their much anticipated “tapering” operation.  The decision to leave the current amount of money printing (Quantitative easing, that is) at current levels, which amount to roughly $115 Billion per month, was welcomed with a certain degree of shock by those who were certain that the program would be discontinued in light of the recent strength in the US economic data reports.

Entitlement: Why the FED will Raise the Target Rate Before Tapering

The decision did not surprise us, however, for the following reason.  The Quantitative easing program has essentially become an entitlement in the sense that it guarantees the credit system a buyer of last resort for the current level of mortgage backed and other securities which the FED purchases from their holders.  Were this program to be dialed back, it is clear which entities would be hurt by the action.  Entitlements of this sort are nearly impossible to take away once they are in place.

On the other hand, the other tool that the FED would theoretically use to signal it was responding to strong economic data by working to tighten credit (something that will not occur within the next three to five years, no matter what the FED does), is by manipulating short term interest rates via the SOMA and POMO.  They are more likely to test the waters by letting rates drift higher as this is an action that does not necessarily have direct consequences for certain market actors.  While some of the consequences are predictable, they are in the end indirect consequences, which give them less the feel of an entitlement, which is what the QE program has become.

In any event, by espousing a policy of giving “Forward Guidance,” which theoretically gives juice to existing policy actions by providing certainty to market participants as to how long certain policies will be in place, the FED is now, monthly, placed in the impossible position of showing the world how much its “word” is worth, as Forward Guidance only works if that guidance is actually reliable.

You see, contrary to what academics such as Michael Woodford, who is credited with originating the Forward Guidance principle, might say, the word of an organization and/or individual, like a debt instrument, can also be discounted based on the prevailing belief as to the extent to which the promises of the individual and/or organization can be trusted.

While the actions of the Federal Reserve, whatever they may be, are for some reason seen as immediately effective is beyond us.  In our models it is clear that any action taken by the FED with regards to interest rates does not significantly impact price and wage levels outside of the financial sphere for three to five years.  Nevertheless, the Federal Reserve actions are observed by algorithms which “think” differently than we do, and it is these algorithms which drive large scale equity trading circa 2013.

Fiscal Policy vs Price Levels:  Why the DC Budget/Debt Ceiling Paralysis Matter Not

Perhaps even more ineffective and innocuous to the economy in the short term than Federal Reserve action are the actions that are taken (or not taken) by the Federal Government.

The news is currently ablaze with the current scenario in Congress which has managed to entangle the Federal Budget, the Debt Ceiling, and Obamacare in the same line of debate.  This type of stalemate in terms of budget matters is absolutely normal and to be expected of technically bankrupt entities.

The past three years, which have seen at least two other debates around the debt ceiling as well as various sequesters, furloughs, disastrous tax and fiscal policy, and arguably a complete failure of any inkling of “Forward Guidance” out of the Federal Government, have taught the economic community one very important lesson:

Despite members of each party assuring the public that the outcome of these debates and any failure to act will destroy the economy, whether these debates are resolved or not is of little consequence.  The reason that they are inconsequential is that the major actors in the US economy, which are and always will be at least one step ahead of both politicians and central bankers, have already discounted the true impact and likelihood of government action by tacitly adjusting their activities to adapt to the inherent uncertainty.

So relax, the no matter what the FED or Congress do or fail to do, the risks remain firmly on the upside for at least three to five more years or the day that the current “debt is money” system fails, whatever comes first.

Stay tuned and Trust Jesus!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 27, 2013

Copper Price per Lb: $3.29
Oil Price per Barrel:  $102.77
Corn Price per Bushel:  $4.54
10 Yr US Treasury Bond:  2.62%
Mt Gox Bitcoin price in US:  $140.00
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,337
MINT Perceived Target Rate*:  0.25%

August and Everything After All Over Again

9/23/2013 Portland, Oregon – Pop in your mints…

Most persons in the financial industry, and likely beyond may recall that a mere five years ago, the Lehman Brother’s bankruptcy filing rocked the financial markets and served as the official notice that the blind 25 basis point hikes in the FED target rate that had passed as “monetary policy” during the go-go years of the early 2000’s were not exactly what the economy ordered.

In a matter of months, an entire industry that had been operating in a nearly infallible uptrend since the early 1970’s began to retool itself to cope with significant downside risk.

The Lehman event took place on September 15th and, while it did not exactly catch the US Treasury and the FED off guard, it did catch them without the resources or authority to do anything about it.  As Phillip Swagel details in this piece “Why Lehman Wasn’t Rescued,”:

“Lehman failed before TARP was passed or even proposed to the Congress. This meant that the Treasury Department had no legal authority to put government money into the firm or provide a guarantee for its obligations. This changed with the passage of the Emergency Economic Stabilization Bill on Oct. 3, 2008, which provided $700 billion in TARP financing to be used to purchase troubled assets (used in the end mostly to purchase preferred shares in banks).”

Swagel goes on to state that the cases of both Bear Stearns and AIG, whose subsequent bailouts caused Lehman stakeholders, amongst others, to cry foul, differed on one very significant count:

“To all eyes, the problem at Lehman was one of solvency while the issue in the other two cases was liquidity. The Fed’s actions on Bear and A.I.G. were thus appropriate in its role as a lender of last resort and the same with its caution at Lehman.”

And so began the cascade of minifailures which have become collectively known as the Financial Crisis of 2008, as liquidity was provided to the solvent while the insolvent went quickly into history’s dustbin.

At The Mint, we refer to this odd period of time as “August and Everything After,” with apologies to the Counting Crows.  It was a time when the industry threw in the towel, and the prevailing current became one of loss avoidance.

Today, just over 5 years later, we believe that we are at a similar inflection point with regards to tendencies in the financial markets, hence our tagline “August and Everything After All Over Again,” only this time, the tremendous risks in the financial system are not on the downside, where everyone is looking for them, they are on the upside, where few dare to tread.

The few who have tread confidently on the upside risks, despite the commonly held beliefs to the contrary, would have nearly tripled their money by doing something as mindless as going long the Dow circa March 2009, when it appeared the Dow companies themselves were to be swallowed up.

At this point in time, the upside risks are hidden from most.  While the stock market continues to churn out an impressive performance, a more significant trend has been playing out in plain sight:  Private investment activity is going through the roof.

