Category Archives: The Mint

Mint Classics, Politics, Subtle Change from Principles to Rules

The Subtle Change from Principles to Rules Part II – From Eden to Woodstock

5/9/2012 Portland, Oregon – Pop in your mints…

Today we continue our brief trip back to one of the origins of the agitation which is The Mint:  The Subtle Change from Principles to Rules.

The Subtle Change from Principles to Rules
The Subtle Change from Principles to Rules

The following is another excerpt from our soon to be released ebook.  It will be offered  for free through Smashbooks.com in all common ebook formats in the coming months.  Enjoy!

From Eden to Woodstock

We recently attended a brief seminar which was titled “GAAP Update.”  This title, to anyone who is not an accountant, may sound like some sort of fashion show.  While I had hoped to observe some of the latest models of pocket protectors, the only thing that any reasonable person (that is you and I, “deer” reader) could observe to be “in fashion” was a decreasing reliance on professional judgment and increasing scrutiny, oversight, and more rules in the accounting profession.

In order to properly understand the above observation, we must first attempt to understand what GAAP is.  GAAP, while not addictive, should be taken in small doses.  As such, I will proceed to administer it in as small of doses as possible so that we can avoid the common side effects of confusion, drowsiness, and its other less understood attacks upon the human psyche.

GAAP, for those of you who have been fortunate enough to avoid the acronym thus far, stands for “Generally Accepted Accounting Principles.”  According to Wikipedia, “GAAP is the standard framework of guidelines for financial accounting. It includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.”  Wikipedia goes on to list the principles by which GAAP is guided by as the principles of sincerity, permanence of methods, non-compensation, prudence, continuity, and periodicity.

The presenter at the seminar, a brilliant local CPA, alluded to what we are now calling the “subtle change from principles to rules” when he mentioned that the words “should” and “must” were now explicitly defined in the new accounting guidelines in such a way that it had all but eliminated professional judgment from his profession.

His statements referred to the new requirements which Statement of Accounting Standards 102, entitled “Defining Professional Requirements in Statements on Auditing Standards,” enjoined upon those condemned to his chosen profession.  Where the word “must” appears, the accountant is to understand that the requirement is unconditional and must be performed.  This is straightforward enough, and even highly trained professionals would have trouble arguing this definition.

It is the stated definition of the word “should,” which has from time immortal been the fallback for the imprudent when explaining why something was not done, which took the man aback.  For the word “should,” from now to eternity, shall indicate a “presumptively mandatory requirement,” which for practical purposes, makes it just another spelling of the word “must.”

On the surface, this sounds like a simple and presumably necessary clarification made in the name of making the writings of accountants more accessible to the general public and the ethics of the general public more accessible to accountants.

The deeper truth, the one that our brilliant local CPA alluded to, is that trust in professional judgment has disintegrated and the need for specific, carefully worded instructions that remove the need for “flawed” professional judgment is taking its place.  This should alarm us all, as the accounting profession is by no means the only field that this subtle change is taking place in.

[Editor’s note:  If you would like to witness for yourself the alarming rate of the expansion of rules written by agencies of the Federal Government, a peek at regulations.gov at any given time will give you a general idea of the proliferation of rules in society.]

Any institution that is organized by human beings, such as a company, a religion, a government, or a football team, follows a pattern.  Observe closely, “deer” reader, and see if you can pull an example from your own experience.  These institutions begin with some sort of principle or set of principles.  The person or persons, whom we will call the founders of the institution, understand the principles upon which they were founded and tacitly operate according to these principles.

When something is in its genesis, it is fresh and exciting.  Possibilities bound about, like deer in a meadow in early spring.  It is a thing to behold.  People flock to this bounding, this life, to simply breathe it in and to somehow be a part of it.

“Let it always be this way!” they say, “I love this!  How can I join?”

The founders may or may not have decided how one can join.  In the beginning, at the genesis of the institution, it hardly matters.  If people are not allowed to join formally, they will do so by imitation.  Such is the charismatic nature of an attractive institution which is run on sound principles.

At this stage, whether formally invited or not, people flock to the institution in great multitudes.  Everyone wants to bound with the deer, drink from the stream, to lie in the grass.

Then, something begins to happen.  The people, who were not there at the genesis, do not understand why the deer are bounding.  And when the deer try to explain this to them, the people may not understand or perhaps may disagree with the reasons given for their joyful bounding.  In this miscommunication, the principles get lost or distorted.

Nevertheless, the people agree that the bounding must continue, and increase, by all means.  They continue to flock to the meadow.  Soon, because of the crowds, the bounding area becomes a mosh pit, the water in the stream becomes undrinkable, and the grass turns to mud.

Yes, the once fair meadow full of bounding deer has quickly turned into a scene from Woodstock.

Stay tuned for further sections and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Mint Classics, Politics, Subtle Change from Principles to Rules

The Subtle Change from Principles to Rules Part I – Introduction

5/4/2012 Portland, Oregon – Pop in your mints…

Today we wish to take you, fellow taxpayer, on a brief trip back to where it all began, to one of the origins of the agitation which causes your author to pen his thoughts in an attempt to understand the world about him:  The Subtle Change from Principles to Rules. 

The Subtle Change from Principles to Rules
The Subtle Change from Principles to Rules

This collection of essays is more an observation than an explanation, which is why we so enjoyed writing it.  Over the next few days we will be presenting to our faithful readers our soon to be released ebook.  It will be offered  for free through Smashbooks.com in all common ebook formats in the coming months.

It is the glory of God to hide things, and the glory of man to discover them.  It is a beautiful, mysterious existence which we live in, and there is a tension between what is revealed to us and what is to remain a mystery.  This tension is inescapable, and the best one can hope for is to find satisfaction within this tension.  Clinging to mystery is to operate in darkness.  Clinging to revelation is to live in the past as the future races by.

Thank you for joining us in our observation of what is happening all around us.

The Subtle Change from Principles to Rules

INTRODUCTION

In the lazy summer days of 2007, the world appeared to be getting its groove back.  Few, if any, were the signs pointing to the financial catastrophe that was about to unfold.

Yet despite the feeling of relative calm and optimism, it was clear that a deep and permanent change was occurring at the very base of society.  Suspicion was beginning to replace trust and goodwill amongst men.

This brief book is a compilation of three essays that were written during the summer of 2007 and first published in October 2010.  They deal with a revelation that was given to us as we were attending a breakfast presentation on upcoming changes to the US accounting standards.  Instead of fighting off the drowsiness which usually accompanies listening to accounting jargon, we found ourselves grappling with a deeply disturbing truth that increasingly defines life in America to this day.

American society, which had built itself and created an unprecedented dynamism by operating on the basis of tacitly agreed upon principles, was now turning to the blunt instrument of rules as the basis for relationships.

An understanding of this subtle shift in American thinking will greatly aid one in understanding the seemingly inexplicable changes that they see all around them.

Clearly, rules have always been a part of life.  They are nothing new.  What was, and is new, is the power that is now being ascribed to rules. In America, it was often the case that a rule would be written and modified on the basis of an underlying principle.  Rules for the sake of having them did not make much sense.

Now, circa 2012, the power is continuing to shift to the rules themselves.  While the hallmark of principles is that they are flexible enough to adapt to constantly changing circumstances, rules tend to serve as a kind of concrete for society which, as they harden, completely paralyzes anything that finds itself trapped amongst them.

Societies based on rules are nothing new.  In fact, they are sadly becoming the norm throughout the world.  Perhaps the clearest high level distinction between a society that operates on the basis of principles and one that operates on a basis of rules is whether it finds its legal basis in English Common Law, which generally produces outcomes based on equity before the law and a reasonable standard; and Napoleonic Code with its strict adherence to written rules which often has little flexibility regarding the individual circumstance that is being examined

These essays deal with the shift, then, from America’s predisposition to operate on the basis of English Common Law to that of the rigidity of Napoleonic Code, and the inevitable consequences of making this shift.

The eternal question that we present here, “deer” reader, is whether or not one will stay in the meadow once as they see this shift occur.

Stay tuned for further sections and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

The Mint

Exiting the work force, stage left

5/4/2012 Portland, Oregon – Pop in your mints…

Today, a couple of things occured which, on the surface, seem to contradict each other.  First, the official unemployment rate ticked down slightly from 8.2% to 8.1%.  While nothing to write home about, this generally would be seen as good news.  However, in the parallel universe of government statistics, the number itself is decieving.

Why?  Quite simply, labor participation, which, for better or worse, is the denomenator of the Unemployment rate equation, dropped to a level not seen in the US for 30 years, as in, circa 1982.

In other words, people are leaving the labor force for good or are returning to school, effectively leaving the government’s unemployment dole and joining the government’s student loan program, or what we like to think of as “ultra extended unemployment.”

In other words, the productive economy is continuing to shrink. 