While publicly traded equities get nearly all of the airtime, it is becoming clear that the advantages of being a publicly traded company are being outweighed by the regulatory burden and incredible scrutiny that public companies are under.  To sum up the plight of public companies circa 2013, they are easy targets.

The answer for many has been to “go private,” and go private they have, from Ford to Blackberry, companies that once basked in the public limelight have found that going private may be just what the doctor ordered.

To accentuate this trend, today is the day that a key provision of the JOBS act takes effect, allowing private companies and startups to solicit accredited investors publicly rather than needlessly lurking about in the shadows as they had done since the days of the Great Depression.

The Role of the Federal Reserve

The Federal Reserve, in direct violation of Natural Law
The Federal Reserve, in direct violation of Natural Law

FED observers watched in near disbelief last week as the US Central Bank declined to “Taper,” which means to scale back the amount of money that they simply print and hand to holders of US Treasuries and Mortgage Backed Securities, citing downside risks.

In observing the FED, we can confirm that the economy currently faces unimaginable upside risks, as they are paradoxically always the last to react to market realities which they have unwittiningly created.

The FED and their observers labor under a belief that is both accurate and woefully misguided all at once.  It is true that the Federal Reserve, in regulating short term interest rates and the base money supply, has nearly unchecked influence on the level of economic activity anywhere that dollars are used in exchange.  This is a simple reality of the insane “debt is money” monetary system that the world suffers under.  The primary issuer of the debt determines how much money there is.

They are wrong in thinking that the FED is clairvoyant in any sense of the word and can somehow time their interventions to achieve desired effects on the underlying economy.  In this sense, the FED is always the last to react as it has no idea what the true timing of the cause and effect of their policy decisions are.  While they have produced reams of academic work to prove their theories, in practice, it is nothing more than guesswork with the benefit of hindsight.

This is also why the FED will only “taper” when nobody cares whether or not they taper, i.e. when there is so much money flooding the system that the dangers are clearly on the side of hyperinflation.  Inflation, in their mind, is much easier to fight than the deflationary spiral the the Lehman event triggered five short years ago.

They are right in the sense that in a hyperinflationary environment, the monetary system simply needs less juice, where a deflationary environment threatens their stranglehold on the world’s monetary system.

To understand the depth of the incompetence of the FED and Central Bankers at large, one need only look to their latest hero, Michael Woodford.  Mr. Woodford wrote a book titled “Interest and Prices:  Foundations of a Theory of Monetary Policy” in which he deals with problems of zero bound rates and quantitative easing, ideas that were being toyed with back in 2003 when the book was published as mere theory.  Now, they are part of a Central Banker’s everyday life, and Woodford’s book is considered their bible.

The base of Woodford’s theory, which we have come to know as “foreword guidance,” is that when monetary policy is accommodating maximum liquidity and the system still lacks it, policy makers must resort to telling market participants what they will do, essentially tying their hands in the future, in order for liquidity to exceed its theoretical limits.  This is the only reason why Ben Bernanke now holds a press conference after FED policy meetings, so that this theory can be implemented.

Woodford’s theory of Foreword Guidance, like Quantitative easing, is further evidence that the current monetary system has failed.  It has failed in the sense that even unlimited amounts of debt masquerading as money cannot satiate the need for liquidity in global markets, which are so disconnected from actual physical conditions that it is impossible to tell which projects are a net benefit to humankind and which take humankind further down the path to fantasyland, where all play and no work promises a lot of pain and scarcity down the line.

The risk in the “After August” period is to the upside, and central bank notes will become irrelevant as the global economy goes into overdrive and a new monetary system will be tacitly agreed upon by all participants.

When the Central Bankers of the world look up from Woodford’s textbook, they may catch a glimpse as the Tsunami of liquidity washes their currencies away.

The FED has nearly doubled the base money since 2008, are re you ready for it to multiply?

Stay tuned and Trust Jesus!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 23, 2013

Copper Price per Lb: $3.27
Oil Price per Barrel:  $103.40
Corn Price per Bushel:  $4.53
10 Yr US Treasury Bond:  2.71%
Mt Gox Bitcoin price in US:  $133.43
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,322
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.3%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  15,401
M1 Monetary Base:  $2,469,100,000,000
M2 Monetary Base:  $10,783,000,000,000

Was Removing the DEA the Catalyst for Bolivia and Latin America’s Economic Miracle?

9/11/2013 Portland, Oregon – Pop in your mints…

We recently returned from Bolivia, which, for the geographically challenged, is a relatively large country located in the heart of South America.  Our better half hails from this land that extends from the peaks of the Andes to the Amazon basin, and we have more than a passing interest in the goings on there.

What we observed in Bolivia this past trip can only be described as an economic boom.  While the economy has been on the uptick for a number of years, what we saw this year was well beyond an uptick.  During previous visits, we witnessed the construction of major roads along with an insane number of apartment complexes being constructed.  On this trip it was evident that the parks are now being maintained and the number of western style shopping malls and other spaces had greatly increased.

The homogenization of Bolivia, as we are fond of calling the phenomenon of globalization, is well underway.

Indeed, as one toggles the GDP of Bolivia on the embedded chart below, courtesy of tradingeconomics.com, the warp curve of economic growth that we have observed in our travels there, which began in 2005, just before Evo Morales (whose policies can only be described as Neo-Socialist) was elected, is confirmed by GDP figures.


Source: tradingeconomics.com

As we descended into Viru Viru, the interestingly named airport in Santa Cruz, we struck up a conversation with a young man who was working as a commercial diver in Oman.  In the course of the conversation, we remarked that Bolivia appeared to be in the midst of an economic boom.

When we asked our fellow weary traveller his opinion as to why the Bolivian economy had entered into its most recent growth spurt, he simply replied, “se fue la DEA.” Which means, the DEA is gone.

The DEA (US Drug Enforcement Administration, for those unfamiliar with the show Miami Vice) had occupied the rich agricultural land of the Chapare, which, while not ideal for growing coca leaves, enjoys a humid climate in which nearly anything will grow quickly, for nearly 33 years when Morales ordered them to leave during a diplomatic spat with the US in November of 2008.   It was a long-standing grudge that Morales, a coca farmer himself, had against the agency which he saw as an imperial force which harassed the simple farmers in the region that was his adopted home.

A quick glance at the GDP graph above seems to indicate that the DEA’s departure, which was completed in early February of 2009, appears to have been the catalyst that sent the Bolivian economy into overdrive.