While a lower unemployment rate will give both the Obama campaign something to tout and the hacks at the FED academic ammunition to speak of raising short term rates, very few people outside of the ivory halls of Washington can count this jobs report as good news.

It should come as little surprise, then, that there was a widespread drop in most markets today, save US Treasury yields, which inversly correlate with broad market drops.

The M1 money supply is expanding rapidly.  Ben’s helicopters have arrived.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 4, 2012

Copper Price per Lb: $3.75

Oil Price per Barrel:  $98.49

Corn Price per Bushel:  $6.62

10 Yr US Treasury Bond:  1.88%

FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,642

MINT Perceived Target Rate*:  0.25% AWAY WE GO!

Unemployment Rate:  8.1%

Inflation Rate (CPI):  0.3%

Dow Jones Industrial Average: 13,038

M1 Monetary Base:  $2,275,100,000,000

M2 Monetary Base:  $9,832,700,000,000

However, this news came against the backdrop of

Gold, Monetary Theory, Of Money and Metals, Silver, The Mint

Is Fiduciary money really money or cleverly disguised debt?

4/30/2012 Portland, Oregon – Pop in your mints…

As money managers are frantically rebalancing their portfolios in a vain effort to get out of the way of Apple’s 20 point decline and Spain’s central bank, whose reason for existing we cannot conjure at the moment, consults experts in toxic assets because it apparently cannot figure out how to perform the most basic of banking functions:  Writing down bad assets, we are waxing philosophical here at The Mint.

We will give the Spaniards the benefit of the doubt and assume that they know what should be done with the toxic assets, they just do not want to appear to have admitted that the vile sludge on the balance sheets of nearly all spanish banking institutions are worse than worthless without getting an expert opinion. 

The defunct Spanish Central Bank looking for unsophisticated Investors to clean their banking system's septic tank

These are smart people, no doubt, the money managers and central bankers involved in the debacle that is the western financial system, circa 2012.  It is for this reason that there should be great cause for concern when they appear completely uncapable of functioning when things do not go the way they planned.

For example, a properly functioning banking system would have no problem figuring out what to do with non-performing loans (the common name for the toxic assets that the central bankers so dread).  In fact, a properly functioning banking system, where real and not limitless fiduciary money was at stake, would have created an adequate quality control system to ensure that very few financial assets of the toxic variety live to see the light of day.  Those that did see the light of day would have beem properly discounted them to a point where all of their toxic side effects could be properly cleaned up should they spill over.

We must assume, then, that there is something dreadfully wrong with the banking system.  But what is it?

We began to ponder this question last week when we saw a post by an Ivy League trained economist.  The assertion that fiduciary money is money bothered us to the point where we were compelled to jump in to correct this unintentional error.

The Ivy league trained economist indulged us for a time and then, for reasons unknown, disabled commenting on the post.  We interpret this action as a concession of the point we are trying to make, either that or they just wanted to get rid of us, which, given our obvious charm, we can only assume is not the case.

What is important is that the post brought up a fallacy which we see it as part of our mission here at The Mint to debunk.

The fallacy, which is widely accepted as fact by money managers and Spanish central bankers alike, is that fiduciary money operates like money when in reality it is nothing more than a debt instrument in disguise. 

So which is it?  Is The Mint off its rocker or is there something to the error of this “debt is money” point of view, as in, it is causing otherwise intelligent people to act in more and more absurd ways as the inevitable consequences of using debt as money rear their ugly head?

Simply stated, is fiduciary money really money, as the name implies, or is it technically debt?  It is a fine point that, to be honest, does not matter to most people on the planet, for what is commonly known as fiduciary money tends to operate as money in a way that is imperceptable to the members of society…until it doesn’t.

The true essence of fiduciary money is not money at all, but debt.  Granted, it may be a highly liquid and highly transferable form of debt, but that does not change the fact that when it is created at the bank, be it a local or central bank, it represents a debt of that bank, regardless of the ability of said bank to redeem the fiduciary money for specie money, which is what we hold out as worthy of the term money for purposes of analysis.

As you can see from our presentation of the interaction below, we attempted, in good faith, to convince the Ivy League trained economist that Federal Reserve notes, as their name implies, are debt and not money.

I have redacted the amicable interaction to highlight the applicable text of our interaction as it pertains to the case in point, is fiduciary money really money?

Please read on and decide for yourself.

{Editor’s note:  Out of respect for the Ivy League trained economist, we have removed all references to their identity, for it is not our intent to shame, discredit, or launch any form of personal attack on them, but rather, the fallacy surrounding mainstream economics’ treatment of fiduciary money in its analysis}.

The Mint (in response to the intial post):

I would like to point out that fiduciary money is not money, but rather debt which carries in its value a monetary premium which the market has chosen to assign it.

Ivy League trained economist:

“Perhaps this helps you David Mint. I wrote this back on March 8th.

{Link to content further asserting that fiduciary money is money, removed to protect economist’s identity}

The Mint:

Thanks again, however, I still cannot concede your assertions that Federal Reserve notes are money, rather, they are a debt instrument, which is often referred to as fiduciary money.

The proof of this lies in that Federal Reserve notes pay interest and trade at an implied discount rate, whereas money simply trades against other goods in a varying relationship determined by the relative scarcity of resources.

Both circulate as currency in a normal economy, but the rigidity of debt makes it unsuitable for obligatory legal tender.

It is a fine point that is categorically overlooked, but the more one forces debt into the role of money, the greater the disconnect between the activities of men and the resources available to support those activities.

I would love to hear a convincing argument that debt is money if you have one in your archives.

Thanks again and all the best!

Ivy League trained economist:

“Decidedly David Mint, Federal Reserve notes do not pay interest. There isn’t anyone on earth paying interest to anyone else who is holding a $5 bill in his wallet.

Here, David, disabuse yourself. See my many shares on what money is:

{Link to content further asserting that fiduciary money is money, removed to protect economist’s identity}

You ought to spend good time reading this one:

{Link to content further asserting that fiduciary money is money, removed to protect economist’s identity}

The Mint

Quickly, on the fallacy of the $5 bill which is held, the implied interest and discount rate on Federal Reserve notes traded amongst commercial and central banks still affect the value of the bill as it is held up until the moment it is given in exchange for trade.  The coupon rate is 0%, but the normal operations of debt instruments hold true for them.

From what admittedly little I have read of your work, I agree with 99% of what you present.  It is this fine point, that Federal Reserve notes behave as debt, even when they are part of the M1 money supply, that I believe is the error which is spread throughout mainstream economics.  Of this, I have yet to be disabused by what you have presented.

Debt includes all fiduciary money.  The point is important because using debt as money works until it doesn’t, meaning the issuer of the debt defaults or is widely perceived to have defaulted, and their debts become worthless in trade.

Ivy League trained economist:

“That’s all fine, except Federal Reserve bank notes are not debt.  Decidedly, Federal Reserve bank notes are money owning to bearer negotiability and ability to extinguish contracts.

Yet, Federal Reserve notes are not credits, and thus are not debt.  Federal Reserve notes are not even evidences of ownership of contracts.

At most anyone can say is that Federal Reserve notes represent a call on future products to be made by anonymous, as yet, identified others who likely shall take them in exchange.”

The Mint

As a matter of accounting necessity, the Federal Reserve must book a liability when it issues a Federal Reserve Note which makes their notes debt by definition.  If this were not the case, why would they list it as a liability on their balance sheet?

http://www.federalreserve.gov/releases/h41/current/

On the contrary, the most that anyone can say about Federal Reserve notes is that they are the highest and most liquid form of debt which is traded in the US economy.  However, this does not change the fact that the essence of the Federal Reserve note is debt.

The Ivy League trained economist unexpectedly exits stage left.

Who cares?  Why is this important?  It is important because if what we believe about fiduciary money is true, most of the Western world, including the mysteriously influential Paul Krugman (who is not, by the way, the anonymous Ivy League trained economist above), somehow believes that fiduciary money is money that can be produced at will, and that the world will be better off if we simply produced more of it.

If the Krugman’s of the world get their way, labor and accumulated capital will be so poorly allocated that it could take three generations for humanity to adequately organize itself to make good use of the earth’s inexhaustible reasources.  Do you have that kind of time?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 30, 2012

Copper Price per Lb: $3.86

Oil Price per Barrel:  $104.88

Corn Price per Bushel:  $6.60

10 Yr US Treasury Bond:  1.92%

FED Target Rate:  0.14%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,664

MINT Perceived Target Rate*:  1.00% AWAY WE GO!

Unemployment Rate:  8.3%

Inflation Rate (CPI):  0.3%

Dow Jones Industrial Average: 13,214

M1 Monetary Base:  $2,210,700,000,000

M2 Monetary Base:  $9,970,100,000,000

Events, The Mint, Uncategorized

Pete’s Pest Control – Restoring one’s faith in humanity

4/26/2012 Portland, Oregon – Pop in your mints…

As we were cutting down a the tree in the back in the yard last week, we encountered Carpenter ants.  For the uninitiated, carpenter ants seem to thrive on moisture and wood.  Hence, Oregon, and more precisely, the Mint’s backyard, is paradise for this winged menace.

Our first reaction was that of indifference.  It was just another one of a zillion bugs which appear as the temperature begins to warm up here.

For those of you live have never had the pleasure of living in Oregon, we should clarify that living here is like living in two entirely different places depending upon the season.  Under the cover of rain, humans and animals alike go hibernation, taking with them lattes, iphones, ipads, kindles, androids, and the occasional paperback to while away the rainy months.

When the sun comes out, however, Scotty beams the entire Northwest to another planet.  One full of rich colors and light.  So many people and animals appear as if from nowhere that you hardly recognize supposedly familiar surroundings and landscapes.  It may be a hallucination owed to a temporary overload of vitamin D, but it sure feels real.

For a primer on spring in Oregon, take a quick gander at Kurosawa’s dream sequence:

As we pondered life as we know it during the intoxicating dream that is a warm, sunny, early spring day here, a faint memory came to us, like Obi Wan Kenobi’s hologram appearing to call on Luke Skywalker.

Ours was one of the home inspector mentioning something about prior carpenter ant activity in the house.

As we came to, we performed a quick internet search which confirmed our fears, the winged beasts we had encountered were indeed carpenter ants, and they had their sights on the Mint’s humble abode as a summer home.

From the looks of things, they were inviting the entire clan to join them.

It was clear that swift and decisive action must be taken to eradicate these guests.  Beside termites, there is no greater enemy of a wooden house than the carpenter ant.

We considered doing it ourselves.  However, after narrowly winning a pitched battle with mice over the winter, we decided that DIY pest control is more trouble than it’s worth.  The only question was, on whom shall I call?

As a sales prospect, we were ripe.  We wanted the whole nine yards, nuke the carpenter ants, take out the sugar ants as collateral damage, seal off the entrances and exits and take no prisoners.

And while we are at it, let’s teach the mice a lesson.  We had illusions of our house being a sterile environment, free from the forced cohabitation practiced by insects.

After contacting a number of local pest control agencies, it became clear that we were in for more than we bargained for.  The exterminator was to be our companion for life, making a courtesy visit every three months to spray the perimeter and send a bill.

It seemed a high price to pay, yet worth the piece of mind.  We were gathering bids and checking reviews.  We had three companies coming out to bid and two more in the wings when we came across Pete’s Pest Control.

As you can see here, the guy has a ton of rave reviews and not one negative comment.  This is extremely rare in the exterminator business, for obvious reasons. While a number of comments got our attention, we knew that Pete would be the one to get us out of this jamb when we saw this five word phrase in one of them:

“Pete is the ant whisperer.”

We picked up the phone immediately.

Pete:  “Pete’s Pest Control, this is Pete…”

The Mint:  “Hi, we have some carpenter ants which I need taken out.  While we are at it, I need an ongoing service to take care of some sugar ants, mice, etc…”

Pete: “You don’t need a contract, you need to get rid of the carpenter ants.  We can do that.”

The Mint: “Yeah, but we were thinking of having a year round protection…”

Pete:  “We will get rid of the carpenters ants and come back until they are gone if it is necessary, and it will not be.  We have a one year warranty.”

The Mint:  “But what about the ongoing service contract…”

Pete:  “If you really do not want to see another bug around your house or garden, ever, we can talk about that, for now, we just need to annihilate the carpenter ants.”

The Mint:  “OK, when can you be here?”

We set the appointment and hung up, thoroughly impressed.  The rest of the companies had tied a service contract to the initial service or strongly recommended one.

Our first impression of Pete was that he is extremely efficient and that he knows what he is doing.  Impressed by the phone conversation, we promptly cancelled the appointments for estimates.  Comfortable that we had the #1 pest mercenary on the case.

When Pete arrived, he went straight to work and gave us the assignment to clear access to the interior where he would be working and inspecting.  We cleared the access points as he roamed and sprayed the perimeter.

“Aha!” we heard outside.  We went out and Pete had identified the ant’s access point into the house.  Like a General who had arrived at the field of battle a day before the opposing army, Pete sprayed the access points on the house as well as the base of the tree and phone line.

He then accurately predicted that it would rain in five minutes, and that the terminex that he had sprayed would be dry before it came.

He was correct on both counts, and we had to smile as he reported “this is a good scenario.”

Once the carpenter ant threat had been neutralized, he went after the sugar ants.  Then things got really impressive.

We had opened some small access points upstairs into the attic.  They were small and Pete is tall, so we said, “are you sure you can get in there?”

Pete fired back:  “I can detect 17% humidity by smell”

He then reported that we did not have the conditions upstairs to sustain insect life and that it was not a concern.

We then showed him the crawlspace, the scene of the battle with the mice.  He could smell the activity and recommended that we stock up on the decon before they took it off the shelf.  It seems that soon only licensed pest control professionals will be able to purchase it.  A great tip.

He then proceeded to the garage to show us the only place, under a side door, where the mice could enter.

“You seal that, you solve your mice problem once and for all.”

The entire experience restored any faith that we may have lost in humanity.  Pete is the most efficient and competent professional that we have met in the Northwest, in any profession.

Even if you do not have a pest problem we recommend that you schedule a service with Pete anyway.  Being the competent professional that he is, he will try to talk you out of it.  However, if you want a lesson in world class customer service, insist that he come and watch him work.  You will be amazed.

As for us, we said goodbye to Pete by letting him know that we would call if we saw anything.

“You won’t,” said Pete, decisively “we got ’em.”

We were sad to see him go.

Thanks Pete!  The Mint tips its hat and raises a glass to you.  May we all strive to achieve the excellence which you have shown us today.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 26, 2012

Copper Price per Lb: $3.80

Oil Price per Barrel:  $103.95

Corn Price per Bushel:  $6.24

10 Yr US Treasury Bond:  1.95%

FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,657

MINT Perceived Target Rate*:  0.25% AWAY WE GO!

Unemployment Rate:  8.2%

Inflation Rate (CPI):  0.3%

Dow Jones Industrial Average: 13,204

M1 Monetary Base:  $2,210,700,000,000

M2 Monetary Base:  $9,970,100,000,000

Jesus, The Mint, What to expect in the Monetary Realm as the world comes to an end

Dabbling in Eschatology: What to expect in the Monetary Realm as the world comes to an end – Part II – The Vision of John

4/10/2012 Portland, Oregon – Pop in your mints…

If you missed Part I of this series, please click below and give it a brief read before continuing:

Part I – Give to Caesar what is Caesar’s

It is clear from Jesus’ answer to the spies’ question that He ascribed little importance and value to the coinage of Caesar.  This flew in the face of what to most people believe about money on a subconscious level.

As we have explored in this space before, the current monetary system, where money is debt, creates an unnatural link between human beings, a sort of mutual slave/master relationship in which each and every person within the system finds themselves ensnared.

How does Caesar ensnare people in this system?  By simply placing his mark on the coinage, the coin becomes Imperial property.  The next step is to pass a series of laws, commonly known as legal tender laws, which obligate people to use the coinage in trade and commerce.

“Give to Caesar what is Caesar’s,” therefore, may be seen as a call out of the system of Imperial coinage and tribute.  If one remains in the system by accepting and using the coinage in exchange for goods and labor, they remain a slave to the empire and all of the money bearing his mark which they have accumulated belongs to Caesar.

Today, some 2000 years after Jesus’ words, most of the western world lives in a system where not only does the modern day Caesar lay claim to their money via a mark, but also their future output by means of debts which are incurred as a necessity in the face of the declining real world value of the Imperial coinage in trade.

And yet it is only money, nothing more.  Jesus stresses both private property rights and God’s divine sovereignty over all when He continues, “and to God what is God’s.” implying that everything is God’s while recognizing the right for Caesar to lay claim to all Imperial coinage via the mark.

This brings us to the second passage which we will examine as we continue our eschatological dabbling into what to expect in the monetary realm as the world comes to an end.

Albrecht Dürer, The Revelation of St John: The Four Riders of the Apocalypse, 1497-98, Woodcut
The Revelation of St John: The Four Riders of the Apocalypse, 1497-98, by Albrecht Dürer, Woodcut

The second passage relates to us a portion of the vision given to the Apostle John as he was exiled on the Isle of Patmos in the Aegean Sea circa 95 AD.

The passage, Revelation 13:14-18, is a source of widespread discontent amongst Christians who are paying attention as it warns of a time when all people on the earth will be forced to make a permanent choice between accepting the “mark of the beast” and “buying and selling.”