Not only that, but when one overlays the Latin American GDP in the graph above, it is clear that not only Bolivia, but all of Latin America has experienced a similar GDP warp curve and attendant development in their infrastructure and consumer amenities.

While it may appear that a simple injection of drug money, which now flows somewhat unhindered into the country in search of the now abundant coca leaf (the raw material for cocaine and other illicit drugs) would account for this unprecedented growth, the phenomenon has coincided with another US policy that has paralleled the time frame in which Bolivia has been “DEA free*.”

Ben Bernanke’s printing press, which kicked into hyperdrive circa 2008 and has not stopped since.

While places like Hong Kong and China receive a great deal of attention for their respective currency pegs to the US Dollar, the Boliviano (the Bolivian national currency) is also pegged to the US Dollar in a similar 7:1 fashion.  As such, the Bolivian economy, which until recently has had a relatively low-level of consumer debt, has taken the dollars that Bernanke had intended to stimulate the US economy, and put them to work rather than throwing them down the black hole of their banking institutions.

So what is the ultimate catalyst for the explosive Bolivian and Latin American GDP growth over the past five years, the DEA leaving Bolivia or US Monetary policy?  Either way, it is clear that despite the Socialist bent of many Latin American countries, there is a flashing green light to invest in them as long as these two conditions persist, for they are like rocket fuel for these largely cash based economies with dollar pegs fixed to their national currencies.

“Viva mi Patria Bolivia…como la quiero yo!”

*Morales has deployed his own military to fulfill the role of the DEA in their absence, however it is evident that they are not as zealous in their persecution of the coca leaf as their American counterparts.

Key Indicators for September 11, 2013

The Mint Money Supply Digest – July 15, 2013

7/15/2013 Portland, Oregon – Pop in your mints…

Now that summer is in full swing there are few surprises on the horizon and the world, it would appear, is resigned to reluctantly following the current credit cycle on its dramatic upward trajectory. While we do not believe that the centrally managed credit cycles of today are beneficial (indeed, they are quite the opposite) nor do we believe in money in its present form (as long-suffering readers well know), the centrally managed credit cycle is quite predictable and in this sense appeals to our inner laziness.

Some five years ago, the Federal Reserve began doing everything in their power to stimulate credit, as the swoon of 2008, induced by a series of blind 25 basis point hikes in the Fed’s rate target, threatened to choke off the lifeblood of the debt based monetary system.  At the time, we postulated that it would be roughly 39 months before the average man on the street began to feel stimulated the way the Fed’s architects imagined he would.

Now, 60 months on, consumer credit is finally picking up, on net, and everywhere you look the debt soaked economy is on a high.  The money is so hot one risks a scorched retina by merely looking upon it as it flashes through the bond, equity, and commodity charts.

Unfortunately, beyond the glare, the debt based money supply has left some major sinkholes in the economy that either fiscal or monetary policy can patch.  The trick to safely navigating through the coming phase of the most recent edition of credit madness sponsored by central banks across the globe will be to avoid being engulfed by the sinkholes, for at this point there exists not the means nor political will to do so.

Where are the sinkholes?  Alas, if we knew for certain, we would long since have laid our pen to rest in favor of a life of leisure.  However, if we were pressed to guess, we would watch for them to appear under any patch of economic mass holding large sums of cash or long term debt instruments.

Given that criteria, the central banks themselves come to mind.  It is they that will remain trapped in concrete as human progress speeds ahead.

Stay tuned and Trust Jesus!

Stay Fresh!

Key Indicators for July 15, 2013 

A New Season is Upon the Earth

7/11/2013 Portland, Oregon – Pop in your mints…

The summer is in full swing here in the Northwest.  We have recently sent the manuscript for our mini treatise off to perhaps the only publisher that aligns ideologically with its many and varied themes; Laissez Faire Books.

As we await a response, we are directing our creative energies into the construction of a playground/deck/Gaudi-esque structure upon some otherwise idle ground near the back of the property.  As someone who stares at screens for a living, wielding a circular saw and power screwdriver is nothing short of exhilarating.

There is something about creating something from nothing that brings with it a contentment only those who have done it can explain.  It is to work outside the confines of time and space while at the same time yielding to their limitations.  In the best of moments, it brings us closer to the divine.

In addition to our power tool therapy, we have been seeking funding for a number of projects that have come across our radar.  While our efforts to this point have been categorically unsuccessful, we have a feeling that is about to change.  We have had the feeling that things are about to break loose for some time now.

Yesterday, this feeling was confirmed in the most unexpected of settings, a Board Finance Committee.  In the middle of the meeting, as we were punting around various ideas and cost savings measures, a prophet came in and declared a new season had come upon the world, a season in which the plans of Yahweh, those that have been stayed for various reasons, would now come to pass.  That the righteous would have resources thrust into their hands.  This season began in early July.

With that, all discussion ceased and we simply came into agreement in prayer over the matter as a Committee, and the meeting was adjourned.  It was the most unique committee meeting we have ever attended.

It must be said that there is great relief in prayer.  While simply praying is no guarantee that funds will appear or that plans will come to pass, it is a guarantee that the matter is firmly in Yahweh’s hands, leaving the outcome, whatever it may be, a victory for the Kingdom of Heaven.

In other words, prayer brings peace, and in this case the confirmation of a notion that The Lord has laid upon us for the past six months. A new season in the spiritual realm has arrived.

It is crucial that we open our eyes, or we shall remain blind.  This was made clear to us in a vision we had yesterday (yes, visions are returning as well!) in which we saw a field and a man standing at the end of it.  The man was looking through a field of vision that allowed him to see a mere 1% of the immense richness of the land in front of him.

This represented the blindness inherent in seeking answers in numbers, which provides one a viewpoint that is 1% reality and 99% fiction.  If we can learn to see past the 1% and step forward into the field before us, the 99%, the abundance of Yahweh’s supply for us, appears as if out of nowhere…yet it has been there all along.

Such is the blindness of those who decide based on numbers alone, for the numbers are at best, a trailing indication of words, decisions, and actions long past. At worst, they are a stumbling block and a snare.  For renewal an growth to take place, there must be a complete separation from the current concept of money and the reality of the natural world.  This separation is just now beginning to take place.