The discontent stems from the perception that one will be forced to accept the mark, and as a consequence presumably be forever estranged from Jesus, to be able to put bread on the table for themselves and their families.  On the surface, this discontent is completely understandable.

Yet in light of the coming rapture of the Church, it is also completely unfounded for the true believer.  Allow us to explain.

At the Mint, we are of the opinion that Jesus will rapture us (those who have accepted Jesus as their savior) before the inhabitants of the earth are faced with this fateful decision.  This opinion is based on the parallels between the rapture and Jewish wedding traditions, where the bride (the Church of Christ) is swept away for seven days.

The parallel is that Jesus will come to sweep us away and hide us in his house (heaven) for the seven years of the tribulation which were revealed to John in his vision.  This interpretation is supported by everything else that Jesus said about the end of the world.

While nobody knows exactly when Jesus will come, it is reasonable to expect that He will return around the time of Rosh Hashanah, the Jewish New Year.  The first coming of the Messiah, Jesus, was the culmination of the Jewish Passover which occurs in the springtime.  It could logically follow that the second coming of Jesus would occur during the harvest time around the Feast of Trumpets.  Though we do not know the time of Jesus’ return, we will know the season.

If you, too, would like to share this joyful fate, we encourage you to choose today to trust Jesus.  At this point, you may stop reading and begin a life of praise and service to God.

In the unfortunate event that one chooses to decline God’s loving invitation and finds themselves on the earth when humanity is faced with the ultimatum to either accept the mark of the beast or to be denied access to a perceived economic necessity, namely, “buying and selling,” please read on, for there will still be time to choose eternal life with God, but it will involve a seemingly difficult decision.

There is no shortage of speculation as to what form this “mark of the beast” will take, ranging from barcode tattoos, implanted microchips, and even the choice to worship on Sunday.  Here we do not wish to add to the speculation.

Rather than focus on the substance which the mark will take, it is more important to focus on what it will mean, for at the time of the ultimatum, the choice they are being asked to make will be subtle and at the same time, crystal clear for all of mankind.

God’s enemy, satan, desires to occupy the place of God in people’s lives and the obligation to worship an image and accept a mark will be his final, desperate attempt to obtain all human worship for himself through a final deception.

It is clear that this desperate attempt will fail, yet that even some of those who are following Jesus may be led astray.  For this reason, it is important for all to be aware of the choice which is being presented.

The acceptance or denial of the mark will be a choice that all those on earth will be forced to make and it appears to be the final watershed event in human history.  The choice for those living at that time will be clear to them and the consequences eternal.

The choice is the following:  Will you accept the mark and throw your lot in with the world which you can see or will you deny the mark and throw your lot in with the unseen God, and as a consequence subject yourself and your family to being ostracized from the world system to face hunger, persecution, and torture?

Denying the mark will likely be similar to losing title to all of one’s assets and loss of access to the banking system.

In other words, it would mean being shut out of the system.

The choice that each person makes at that time will then be clear for all to see.  It will symbolize either entitlement to goods, services, and protection in the world system or being cast out of it to wander the earth as Cain did.

Those who desire to throw their lot in with God at that time are then presented with the some very important questions here and now:  How long can you and your family survive without access to your assets or the banking system?  Is it worth it to resist the mark and live as wanderers?  Won’t God understand if I take the mark and forgive even this transgression?

To the first two questions, only you can provide the answers.  The Bible is clear as to the answer to the third question, and from what we read in Revelation 14:9-12, it appears that the answer is no.

So, then, the true believer is left to prepare to live outside of the system until Jesus comes for them, to keep their lamp lit until the groom comes, as it were.

But for how long?  That, fellow taxpayer, is the exciting part, and it will have to wait until tomorrow.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 10, 2012

Copper Price per Lb: $3.69

Oil Price per Barrel:  $100.90

Corn Price per Bushel:  $6.34

10 Yr US Treasury Bond:  1.99%

FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,660

MINT Perceived Target Rate*:  0.25% AWAY WE GO!

Unemployment Rate:  8.2%

Inflation Rate (CPI):  0.4%

Dow Jones Industrial Average: 12,716

M1 Monetary Base:  $2,299,000,000,000

M2 Monetary Base:  $9,823,900,000,000

Economics, Mint Classics, The Mint

G7 Meet to Stop Yen’s Dramatic Rise and the BLS Calls BS on its Broad CPI Measure – A Mint Classic

Over the past year, the Bank of Japan has tried numerous times to Kamikaze its currency and has failed miserably.  As of the writing of this classic Mint, the USDJPY exchange stood at about 80:1.  Check today to see how the Bank of Japan has fared.
 
As for the other theme, if anyone still believes in the BLS’ headline inflation number, they probably work at the Federal Reserve and watch I-Pad prices for signs of inflation!

Enjoy!
 
3/18/2011 Portland, Oregon – Pop in your mints…
 
The G7 Central Bankers have called an emergency meeting to “do something” about the “skyrocketing Japanese Yen.”  This meeting is simply their latest attempt to combat reality.  The reality of the situation in Japan is that they are dealing with a catastrophe.  When one is dealing with a catastrophe, the next prudent step, after all of the immediate crises have been contained, is to take stock of the situation.  By taking stock, we mean that one takes note of what was lost and, more importantly, what one will need in order to restore things to an acceptable level of comfort.Comforts cost money.  In Japan, to replace these comforts the average person needs Yen.  They will either get this Yen by making a claim with their insurance company or selling assets to raise cash.  With damages of nearly $15 Trillion Yen (roughly 3% of Japan’s GDP) and counting you can imagine how the demand for Yen is, well, about to skyrocket.

 
The Japanese people are still dealing with the catastrophe.  Speculators in the currency markets are, as always, one step ahead of what must happen and are sapping liquidity, in terms of Yen, at a rapid pace.  This activity, taken at face value, will presumably wreak havoc for Japanese Government Bond prices, the prices of stocks traded on the Nikkei, and the US Dollar.
 
These three markets will crash if nature is allowed to take its course.  You see, in the tipsy turvy world of currencies, to buy a yen more often than not means that a US dollar, a JGB, or a stock listed on the Nikkei is sold on the other side of the trade.
 
The most sought after currency in the world, at least until the G7 meet tomorrow
 
The accelerated selling of dollars, as Jim Rogers points out, could cause the endgame scenario for the US currency to swiftly come upon the world.  Mr. Rogers goes so far as to call this a “Moment of Truth for the dollar.”
You can see the brief interview by clicking here.
 
Of course, as Mr. Rogers points out, it may be time to buy the dollar, if for some reason it is to survive as a top tier currency.  We have lived just long enough to know that anything is possible.
 
The G7 meeting today is VERY IMPORTANT.  It should not be, if only the world had not left the embrace of sound money 40 years ago, but unfortunately, it is.  For the G7 will essentially decide whether to keep the Dollar on life support or to pull the plug.
 
What will they do?
 
Meanwhile, the Bureau of Labor Statistics (BLS), the legion of bureaucrats who are charged with cranking out data in order to support FED policy, appears to be starting its own form of political protest against the loose dollar policies followed by the Federal Reserve.  After faithfully cranking out the core CPI, a key statistic here at The Mint, for years and watching it slowly become distorted into the puppet statistic that it now is, they came out with a data point in 2002 called the “Chained Consumer Price Index” which takes into account a rolling average of food and fuel costs, which the core CPI now blatantly ignores.
 
This index hit a record high in February, confirming what most average Americans already know:  It has never been more expensive to live in the Land of the Free.
 
Will we be Brave enough to return to sound money?  You, fellow taxpayer, can take a step in that direction with just a few simple keystrokes.  APMEX, our affiliate, is running a contest.  They are giving away one 1 oz gold eagle coin each month.  All you have to do to enter is register by clicking this link and filling in the blanks.  You can register to win once per month.  If you so desire, click here and Register at APMEX.com Today!
 
By definition, the black hole of debt will always grow at a more rapid pace than the worthless currency that is printed in an attempt to fill it.  If the black hole collapses (i.e. widespread default occurs), hyperinflation will occur quickly.  If currency becomes scarce, people will find another medium of exchange, likely gold and/or silver.
 
Either way, the world will be out of this mess before long, so hold on to your hats, it is bound to be a wild ride to the other side!
 
Stay Fresh!
 
 
 
P.S.  If you enjoy or at least tolerate The Mint please share us with your friends, family, and associates!
 
Key Indicators for Friday, March 18th, 2011
 
Economics, Mint Classics, Politics, The Mint

US Debt Ceiling Vote to Ignite Armageddon in Bond Markets? Key Indicators all Point to Inflation – A Mint Classic

Today we are taking a break en route to Bolivia.  Breathing in La Paz is hard enough, let alone attempting to dissect what is occurring in the World economy.  As such, we offer a look at things which we wrote about 14 short months ago which came to pass just 8 short months ago.  A much ignored number which is peculiar to America, the debt ceiling.
 
Today, the number is mostly ceremonial but it is important to remember that the US is likely to breach the $16.2 trillion symbolic limit in the near future.  Will we have  repeat of the events we described?  Enjoy!
 
1/18/2011 Portland, Oregon – Pop in your mints…
 
For some months now we have been wrestling with the notion that there will be a major collapse in the Bond Markets.  We have speculated as to the causes and possible effects in these chronicles, comparing the coming events to the battle of Armageddon, famously prophesied by John in the book of Revelation, Chapter 16.  Bondholders have been lured into a valley, and our guess is that they are about to get slaughtered.
 
When and how will this occur?  This is the subject of our speculation today.  Be forewarned, fellow Gambler, that we do not have any sort of inside information.  Rather, we rely on our own wild imagination and questionable powers of deduction.  Actual events may differ dramatically from what we imagine, and we pray that they will!
 
Our current speculation has its origin in digesting the reality of the upcoming Congressional vote as to whether or not to raise the debt ceiling.  In the past, this would barely have been news.  The government almost always, without fail, spends more money than it takes in. This is one of the few things that you can count on a democratically elected government to do.  To cover the deficit, the government must issue debt.  Since there is almost always a deficit and there is almost always interest to be paid on existing debt, the amount of debt owed by the government must always increase.  This is the basis of our current insane monetary system.
 
 But wait!  Along comes a group of Congressmen and women that either don’t understand the game or are unwilling to play along any longer.  They appear, at least from their rhetoric, to be set to vote AGAINST raising the debt ceiling (the total amount of debt that the US Government can officially borrow).  In theory, this would mean that Government expenditures would have to be immediately reduced by $1 Trillion, the projected deficit for current fiscal year, and further reduced to give them the ability to roll over the roughly $3 Trillion dollars worth of US Treasury debt that is set to mature in 2011, even assuming that it can be rolled over at 0% interest.  Both of these are plausible but highly unlikely scenarios.
 
 
As an aside, you can watch all of the dizzying US Debt statistics here.  We advise you to take some Dramamine beforehand.
 
However, a “NO” vote on raising the debt ceiling would make these highly unlikely scenarios not only likely but absolutely necessary.  A “NO” vote would likely trigger a sell-off not only in the US Treasury Debt Markets but also in every fixed income and equity market on the planet.  This sell-off would lead to an unprecedented amount of cash chasing around a finite number of real goods.  
 
In short, the end result of a “NO” vote would be a paralyzed Government and hyperinflation.
 
On the other hand, a “YES” vote is no picnic either.  Many of these Congressmen and women were around the last time they had to vote on a measure with such broad reaching financial implications.  Does the TARP Fiasco of 2008 ring a bell?
 
On the bright side, a “NO” vote would bring an abrupt end to the insanity of the present world monetary system.  A system that is based on debt, not real money, which causes the productive forces of mankind to cannibalize themselves.  After the initial shock, a “NO” vote would be a great thing for mankind.  Do today’s politicians have the backbone to do this?  Only time will tell, but here at The Mint, we believe that at this point a “NO” vote or a stall tactic (which is practically the same thing) may in fact be likely to occur this spring.  We are not alone in this boat, as back in November former Treasury Secretary Robert Rubin alluded to this vote as a possible “trigger“ for a “rout in the Treasury Market.”
 
While all signs in the Bond Markets point to an implosion, either this spring or at some unspecified date in the future, all of our Key Indicators here at The Mint are continuing to point to Inflation.  It is for this very reason that we observe them daily, to ensure that our hypothesis is correct.  These are the “cards” the we hold as gamblers.  Each one merits in depth study as to its economic significance but we will spare our fellow gamblers this depth for now and jump directly to the practical application. 
 
At the end of every Mint, we present the Key Indicators.  We encourage you to compare them with the Key Indicators from previous Mints.  If the Key Indicators are generally higher (with three exceptions) than they have been in the past, we expect inflation, maybe a lot of it.  If they are lower, we would expect deflation.  The magnitude of the inflation or deflation depends upon the magnitude of the changes in the numbers.
The three exceptions, of course, are the “FED Target Rate”, the “MINT Perceived Target Rate”, and the “Inflation Rate (CPI).”  In the case of these three indicators, if the number is lower than it has been in the past, we can expect inflation.  If they are higher, we would expect deflation.   
 
You may also click on each data point below for a link to its source to better perform trend analysis.
The timing of what is to come is a mystery.  Based on recent data, inflation is walking up the drive but still a ways from the door.  If we had to guess, we would expect inflation in full force by January 2012.  If Congress pulls the trigger with a “NO” vote this spring, it could arrive quite a bit sooner.
 
As Kenny Rogers wisely said, “Know when to walk away and know when to run!”
 
Stay Fresh!
 
 
 
 
P.S.  If you enjoy or at least tolerate The Mint please share us with your friends, family, and associates!
 
Key Indicators for Tuesday, January 18th, 2011
 
MINT Perceived Target Rate*:  4.5%
Unemployment Rate:  9.4%
Inflation Rate (CPI):  0.5%
Dow Jones Industrial Average:  11,787
M1 Monetary Base:  $1,954,500,000,000
M2 Monetary Base:  $8,881,000,000,000 (this numbers stands roughly $2 trillion higher today, about the same amount that the debt ceiling was ceremoniously increased back in August.  Coincidence?  we think not!)
The Mint, Uncategorized

A default that isn’t a default and a sale that isn’t a sale | The Wall Street Examiner

A great piece on the absurdities which are now the norm in high finance. The rules of the game can no longer be relied upon, and operating in debt markets will be more like playing in the NBA.
Except that for many peoples retirements, the debt markets are far from sport. Enjoy:

http://wallstreetexaminer.com/2012/03/03/a-default-that-isnt-a-default-and-a-sale-that-isnt-a-sale/

GSM, Jesus, The Mint

The Importance of the Bible, A Foray into E-Book publishing

2/27/2012 Portland, Oregon – Pop in your mints…

We have been busy here at The Mint publishing our first of what we hope will be many E-books.  To the surprise of many, it has nothing to do with Monetary Theory.  For Monetary Theory to have any coherence, a proper understanding of the world must first be established.  This E-Book is a humble attempt to begin this process for our dear fellow taxpayers.

Regardless of whether you believe that the Words of the Bible are true or if you are of the opinion that the Bible has nothing of relevance to say to the modern world, it is extremely urgent that you examine the Bible soon for it will provide the only coherent explanation for the events which are unfolding.

This particular E book deals with teaching the Bible, specifically the book of the prophet Hosea.  Fellow taxpayers who have an interest in the Bible are encouraged to take a peek at it here.  The book presents a method which is entirely different than any other teaching method which we have encountered, for it permits the Word of God to speak for itself, free of man’s distorted and too often self interested interpretations.

A book which teaches one to study the Bible may not be what one would expect from The Mint.  On the other hand, given that the Bible is our only hope of grasping a coherent, consistent truth from which all other events can be understood and put into perspective, there could perhaps be no more urgent or noble undertaking to which we must dedicate our lives

In the Bible, God did 10 amazing things: 

  1. He gave us a concrete understanding of our origins in a way so simple that a child can understand it.
  2. He gave us a historical narrative that can be archeologically corroborated should we have doubts that the events actually took place.
  3. He gave us 10 rules to live by which, if observed, would eradicate every social and many physical and mental ailments.
  4. He provided a number of other tips and suggestions which would further improve the general welfare.
  5. He gave us a brief summary so that we would not have to memorize the rules, tips, and suggestions in order to observe them.
  6. He gave us the choice whether to live by the rules and suggestions or not.
  7. He sent His Son to accept all of the natural consequences for failing to observe the rules and suggestions and in the process He vanquished the inevitability of death.
  8. He gave examples of every problem imaginable with regards to family and other human relationships, and then some.
  9. He laid down the division between good and evil which had nothing to do with observed behavior and everything to do with intent.
  10. He gave us a promise the He would physically return to dwell with us.

It should come as no surprise, then, that a correct understanding of the present state of the economy and of cause and effect can only be achieved by first understanding the essence of life, the world in which we live, and most importantly, who is ultimately in charge.

There is a need for understanding that can only be found in the Bible.  While reading the Bible is a good way to start, listening to the spoken word of the Bible in the presence of others is a much better way to gain the aforementioned understanding of life itself.

This E Book is an attempt to open the Word of God to be understood by many.  There is a deep need for people to take the hard assignments that are given to them as they gain this aforementioned understanding for themselves.

Are you ready, fellow taxpayer?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

 

Key Indicators for February 27, 2012

Copper Price per Lb: $3.84

Oil Price per Barrel:  $107.96

Corn Price per Bushel:  $6.44

10 Yr US Treasury Bond:  1.92%

FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,768

MINT Perceived Target Rate*:  1.00% AWAY WE GO!