Finally, we are also making preparations for our long delayed annual journey to Bolivia, where we hope to advance a project that has long been on our hearts:

The Night John the Baptist Died

Stay tuned and Trust Jesus!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for July 11, 2013

Copper Price per Lb: $3.16
Oil Price per Barrel:  $104.63
Corn Price per Bushel:  $7.16
10 Yr US Treasury Bond:  2.57%
Mt Gox Bitcoin price in US:  $86.90
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,286
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  15,461
M1 Monetary Base:  $2,623,800,000,000
M2 Monetary Base:  $10,629,300,000,000

Why Short-Term Interest Rate Management is Harmful to the Economy: The Unseen Funding Dynamic

Ben Bernanke Testimony
Pondering the folly of Short-term interest rate management

7/1/2013 Portland, Oregon – Pop in your mints…

There are days when things are muddled and days when things are so painfully apparent it disturbs us that we did not happen upon it sooner.  Today is one of the latter.

We have been pondering the failure of centralized planning.  While the evidence is clear that centralized planning is a failure, pointing to the reasons why can prove elusive.  The same holds for our working theory that in order for the activities of mankind to be in balance with the natural world, the monetary premium, a concept that is commonly referred to as money, must be affixed to the natural realm.

Today, a revelation regarding the problem with fixing short-term interest rates (or any interest rate for that matter) came upon us which we will share with you now.  We believe that the revelation deals with both the problem of short-term interest rate fixing as well as the larger issue of the placement of the monetary premium, for the two are linked.

The revelation is the following:  Imagine you are a banker who needs to fund a loan.  In order to fund this loan, you would presumably need to have the money available with which to fund it.  This is simple logic, however, in the real world of banking, the decision of whether or not to fund a loan is completely disconnected from the availability of funds, which is primarily determined by the overnight funding markets which, in turn, are completely reliant upon short-term interest rates.

In a world that followed the rules of financial physics, the short-term interest rates would be completely dependent upon the availability of funds in the system.  However, the centralized management of interest rates makes this critical data point, which would otherwise provide a snapshot of the amount of capital in an economic system which is held in liquid form and available for deployment, irrelevant.  The amount of capital available in system can be determined on whim, such is the power of centralized discount rate management.

As such, the ability of the banker to fund the loan is not dependent upon an availability of funds that represents the amount of capital available in the real world, rather, his ability to fund the loan is completely dependent upon the borrower’s ability to pay, the size of the loan, and the structure of the bank’s balance sheet.

The three criteria above are important, as any underwriter will tell you, but the invisible fourth criteria, the true availability of the funds for the loan, what we call the funding dynamic, is completely ignored in the following fashion:

When the short-term interest is managed to be low, as is the case currently, any borrower who has the capacity to pay and has a lending need that fits well with a certain bank’s loan mix is extremely likely to get funded, regardless of whether or not the economics system as a whole has the capital available to fund his or her loan.  When the short-term interest rate is managed to be high, as it was in the early 1980’s in the US, funding any loan, regardless of the ability to pay and fit with then bank’s balance sheet, becomes impossible to fund.

In both cases, both the borrower and the banker are left completely in the dark as to whether or not there exists the necessary capital stock or productive capacity in the economy for the funds to be deployed in the manner that the borrower envisions, for the short-term interest rate signal has been genetically modified to send a common signal to all participants.

Unfortunately, it is a signal that blinds everyone to the facts of the situation.  For many are the hopes, dreams, and ideas of mankind, but it is the funding dynamic which keeps these hopes, dreams, and ideas in harmony with the natural world upon which we all depend.

Right now, we are floating in the clouds, completely disconnected from reality.  The landing caused by the next round of high rates, via a natural rebalancing of accounts or further genetic modification of the short-term rates, will be very hard indeed.

The funding dynamic is so delicate that mankind cannot hope to optimize genetically modification, for when left alone, it is optimized by definition.  Again, by definition, every attempt to modify will bring about sub-optimal results.

As with all complex economic and political systems, dissent is information, and serves to manage the system’s outputs while at the same time increasing the resiliency of the system, making it less susceptible to shocks.

Centralized short-term interest rate management must be abandoned before it is too late, for it is leading the activities of mankind towards a dangerous showdown with the limitations of the natural world.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for July 1, 2013

Copper Price per Lb: $3.14
Oil Price per Barrel:  $97.99
Corn Price per Bushel:  $6.55
10 Yr US Treasury Bond:  2.48%
Mt Gox Bitcoin price in US:  $89.74
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,253
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  14,975
M1 Monetary Base:  $2,452,200,000,000
M2 Monetary Base:  $10,628,800,000,000

The Mint Money Supply Digest – June 27, 2013

6/27/2013 Portland, Oregon – Pop in your mints…

With the last trading day in June in sight, the US equity markets are staging a comeback from their recent collapse.  Nearly everything is along or the ride except for currency alternatives such as Bitcoin and Gold.

While we think the stock markets will continue to post nominal highs, it is painfully apparent that the action over the past few days is smells more of window dressing than any serious near term move higher.  After all, most working Americans are due a statement of their retirement account on June 30, and their asset managers want to make sure they have a number appear that will ensure their employment for another quarter.

In the real world, where window dressing in not an issue, there is a serious problem occurring.  On one hand, there is an unprecedented amount of liquid funds available for deployment.  On the other, there is a world on edge, reluctant to take the bait.

If history is any guide, the recent rise in interest rates will kick start the exchange of money (for we are loathe to call it economic activity) and the central bankers of the world will have all the velocity they can handle to go along with their unprecedented creation of currency.

It will be quite a ride, and when it is finished, we will either have a large increase in overall price levels and a severely disjointed and dysfunctional economy, or we will have a full scale currency collapse and a severely disjointed and dysfunctional economy.

Either way, dollar holders lose.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for June 27, 2013

Copper Price per Lb: $3.02
Oil Price per Barrel:  $96.82
Corn Price per Bushel:  $6.67
10 Yr US Treasury Bond:  2.48%
Mt Gox Bitcoin price in US:  $102.59
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,201
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  15,024
M1 Monetary Base:  $2,452,200,000,000
M2 Monetary Base:  $10,628,800,000,000

The Mint Money Supply Digest – June 24, 2013

6/24/2013 Portland, Oregon – Pop in your mints…

And then there were two.

The liquidity drain initiated by the People’s Bank of China has caused a fire sale on financial assets across the globe as Chinese banks scramble to make various margin calls in the face of double-digit overnight rates.  Lee Adler, over at the Wall Street Examiner, offers some insight into the big squeeze currently underway:

US and Japan Pump It, Chinese Dam It and Suck, And Europe Sullenly Suffers Shrinkage

For the uninitiated, we beg of you to take a step back and to leave, just for a moment, any thought of “efficient market” hypotheses and market fundamentals behind and see the financial world for what it is:  A bunch of corporations with large credit card bills to pay and margin calls to meet.

Like anyone who has a large credit card bill to pay or margin call to meet, the ability to meet the obligation is more often than not determined by the willingness of other large corporations in similar situations to lend them money.  If they can, great, the credit rolls over.  If not, assets must be liquidated so that the debt can be paid.

The flaw in efficient market theory, with regards to financial markets, is that it implies stability when, in fact, most debtors, especially big ones, only liquidate assets as a final option.  As such, this type of liquidation often occurs suddenly and with little warning, hence the feeling of panic and cascading financial markets.

At their core, equity markets represent decisions at the margin. They often reflect this type of liquidation in an exaggerated manner.  In an odd way, this sort of whiplash seems to be the only way to spur Central bankers into action.

The actions of the PBoC suggest that they have had enough of the easy money policy that has dominated Central Bank actions for the past five years.  They have pulled the plug.  Does it have anything to do with Mr. Snowden?  Who knows, but it is what it is.

As it stands now, the Federal Reserve and Bank of Japan now stand alone on the mountain of insane monetary policy, watching the smoke plumes rise.

Anyone who has perused The Mint no doubt has noticed that we keep a relatively small collection of coins online.  This serves a dual purpose.  First, it allows us to quickly grab marketing copy should we have a particular coin in stock.  Second, it allows us to savor the coin as we attempt to put its dual faces into words.  Normally, this can be a tedious and relatively dull process.

1 OZ .999 Fine Silver First Anniversary Mount St. Helens Harry Truman Commemorative Round – 1981
1 OZ .999 Fine Silver First Anniversary Mount St. Helens Harry Truman Commemorative Round – 1981

Today was different, as we came across a relatively rare 1 OZ .999 Fine Silver First Anniversary Mount St. Helens Harry Truman Commemorative Round, minted in 1981.  For those who are unfamiliar with Harry R. Truman, we offer our marketing copy as a brief descriptor:

On one side of this coin is a bust of Harry R. Truman, the caretaker of the Mount St. Helens Lodge at Spirit Lake who stubbornly refused to leave his home even as the historic eruption was imminent. Truman was 84 when the Mount St. Helens erupted and is presumed to have died along with his 16 cats and 56 others that fateful day on May 18th, 1980. Truman’s bust is surrounded by the inscriptions “Courage,” “Spirit,” “Determination” above and his name, “Harry R. Truman” and the years he was born and died, “1896 – 1980″ below. The letters “KU” appear to the right, their meaning is unknown.

On the other side of this reeded coin is a depiction of Mount St. Helens erupting flanked by the inscriptions “One Troy Ounce” and “.999 Fine Silver,” to indicate its weight and silver content. The top of the coin, just above the smoke plume, is adorned with the inscription “First Anniversary.” Below the mountain are inscribed “1980 – 1981,” and the words “Mount St. Helens.” These beautiful coins are a great way to inspire your friends, loved ones, and co-workers by recalling the finer qualities of a man who became a hero for sticking by his desire to ride out a violent act of nature, come what may.

Mr. Truman, may he rest in peace, in many ways represents the Fed and BoJ today.  The other Central Bankers of the world have stepped cautiously back, away from the dreadful inflation for which the eruption of Mount St. Helens will serve as a handy metaphor of today.

1 OZ .999 Fine Silver First Anniversary Mount St. Helens Harry Truman Commemorative Round – 1981
1 OZ .999 Fine Silver First Anniversary Mount St. Helens Harry Truman Commemorative Round – 1981

Not Mr. Bernanke and his Japanese counterparts.  Both the US Dollar and Yen have been on the mountain longer than many of their counterparts, and their current caretakers are convinced that the bubbling inflation that their policies are stoking will simply blow over as they has in the past.

Are they right?  Or is it time to move away a safe distance from the mountain?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for June 24, 2013

Copper Price per Lb: $3.03
Oil Price per Barrel:  $94.85
Corn Price per Bushel:  $6.53
10 Yr US Treasury Bond:  2.55%
Mt Gox Bitcoin price in US:  $122.89
FED Target Rate:  0.10%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,283
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  14,660
M1 Monetary Base:  $2,432,200,000,000
M2 Monetary Base:  $10,621,100,000,000

The Mint Money Supply Digest for June 17, 2013

6/17/2013 Portland, Oregon – Pop in your mints…

Over the past week the M1 money supply has come roaring back from its relative collapse over the prior two weeks.  Today, the measure sits at $2.6 trillion.

For the uninitiated, the M1 and M2 Money supply measures, published on a weekly basis by the Federal Reserve, are defined as the following:

M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler’s checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted M1 is constructed by summing currency, traveler’s checks, demand deposits, and OCDs, each seasonally adjusted separately.

M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000), less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market mutual funds, less IRA and Keogh balances at money market mutual funds. Seasonally adjusted M2 is constructed by summing savings deposits, small-denomination time deposits, and retail money funds, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

In layman’s terms, the M1 Money supply is what we refer to as “Money on the street,” or cold hard cash.  It is the part of the money supply that is otherwise unencumbered or loaned out on float.

The M2 Money supply is perhaps best defined as the Money on the street (M1) plus all of the money that customers think is held at banks but is really loaned out.

In the past, the Federal Reserve also published the M3 (Broad) Money supply measure, which was essentially all of the money that customers had, thought they had, and/or thought that they could receive (via the inclusion of money market funds and repo instruments).  It was perhaps the truest measure of the money circulating in an economy  in aggregate.  In addition to base money, demand deposits, and time deposits, M3 included what the largest treasuries were holding in quasi money instruments . The Federal Reserve stopped publishing the measure on  March 23, 2006 as it began to launch into the stratosphere.

While the Broad money supply (M3) may have crossed the line into credit instruments {Editor’s Note:  Here at The Mint we recognize all Central Bank notes as credit instruments by definition}, it was an excellent proxy for inflation, for it gave demonstrated the sum total of how many players were participating in the game of monetary musical chairs that the banks and large treasuries play every evening when they settle up.