Unemployment Rate:  8.3%

Inflation Rate (CPI):  0.2%

Dow Jones Industrial Average: 12,981

M1 Monetary Base:  $2,137,600,000,000

M2 Monetary Base:  $9,763,200,000,000

Economics, The Mint

No Love for Greece, The latest casualty of central planning

2/15/2012 Portland, Oregon – Pop in your mints…

The fruits of Central Planning, via the socialized monetary and credit system which is currently managed by the World’s Central Banks, are beginning to ripen, and the whole world is witnessing the latest social harvest of this doomed philosophy in Greece.

From the Associated Press:

“Tensions between Athens and other European capitals have hit new highs this week. While the European Union is officially still warning of the far-reaching dangers of a disorderly default by Greece, some politicians have in recent weeks downplayed the effects of such an event.

… While the Parliament in Athens faced down violent protests over the weekend to approve a far-reaching new austerity package, the cabinet of ministers remained locked in talks Tuesday evening over how to save an extra euro325 million demanded last week by the eurozone.”

It seems that the Greeks are having trouble accepting the well intended budgetary advice which their credit “counselors” (read overlords) in the north are so generously imposing upon them.  Now that the Greeks appear to be balking at their inevitable slide towards a vassal state, the folks in the north are getting restless as their banking syndicates have quite a bit riding on the events unfolding on the shores of the Aegean Sea.

Will the Hellenic Republic submit?

On the other side of the Atlantic, it appears that the similarly indebted US government will escape the fate of externally imposed austerity which Greece is now suffering.  The Federal Reserve has made it clear that it will print money to monetize the deficits of the US Government for as long as necessary, and the Republican budget hawks have had their wings clipped with their latest capitulation on the extension of the Payroll tax holiday.

These two events, taken together, indicate that the US intends to go for broke and fully embrace the Keynesian dream of printing its way to full employment.

The obvious solution, then, would be for the Greeks to reject the Euro in favor of not the Drachma, but the infinitely flexible US Dollar.

Unfortunately for the US, and the Greeks, should they choose to join them, the Keynesian dream is quickly becoming a nightmare as the folly of central economic planning begins to express itself in the form of runaway inflation.  The policy tools used in the past have succeeded only in stripping the earth and its people of the ability to make productive economic decisions.  What now awaits the world is the inevitable adjustment which is likely to lead to a lower standard of living.

At this prospect, Athns burned on Sunday night, and it appears that the last bastions of austerity in the US capital threw in the towel and, for the moment, Washington is not burning.

The tragedy unfolding in Europe is a painful reminder that the power to mint money was never meant to be given, by edict, to an elect few. 

Will the rest of the world learn this valuable lesson before it is too late?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com 

Key Indicators for February 15, 2012

Copper Price per Lb: $3.80
Oil Price per Barrel:  $101.93

Corn Price per Bushel:  $6.27 
10 Yr US Treasury Bond:  1.93%
FED Target Rate:  0.12%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,721

MINT Perceived Target Rate*:  1.00% AWAY WE GO!
Unemployment Rate:  8.3%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average: 12,781

M1 Monetary Base:  $2,274,500,000,000
M2 Monetary Base:  $9,653,000,000,000

Monetary Theory, The Mint

Bernanke Sends the US Dollar on a Suicide Mission

2/7/2012 Portland, Oregon – Pop in your mints…

We have been cooking up a project here at The Mint and have been remiss in our faithful correspondence to you, fellow taxpayer.  For this, we offer you our humble apologies. 

With our mission partially accomplished, we are back in the saddle and riding the monetary range.  The days have been uncharacteristically sunny here in the Northwest, and it should come as no surprise that the outlook has cleared up, along with the skies.  While Europe remains in the dual grip of debt and cold, the US is once again tying its shoes and heading out to dance.

Official unemployment is down and inflation is nowhere to be seen according to the government.

Yes, fellow taxpayer, all signs indicate that a Keynesian socialized monetary system has saved the day.

Yet no matter what the official statistics say, there is something much more important occurring as we write, something that will adversely affect every person who is long the current US Dollar via holding the currency directly or indirectly via some vague promise to have the currency delivered in the future (Read:  Bonds, MBS, and any derivative of such).

The fateful occurrence is this:  The US Dollar is about to carry out its suicide mission.

Suicide mission?  Wouldn’t the Government inform us of something as important as the severe devaluation of the currency?

Yes and no.

Allow us to explain.  First and foremost, the Government, who, behind the banks in the Federal Reserve system, gain the most from a weak dollar, have a tremendous incentive to devalue the dollar as well as a tremendous incentive to hide this fact.

However, the truth can easily be deduced by simply observing what the stated Federal funds rate is at any given time and waiting approximately three years for the effects of that rate to hit main street.

39 months, to be exact, but here at The Mint there are no extra points given for accuracy.

Where were we, something about a suicide mission, ah yes…

Join us, fellow taxpayer, on a journey back to the lazy days of August and September of 2007.  The world could not have been brighter.  Everything seemed to be turning up roses, which in retrospect should have been the first sign of trouble.

 

"Benky" sends the US Dollar on its final quest

 

In early September, Ben Bernanke, the Chairman of the Federal Reserve, has just parked his avatar, “Benky” and logged off of World of Warcraft after completing a quest during his third day of “work” after a much undeserved vacation when the phone in his office rang.

“It’s time,” said the voice on the other end, and Bernanke slowly hung up the phone.  Nothing more needed to be said.

The Federal Reserve was finished; it was only a matter of time.  100 years of subtle confiscation was about to go into the history books, and it was time to execute the plans which had been laid for its chief agent, the US Dollar, to go out in spectacular fashion. 

Mr. Bernanke and his colleagues held a cursory open market meeting to say a tearful goodbye to the currency which they had been sworn to defend.  They then set in motion a series of rate cuts which to this day have not been reversed.

The US Dollar was off on its suicide mission.

It had been on many similar missions before, all with overwhelming success in what were increasingly high risk operations against multiple targets, and it had always returned to its home shores with the spoils of war in its train, stronger and more arrogant for the experience.

But this mission was unheard of.  Delving into short term interest rate depths never before attempted by a currency its size.  Infiltrating foreign bases and confiscating wealth on an unimaginable scale.  Only this time, it was not foreseen that it would return.  A bigger, stronger, and more efficient model was waiting in the wings to swoop in and bring the spoils, which the US Dollar was to so painstakingly confiscate, home.

The mission, as in the past, was to take three years.  Beginning at the FED, it would make a slow and steady descent through the short term funding markets and then plunge, in the span of 15 months, to the unexplored bottom.  There it would lurk, setting mines and nets for the next 39 months which would confiscate the wealth of not just individuals and corporations, but of nations and multinationals as well.

It would be a grand climax to an illustrious career.

For their part, Bernanke and his colleagues at the FED would provide all of the cover fire they could muster in order to give the US Dollar as much time as possible to carry out its terrible work.  In the end, however, there was little doubt that the currency would be found, tried, and executed during this tour of duty.

So certain was this fact, that neither provision nor measure was to be taken by anyone at the FED to rescue the US Dollar.  No further resources would be used in its rescue, save the empty words of Bernanke and his colleagues. 

The US Dollar’s orders were clear:  To remain at the ultimate depths of short term funding markets, laying as many traps as possible, until it expired in this effort.

It is a grim mission, to be sure, with a grim outcome for those who are long the US Dollar and, ultimately, for the dollar itself.

Circa February 7, 2011, it appears to the greater world that the US Dollar has descended to the 1% level, the exact level it had been perceived to be at on that fateful day in late summer of 2007 when Mr. Bernanke got the call.  For most people, it feels that all has returned to normal after four years of what can only be described as an economic nightmare.

Nothing could be further from the truth.

For in one short month, it will be clear that the US Dollar, rather than returning to base at the FED, as it has for nearly 100 years, has gone deeper and further into the pockets of the world than any currency has ever dared go before.

And it is about to pick each and every one of them.

If there was ever a time to own real assets instead of US Dollars, it is now.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for February 7, 2012

Copper Price per Lb: $3.85
Oil Price per Barrel:  $98.55

Corn Price per Bushel:  $6.42
10 Yr US Treasury Bond:  1.99%
FED Target Rate:  0.11%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,742 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  1.00% DROPPING LIKE A ROCK INTO MARCH!!!
Unemployment Rate:  8.3%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  12,881

M1 Monetary Base:  $2,198,400,000,000 RED ALERT!!!  THE ANIMALS ARE LEAVING THE ZOO!!!
M2 Monetary Base:  $9,686,800,000,000 YIKES UP $1 Trillion in one year!!!!!!!