The M2/M1 Ratio

Today, we submit for your perusal, a graphic of the M2 Money supply divided by the M1 Money supply (the M2/M1 Ratio) by month for the data sets since January 1, 1959, the first year that the data is easily retrievable, through the first week of June.

Historical Ratio of M2 / M1 Money Supply Measures
Historical Ratio of M2 / M1 Money Supply Measures

For purposes of interpretation, the chart shows the degree to which the M1 Money supply is “leveraged” by commercial banks to create what is reported in the M2 figures.  Bear in mind this ratio is a function of both bank reserve requirements and consumer behavior.  Generally speaking, the M1 and M2 Money supply measures have been increasing over the span of the chart.

The ratio between them, however, has been on a general increase as well, meaning that the M1 measure has been leveraged.  This leverage appears to have peaked around 5.4 during the meltdown of late 2008 and early 2009.  Ever since then, it has been on a steady decline and currently stands at 4, just a shade above the straight average of 3.7 for the entire data set.

At a glance, it would appear that the economy, in terms of the M2/M1 ratio, is returning to a healthy balance.  In practice, this means that the game of musical chairs that occurs at the Fed settlement each night is a bit less stressful for the participants.

Unfortunately, this ratio appears to be historical with little predictive value save that perhaps a ratio of 5/1 being an indication that the monetary base is overextended.

For the moment, with the downward trend in the ratio intact, it appears that the monetary base that the Federal Reserve has gone to great pains to pad via its QE programs, is intact and ready to support an increase in economic activity.  Howver, one must keep in the back of their mind that the money supply itself is fragile, and if confidence in the Fed were to evaporate, all bets are off.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for June 17, 2013

Copper Price per Lb: $3.19
Oil Price per Barrel:  $97.78
Corn Price per Bushel:  $6.68
10 Yr US Treasury Bond:  2.17%
Mt Gox Bitcoin price in US:  $106.99
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,385 THE GOLD RUSH IS ON HOLD FOR THE SUMMER!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  -0.4%
Dow Jones Industrial Average:  15,180
M1 Monetary Base:  $2,634,300,000,000
M2 Monetary Base:  $10,586,200,000,000

The Mint Money Supply Digest for June 11, 2013

6/11/2013 Portland, Oregon – Pop in your mints…

Here at The Mint we have been invited to take part in a summer ritual dating back to 1887, one which we have abstained from participating in for one reason or another for twelve years:  Softball.

We began what was a reintroduction to the ritual last night in a double header.  There was much familiar and generally a good time was had by all.  What was unfamiliar was the unexpected mind/body dynamic that took place as we laced up the cleats, grabbed our glove, and pulled our hat down.

As we trotted out to center field, a position chosen entirely at random as time constraints forced our team to tacitly choose positions on the fly, our mind took a trip back some 20 years to our high school baseball days.  Unfortunately, our body, which must deal with reality, did not make the trip.

The Georgia Peach in a 1910 photo Courtesy of the George Grantham Bain Collection (Library of Congress)
The Georgia Peach in a 1910 photo Courtesy of the George Grantham Bain Collection (Library of Congress)

What followed was a series of misguided exertions and poorly judged balls that passed for softball only by virtue of our dress and physical location.  While we avoided striking out, the results were far from optimal.  With every successive exertion, our already limited range in the position made famous by Ty Cobb, Mickey Mantle, and Willie Mays, became even more limited while the range perceived by our 17 year old mind grew to that exercised by the Georgia Peach himself.

Towards the end, we found ourselves playing just a shade off the infield and found ourselves in a number awkward instances where we were unnecessarily obligating ourselves to replicate Mays’ famous Catch with quite different results.

However, today is another day and brings another double header with it.  How will it turn out?  Fortunately, our body is only beginning to seize up and we should avoid the full physical consequences of last nights folly until at least tomorrow.

The M1 money supply is racing upwards once again after a dramatic drop over the past two weeks.  Equities, Fixed Income, and Gold are beginning to exhale, which means an inordinate amount of dough is set to run through a supermarket near you.

To make matters worse, or better, depending upon your preference for more Quantitative Easing on the part of the FED, the BLS (sans L) Unemployment rate ticked up to 7.6%, virtually ensuring that the program will remain in place.  Despite recent speculation of a taper, QE is the only thing standing between the big banks and insolvency.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for June 11, 2013

Copper Price per Lb: $3.19
Oil Price per Barrel:  $95.25
Corn Price per Bushel:  $6.59
10 Yr US Treasury Bond:  2.19%
Mt Gox Bitcoin price in US:  $106.99
FED Target Rate:  0.11%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,378 THE GOLD RUSH IS ON HOLD FOR THE SUMMER!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  -0.4%
Dow Jones Industrial Average:  15,171
M1 Monetary Base:  $2,585,400,000,000
M2 Monetary Base:  $10,489,300,000,000

 

The Mint Money Supply Digest for May 28, 2013

5/28/2013 Portland, Oregon – Pop in your mints…

Jimmy Buffet hit the jackpot when he penned a three chord melody back in 1977:

Margaritaville:  Welcome to ‘Margaritaville,’ the most lucrative song ever.

While it is difficult to comprehend the moral implications of the fact that Margaritaville currently holds the throne as the most lucrative song ever, what is not difficult to comprehend is its allure, a laid back, carefree lifestyle tinged with a hint of regret and melancholy made tolerable by the beach and the “frozen concoction that helps me hold on.”

It is a lifestyle whose allure quickly fades to the harshness of its demands.  Beyond the headaches and marked lack of depth in human relations, alcohol sans moderation will inevitably hasten one’s march to the grave.  Indeed, despite the headlines received by the AIDS epidemic, warfare, and famine, it is often an addiction to cheap alcohol and that contributes to shortened lifespans in developing nations.

There is no way around it, alcohol is hard on one’s system.

As alcohol is hard on the human system, cheap money is hard on the real economy, and will eventually be purged.  At the moment, the M1 money supply is collapsing as the increasing doses of cheap credit have an ever decreasing effect on the real world hangover that awaits at the end of this binge.

Expect the Federal Reserve and the Central Banks of the world to fire up the blenders and roll out the kegs, for a drunk economy is the only one they know.

You can watch Buffet perform his three chord pot of gold here: 

How long will the frozen concoction help them hang on?  Probably not too much longer.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 28, 2013

Copper Price per Lb: $3.30
Oil Price per Barrel:  $95.01
Corn Price per Bushel:  $6.66
10 Yr US Treasury Bond:  2.13%
Mt Gox Bitcoin price in US:  $128.50
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,381 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.5%
Inflation Rate (CPI):  -0.4%
Dow Jones Industrial Average:  15,409
M1 Monetary Base:  $2,429,700,000,000 ANOTHER MARKED DROP
M2 Monetary Base:  $10,544,600,000,000

The Mint Money Supply Digest for May 24, 2013

5/24/2013 Portland, Oregon – Pop in your mints…

We were honored yesterday to be mentioned alongside a host of names with more weight and prestige than our own by a writer whom we greatly admire, Jason Hommel, on a list he has compiled of Christian Libertarian resources.  We have often referred to Mr. Hommel’s vast trove of research into both the silver market and eschatology (specifically the scriptural and empirical support for a pre-tribulation rapture), which he has published at both the Silver Stock Report and bibleprophesy.org respectively, in our own investigation of these matters.  Indeed, Mr. Hommel has performed the world a great service through much of what he shares.

While we do not know him personally, we appear to share similar interests and applaud his bold search for truth and, perhaps more importantly, the tenacity with which he defends it once discovered.  Most who have tried find that truth is not often welcomed this side of heaven, at best it is ignored and then attacked as others come to know it.  Well done Jason, we cheer you on from our corner of the world and wish you all the best!

The matter gave us pause to think about what it means to be a Christian Libertarian.  Indeed, some who may be reading this site on Mr. Hommel’s may wonder where we stand on certain matters.

There two things that we we know.  One, that the God of the Bible is the one true God, and that He is our friend.  He revealed himself to us and, we believe to all of humanity, through the Messiah, commonly known as Jesus in our experience.  In this revelation, he made it clear that we are to Forgive as He has forgiven us, it is his one simple requirement.  Sacrifices are meaningless, what He desires is to be close to us.  We know that we will live with Him for eternity, no matter what happens here and now.

If this makes us a Christian, so be it.

We also recognize that God has given all of us a free will, which is a logical precondition for His relationship with us.  Some use this free will to liberate others, some use it to enslave them.

Yet it is clear that the whole mass of humanity is obligated to respond to the demands of an inherently anarchic world of our own devising because of our willful ignorance and defiance of God.  For both those of us who know and love God and those who are either ignorant of or defiant towards Him, our only hope of survival lies in our willingness to peacefully cooperate with one another.  This cooperation works best when it is done voluntarily without compulsion.

If this makes us a Libertarian, so be it.

Naturally, there is much more to say on both subjects, and we do pray that you will tune in from time to time.  We have attempted to collect our stream of consciousness, for lack of a better term, in a series of ebooks.  We are currently working on the last volume of what will be our mini treatise, “To Build up the Land,” which we hope to have on digital shelves by the end of May.

Shifting gears to the Money Supply, the M1 measurement clocked another steep week over week decline, this time on the order of 2.12%.  Again, while the week to week shifts in base money are volatile by nature, this now constitutes an 8% + drop.

This is bad news on a number of levels, and the Central Bankers of the world are now moving into overdrive with respect to money creation.  Will the succeed in holding off the coming depression?

Thanks again for reading and a special thanks to Mr. Hommel, we consider mention on your site to be a great honor.  Be encouraged in your work, for it is extremely important.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 24, 2013

Copper Price per Lb: $3.29
Oil Price per Barrel:  $94.20
Corn Price per Bushel:  $6.57
10 Yr US Treasury Bond:  2.01%
Mt Gox Bitcoin price in US:  $133.55
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,383 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.5%
Inflation Rate (CPI):  -0.4%
Dow Jones Industrial Average:  15,296
M1 Monetary Base:  $2,429,700,000,000 ANOTHER MARKED DROP
M2 Monetary Base:  $10,544,600,000,000

The Funding Hunt

5/21/2013 Portland, Oregon – Pop in your mints…

Here at The Mint, we have begun to offer a variety of services to fill the needs of our clients as they arise.  We began with a humble Virtual CFO offering, an offering that most closely aligns with our skill set.  While the offering has met with sporadic success, we have seen a recurrent need amongst those soliciting services, it is a primordial need common to all enterprises:  Funding

In response to this emergent need, we are adapting our service offerings to provide marginal companies with the tools and expertise they need both to seek out funding and to concurrently get the company in shape to be able to successfully solicit and deploy said funding.

We generally begin by evaluating their accounting and bookkeeping needs.  A brief tour through a company’s financials will reveal much about that company’s state of development and actual prospects.  Our bookkeeping and services strive to leverage technology, such as Quickbooks Online (which is emerging as a beautiful platform if one has a relatively fast internet connection and somewhat basic bookkeeping needs, as most startups do), to streamline and automate the bookkeeping function as much as possible.  The idea is to pull transactions from the bank and reclassify them.

The process may seem somewhat backwards, especially to the seasoned accountant.  Yet, if coupled with strong cash projection techniques, it is hands down the most efficient and cheapest way to process payments and accounting data.  Depending upon current processes, we can generally whittle bookkeeping and financial reporting down to 8 hours per month or less per startup client.

Once the bookkeeping house is in order, the hunt for funding can begin in earnest.  Currently, we have ongoing funding needs for clients in the following areas:

– Payment processing

– Organic Health and Beauty Products

– Mobile Application development

– Real Estate Investment

– Motion Picture development

– Non-profit Social Services

– Environmentally Conscious Financial Institution

Further, we are in the early stages of establishing investment funds for the following areas:

–  The Bolivia Fund:  Bolivia is a vastly rich land charged with opportunity.  We are fortunate to have great contacts there.

–  The Global Venture Fund:  This fund is the wild west, it is not for the faint of heart or the shallow of pocket, yet it is a ride that will be the stuff of legend.

All of these ventures and proposed funds are in the concept stage, they are as a baby in the womb, being nurtured, cared for, and protected until their appointed time.  Will you be the one to induce labor?  If you are an accredited investor in need of an endless fount of creativity, ingenuity, integrity, and business expertise, we have a place for you.  To learn more about these opportunities or propose another (ad)venture, please send us an email below.

Adapting to change is the key to survival.  While we do not personally ascribe to a macro evolutionary ideology, its survival of the fittest doctrine can be generally applied to companies at the margins.  Our services aim to bring these ideas from the margins and give them life, to bridge the gap between fundable projects and funding sources.