Economics, Freedom, Gold, Monetary Theory, Of Money and Metals, Silver, The Mint

Of Money and Metals, Part V – Free Money Refutes Gresham’s Law

1/31/2012 Portland, Oregon – Pop in your mints…

 

{Editor”s note: The following is the long awaited conclusion of the series “Of Money and Metals.”  Please click here to view the Part I,  Part II, Part III, and Part IV} 

 

Free money also renders null and void any arguments as to what constitutes good or bad money, for this determination will be made on a daily basis by producers and consumers rather than a monetary authority who is acting on mere theory with severely limited data.

 

Absent the government declaration of what is money and how much said “money” is worth, there is no longer bad money driving out good money, as Gresham’s Law so perceptively observes.  What remains, then, as the ultimate determinant of what is money and how much it is worth are the two parties to a transaction, who are generally in the best position to determine such matters.

 

“But this would destroy exchange as we know it!” comes the cry from apologists of legal tender laws.  “No one will know what anything is worth, let alone how to pay for it!”

 

On the contrary, the free operation of the money supply would, by necessity, cause everyone engaging in exchange to be acutely aware of both what constitutes money and how much it is worth.  It is legal tender laws which serve to pull the wool over everyone’s eyes as to the true value of money.

 

When seen through a different lens, that of the free operation of the money supply, the absurdity of legal tender laws becomes clear.  Commodity (free) money is unhindered by the artificial restraint of existing debts and is constrained only by the productive will of society.  Commodity (free) money is free to accurately reflect the price of goods and services in light of the perceived supply and productive capacity of both goods being exchanged, that being offered in exchange and that offered in payment as money.

 

Money, as most people instinctively understand it, is simply an ordinary good whose utility and value are greatly enhanced by its wide acceptance in trade.  If one strives to remove the “cost” of producing money, as Adam Smith so nobly aspired to do, it is clear that the best way to do this is to allow the good which is acting as money to be produced in the most efficient way by the greatest number of artisans as are necessary to fulfill the present demand for money.

 

But how would all of these artisans, blindly creating all of this commodity money, know when to stop producing were it not for legal tender laws?

 

Here, there is no risk of oversimplifying the answer, for the answer is painfully simple.  As persons competing in the free market who have chosen to produce money, they are likely to be the first to know when there is too much money in circulation, for their orders for new money will uncannily drop when the economy has enough money to function efficiently.

 

Further, any commodity that is only marginally used in the production of money will quickly and smoothly have its supply directed to other, more efficient uses as the incentive (realized margin) to use it as money is incrementally reduced as supply begins to overtake demand.  Each producer is therefore free to choose his or her exit point.

 

Take the case of copper.  If copper becomes monetized by the free will of the participants in the economy, it stands to reason that it could be demonetized by the same free market operation.  Should economic activity slow to the point where the pace of saving and exchange no longer calls for copper to assume a role as money, as copper is demonetized those holding copper will find it more efficient to melt the copper that they have in monetary form and sell it as a consumer good.

 

European Jeton from 1598 courtesy of Wikipedia.org

 

The process of demonetization is simply a matter or free choice when something occurring in nature is used as money.  It first moves to the fringes of use as money, as a Jeton or modern day casino chip is used in place of money.  In time, the material will be demonetized completely.

 

Debt, when used as money, enjoys no such elasticity.  By necessity, when debt is forced into a role as money, it causes an unnatural proliferation of credit, so that when the inverse of Gresham’s law begins to operate (good credits push bad credits out of circulation) the unnatural restriction on the money supply assures that even the best of credits will go bad, and the money supply along with them.

 

When debt is demonetized, usually by force, the result is more often than not a severe hyperinflation followed by war.

 

Legal tender laws, such as the modern laws which declare that debt is money, are futile at best and generally destructive.  They do, however, permit a small group to reap the monetary margin that the artificial monopoly on money creation allows them for at time.

 

Accepting that an inanimate object is no longer worth what one thought it was can be disappointing, but at least one still has said inanimate object.  In the case of debt, accepting that someone cannot deliver what they promised tends to create feelings of resentment and remorse which, depending upon the size of the failure, can lead to violence.

 

Soon, the world will learn that using debt as money is a dangerous violation of the very laws of nature.  As with any violation of natural law, the consequences may be withheld for a time, but they are never avoided.  The longer they are artificially withheld, the more swiftly and severely the consequences will be meted out when they can no longer be repressed.

 

For no man, or group of men, regardless of their number, clairvoyance, or special powers they profess to have, can suspend or accelerate the operation of natural law.  The Creator alone reserves that power for himself.

 

There is a perfect balance in God’s creation.  Yin and yang, male and female, mercy and justice, heat cold, money and debt.  Calling one extreme the by the name of other is futile and leads only to confusion and destruction.

 

It is only a matter of time.

 

Stay tuned and Trust Jesus.

 

Stay Fresh!

 

David Mint

Email: davidminteconomics@gmail.com

 

Key Indicators for January 31, 2012

 

Copper Price per Lb: $3.79
Oil Price per Barrel:  $98.48

Corn Price per Bushel:  $6.39  
10 Yr US Treasury Bond:  1.80%
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,737 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  1.50%
Unemployment Rate:  8.5%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  12,633  

M1 Monetary Base:  $2,152,800,000,000 RED ALERT!!!  THE ANIMALS ARE LEAVING THE ZOO!!!
M2 Monetary Base:  $9,782,800,000,000 YIKES UP $1 Trillion in one year!!!!!!!

The Mint

3 Months After The MF Global Bankruptcy, We Find That $1.2 Billion (Or More) In Client Money Has “Vaporized” | ZeroHedge

More on the missing MF GLOBAL client funds, why justice will never be served, and why our current monetary system is at best an illusion and, more accurately, a fraud.

The same, crystal clear money trails which are used to incriminate alleged terrorists, identity thieves, tax evaders, and drug runners are somehow blurred when members of the political and financial elite are involved in the theft.

It is also clear that numbers on a bank or brokerage statement are subject to “vaporization” without cause, justice, or recourse.

From Zerohedge:

http://www.zerohedge.com/news/3-months-after-mf-global-bankruptcy-we-find-12-billion-or-more-client-money-has-vaporized

Economics, The Mint

Euro funding doesn’t pencil out

Rumors today that Greece would default on its sovereign debt were received with relative calm by the bond markets.  Now that Greece’s public debt is approaching 150% of GDP and is forecast to increase by at least 10%, even the most optimistic analysts, namely S&P, are coming to one inescapable conclusion:

Greece is in technical default.

This is news to no one in the world of finance.  The numbers in Greece haven’t penciled out for at least three years and have shown absolutely no sign of improvement.  Anyone with significant exposure to Greece has either sold it or obtained some sort of guarantee from the ECB and/or IMF that they will be made whole on their exposure.

Hence, the lack of panic in the markets.

For financial market participants, the guarantee of the ECB works as a hallucinogen.  Traditional analysis no longer applies once an infinitely solvent guarantor signs on to back the debt of a weak partner.  The weak partner is no longer seen as insolvent, but rather, devoid of credit risk.

However, 2012 is shaping up to be a tough year for the ECB itself.  With every cent of spare Euro liquidity fleeing to American shores, the ECB is now the lone ranger as its lending activity increasingly dominates the Euro money markets.

Assuming that it must fund a large majority of the Eurozone’s debt rollovers in in 2012, how many Euros will the ECB need to conjure up?  The rough tally is 740 billion euros worth of European sovereign debt.

Additionally, it is almost a bygone conclusion that the ECB will need to step in and buy the debt of European banks whose country’s sovereigns are under pressure.  This includes:

  • 25% of Irish banks outstanding debt
  • 20% of Spanish banks outstanding debt
  • 15% of Italian banks outstanding debt; and
  • 15% of Italian banks outstanding debt

To borrow an old but relevant metaphor, 2012 will be the year that the ECB’s wine, the Euro, turns to sewage.  Thanks to their unlimited swap line at the Federal Reserve, the US currency is likely to begin to smell funny as well.

Could this be why the FED funds rate has creeped up from its flatline the past few days?

No matter how you look at it, the 2012 Euro funding picture does not pencil out.  The sooner that Greece and the other insolvent sovereigns and banks declare the default that the markets have long since priced in, the sooner growth and hope will return to the Eurozone.

On the other hand, the longer the sewage is allowed to backup at the ECB, the greater the risk of a Euro currency collapse.  Nobody wants to see that, especially the FED.

Economics, Gold, Monetary Theory, Of Money and Metals, Silver, The Mint

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

1/23/2012 Portland, Oregon – Pop in your mints…

{Editor”s note: The following is a continuation of the series “Of Money and Metals.”  Please click here to view the Part I,  Part II, and Part III} 

Natural law is always operating, always demanding a balance of accounts in the real world, not simply on an accountant’s ledger or numbers on a bank statement.

It is then foolishness for anyone to assume that a central authority, no matter how clairvoyant, can properly estimate the money supply necessary for human economic activity to continue at the optimal rate, balancing both the quantity of debt and money to provide for both the present and future using all of the information which is collectively available.