It will be an exciting ride indeed.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 21, 2013

Copper Price per Lb: $3.31
Oil Price per Barrel:  $95.59
Corn Price per Bushel:  $6.40
10 Yr US Treasury Bond:  1.94%
Mt Gox Bitcoin price in US:  $122.89
FED Target Rate:  0.11%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,375 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.5%
Inflation Rate (CPI):  -0.4%
Dow Jones Industrial Average:  15,388
M1 Monetary Base:  $2,482,200,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,538,200,000,000

The Mint Money Supply Digest for May 20, 2013

5/20/2013 Portland, Oregon – Pop in your mints…

While the rally in equities continues relatively unchecked, the measure of the M1 monetary base has taken a marked dive of roughly 6.2% since last week, leaving it at a level not seen since April 15th (see the current M1 measure below).

For the uninitiated, the M1 money supply is what we call cash on the street, coins and bills.  In other words, what most people consider spending money.

By nature and by the FED’s own admission, money supply data is highly volatile and subject to revision.  Even so, our own observation has been that folks are short on cash.  While this brief drop is not likely to signal a change in the trend, it has certainly caused some unexpected hiccups in dollar land.

Perhaps not coincidentally, precious metals have continued their near term price collapse.  The price of silver, our preferred investment at The Mint, tanked to nearly $20 overnight Sunday.  While the near term price is somewhat irrelevant, it may be indicative of a rush to meet short term debt obligations by holders of precious metals.

Most media reports read much into price movements, as if they mean something about the real economy.  Unfortunately, the real economy is nothing more than a yo-yo at the end of a string of debt obligations.  Until they wind up the yo-yo and let it be, real economic growth (or contraction of that matter), in terms of debt laden USD land, is nothing more than a myth one reads about in text books and in the main stream financial media.

Eventually, the avalanche of FED funds guaranteed as long as their latest QE pledge is in effect will begin to consistently run into real world asset and commodity prices.  It will feel good, but participants are advised to keep their eye on the punch bowl.  Once it is removed, it will be best to swim near the edge of the pool.

The vanilla crisis is hitting some chocolate patches, try to avoid them.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 20, 2013

Copper Price per Lb: $3.33
Oil Price per Barrel:  $96.71
Corn Price per Bushel:  $6.49
10 Yr US Treasury Bond:  1.97%
Mt Gox Bitcoin price in US:  $119.75
FED Target Rate:  0.11%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,395 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.5%
Inflation Rate (CPI):  -0.4%
Dow Jones Industrial Average:  15,335
M1 Monetary Base:  $2,482,200,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,538,200,000,000

The Mint Money Supply Digest for May 14, 2013

5/14/2013 Portland, Oregon – Pop in your mints…

Today finds US equity markets up, in fact, they are eclipsing new nominal records.  The US economy must see a screaming recovery on the horizon, right?

While the economic recovery, which began in the dark days of 2009 continues to plod along at a predictable pace, there are two factors that are contributing significantly to the determined rise of the equity markets.

First and foremost, strange as it may seem, the US Government is actually paying down debt.  A combination of sequester savings, the fiscal cliff with its notable 2% payroll tax increase, and a slew of paybacks on public “investments” made during the financial crisis has the US Treasury somewhat awash in cash, which in turn has caused the supply of US Treasuries on the market to shrink.

In the meantime, the Federal Reserve still has the monetary spigots on full blast and the Primary dealers, who have had their spigots trained on Treasuries, are now directing the overflow into equities, which has caused stocks to rise despite a rise in the US Dollar index (which just passed 83) and the fact that roughly 50% of individual investors are completely out of the stock market.  Once Ben Bernanke has his way with the USD and the individual investors get off the fence, this rally will run quite a ways.

The second, and more important factor that is propelling the US Stock indices to record highs, is that it is Tuesday, the day when most people’s 401K contributions and auto investment plans find their way into equities.  Zerohedge has provided some interesting analysis as to the effect of Tuesdays on stock indices returns which can be ready here:

This is your S&P; This Is Your S&P Without Tuesdays

The vanilla crisis is moving ahead full throttle.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 14, 2013

Copper Price per Lb: $3.27
Oil Price per Barrel:  $94.07
Corn Price per Bushel:  $6.52
10 Yr US Treasury Bond:  1.94%
Mt Gox Bitcoin price in US:  $119.00
FED Target Rate:  0.12%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,427 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.5%
Inflation Rate (CPI):  -0.2%
Dow Jones Industrial Average:  15,176
M1 Monetary Base:  $2,645,900,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,475,500,000,000

The Mint Money Supply Digest for May 10, 2013

5/10/2013 Portland, Oregon – Pop in your mints…

This week’s M2 Monetary base shrunk by roughly $100 billion while the M1 Base grew by $80 billion.  Generally, this means that more Fed cash has left the hypothetical realm and is out in the world, causing mischief in the form of bidding up prices of everyday goods.

Treasury yields have increased since we last checked in to the tune of 14 basis points.  Given that Treasury supply has shrunk over the past month (yes, the US Government actually ran a temporary cash surplus) this decline in yield is not insignificant and may reflect a fundamental change in the dynamic between the Fed and the economy.

Over the past several years, the markets have become accustomed to Quantitative easing taking the form of the Fed printing dollars, lending them to banks at roughly 0.12%, who then soaked up the Treasury supply.  The fundamental change that is taking place is that the QE spigot is no longer being soaked up by the Treasury supply, rather, it is flooding the basements of equity markets around the world.

Until now, the commodity markets have remained surprisingly tame in the face of the monetary tsunami that is rushing over the planet.  We suspect that the moment may be short lived, and that the time to own anything but dollars is once again at hand.

Yes, fellow taxpayers, the world’s first world wide crackup boom is coming to an economy near you.  Batten down the hatches!

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 10, 2013

Copper Price per Lb: $3.35
Oil Price per Barrel:  $94.57
Corn Price per Bushel:  $6.75
10 Yr US Treasury Bond:  1.90%
Mt Gox Bitcoin price in US:  $117.78
FED Target Rate:  0.12%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,437 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.5%
Inflation Rate (CPI):  -0.2%
Dow Jones Industrial Average:  15,066
M1 Monetary Base:  $2,645,900,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,475,500,000,000