It is for this reason that it is imperative that people be free to declare both what will serve as money as well as its value in exchange.  History has shown that, if people chose gold or anything natural as money, economic activity and the resulting benefits to society will accumulate so rapidly that the supply of gold will quickly act as a constraint.  If gold is money by decree, this becomes a problem. 

However, if gold has simply been chosen for use as money by the majority, the same majority will quickly and tacitly gravitate to a secondary natural source of money with which to augment the primary natural money supply.  Historically, this secondary source of money has been silver. 

Once economic activity further accelerates and the benefits continue to accrue to a larger portion of the population, the supply of silver will act as a restraint.  Again, if left to their own devices, the majority will quickly and tacitly adopt another item occurring in nature to be used as money.  Historically, this third source has been copper.

Yet even the supply of copper, abundant as it may be, will eventually serve as a restraint, and so on, and so forth.  Eventually, in this example of what we like to call “Free Money,” gold will tend to operate as a form of savings and settlement only in the largest of transactions, with silver serving as money at an intermediate level while copper would be the most widely circulated currency for smaller transactions.

The beauty of free money is that, should the supply of copper become a constraint, steel, nickel, or some other more abundant natural resource will take the place of copper for use in smaller transactions, and so on, so that the money supply, in a general sense, will always be perfectly suited for the rate of economic activity which is occurring.

It is important to note that, while history has shown a preference for metals to be used as money, in the free money (and by extension, free banking) theory there is no requirement that what be adopted as money be metal.  In fact, money can be anything that those participating in exchange bilaterally accept as payment for goods and settlement of debts.  As you will recall, the only thing that money should not be, by definition, is debt.

Yes, Mr. Cheney, Deficits do matter

 

While it is obvious that debt can be exchanged in the place of money for a time, as the past 100 years have shown us, common sense, logic, and natural law will demand that the debts which circulate be settled in real terms.  The creation of debt as money severely distorts economic reality and the more debt that is created, the greater the demanded settlement in real terms will be, regardless of how many times one chants the Keynesian mantra recently made famous again by former Vice President of the US Dick Cheney “Deficits don’t matter.”

The superiority of free money is that the money supply is free to adapt to the rapidly economic activity, which is nothing more than an expression of the changing wants and needs of consumers.  The money supply is not hindered by unnatural constraints which have nothing to do with economic reality and are imposed by what is at best an uninformed or disinterested and at worst a malicious monetary authority.

The current debt as money system, far from providing a perfectly elastic money supply, has created the economic equivalent of concrete, which is now hardening the economy instead of providing it with the much needed lubrication.  If this insanity carries on much longer, society will be shattered as economic reality takes a jackhammer to it.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for January 23, 2012

Copper Price per Lb: $3.79
Oil Price per Barrel:  $99.93

Corn Price per Bushel:  $6.20  
10 Yr US Treasury Bond:  2.07%
FED Target Rate:  0.10%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,677 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  1.50%
Unemployment Rate:  8.5%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  12,709  

M1 Monetary Base:  $2,167,800,000,000 RED ALERT!!!  THE ANIMALS ARE LEAVING THE ZOO!!!
M2 Monetary Base:  $9,805,600,000,000 YIKES UP $1 Trillion in one year!!!!!!!

Economics, Gold, Monetary Theory, Of Money and Metals, Silver, The Mint

Of Money and Metals Part III – Debt: The Barbarous Relic

1/19/2012 Portland, Oregon – Pop in your mints…

{Editor”s note: The following is a continuation of the series “Of Money and Metals.”  Please click here to view the Part I and Part II} 

As the world descended further into depression which eventually led it into the Second World War (Editor’s Note:  It should come as no surprise that the only two World Wars have come after the declaration that debt is money), The Keynesian adherents clamored for more debt as the only answer to the world’s economic ills.

What Keynes and his Harvard trained legions fail to comprehend is that the only permanent cure for an economic depression is to allow each individual to declare what he or she will use as money and allow market participants to coalesce around what at that time is best suited for the role of money.  For balance sheet recessions, such as the one the world is currently experimenting, are merely symptoms of a rigid money supply which has failed to keep up with the demands of a dynamic economy.

Under current theory, the government sacrifices the dynamic economy in the name of preserving the “integrity” of the monetary system.

When it is quite obvious that it is the monetary system that has failed, the government’s response can only be seen as idiotic at best.

What makes the situation of the past 100 years even more untenable is that money, instead of operating as a lubricant for economic activity, is more like concrete.  Such is the inherently destructive nature of debt as money. 

For the only rule with regards to money which is imposed as a matter of natural law is that debt cannot ever be money.  It is a concept so clear that it escapes most academics and government officials.

Now, the Keynesian indoctrinated readers of these words are no doubt dusting off the “silver bullet” of Keynesian theory:  That gold, which is widely held as the logical alternative to the “debt is money” insanity, is a “barbarous relic.”  In layman’s terms, Keynesian theory holds that any attempt to limit the money supply via natural means, the most popular being a gold standard (fixing the price of gold in terms of monetary units) will cause a deflationary spiral which will bankrupt the entire world.

The former "Barbarous Relic" - photo by Toi Mine courtesy of Wikimedia Commons

Even Adam Smith argued that the mining of metals for use as currency was essentially a lamentable waste of resources.

We could not agree with them more.  The limited amounts of gold in the world make it wholly unfit for everyday exchange.  Gold, rather, is generally agreed upon to be the most perfect savings vehicle that the world has yet discovered.

So Keynes, despite promoting a theory which sacrifices the yang (savings) and glorifies the yin (debt) is right after all?  Not quite…

Using the same logic with which the Keynesian so adeptly slays the gold standard, it quickly becomes obvious that by declaring that debt is money is not only a violation of natural law, it makes debt, rather than gold, the new barbarous relic.

Debt has a distinct disadvantage to gold in that it can be quickly and completely destroyed.  Once it is assumed by the majority that a certain debtor will not be able to make good on their debts, the debts owed by the debtor, and any money in circulation which is either directly or indirectly related to the existence of these debts, is destroyed.  For debt, at its base level, is a figment of the imagination until it is settled in real terms by the delivery of money in settlement of the debt.

It would hold, then, that debt, the new “barbarous relic,” is exponentially more dangerous than gold when used as money.  The reasoning is the following, while the quantity of debt in the world can be suddenly and permanently reduced, the quantity of gold, which is admittedly difficult to increase, is at the same time extremely difficult to decrease.

Yet even given the strong advantage of gold over debt as money, it is obvious that both the Keynesians and the gold bugs are sadly mistaken in formulating their ultimate solution to the eternal problem of the money supply.

When it comes to determining the proper money supply, Adam Smith’s invisible hand of the market can be seen slapping both Keynesians and gold bugs silly!

For the problem with declaring anything, be it gold, debt, or white elephants as money, has nothing to do with the fitness of gold, debt, or white elephants for use as money, rather, it lies in the act of the minority attempting to dictate what will be used as money by the majority.

Money, in a general sense, is a good of the highest order.  There is nothing in nature which states that gold, silver, seashells, or anything else must be used as money.  The historical association of gold and silver as money is the result of their superior fitness for the role of money.  It is simply a product of the collective wisdom of mankind, gleaned from experience as free exchange and the division of labor began to bring order to man’s chaotic surroundings.

However, just because gold and silver were superior in their role as money in the past does not necessarily mean that they enjoy some sort of divine designation as money.

Gold and Silver, like all things occurring in nature, are in limited supply.  The fact that they occur in nature gives them a distinct advantage over debt (which is simply a promise to pay in the future) in that debt, which is theoretically in infinite supply, quickly loses value against scarce real goods due to the fact that debt, in theory, enjoys an infinite supply.

Anyone can make promises to pay in the future, it is the function of debt markets to determine what those promises are worth today.  Ironically, the value of debt today is perilously tied to speculations about the money supply, which is in turn dependent upon the issuance of debt.  Thus, declaring debt as money provides the economy with yet another hindrance in that the debt markets are increasingly disconnected from their noble origins; the debtor’s perceived productive capacity.

It is clear that mankind is in a perilous predicament.  Will we take hold of the simple answer, which lies in free banking and free determination of what will serve as money?

More to come…

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for January 19, 2012

Copper Price per Lb: $3.80
Oil Price per Barrel:  $100.41

Corn Price per Bushel:  $6.06  
10 Yr US Treasury Bond:  1.97%
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,657 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  1.50%
Unemployment Rate:  8.5%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  12,625  

M1 Monetary Base:  $2,167,800,000,000 RED ALERT!!!  THE ANIMALS ARE LEAVING THE ZOO!!!
M2 Monetary Base:  $9,805,600,000,000 YIKES UP $1 Trillion in one year!!!!!!!