Economics, The Mint

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

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

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

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

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

The FED prepares to Leap to the Long end. Where will the water go?

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

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

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

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

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

Inconceivable!  Yet true.

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

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

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 12, 2011

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

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

Gold Price Per Ounce:  $1,676 PERMANENT UNCERTAINTY

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

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

Economics, The Mint

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

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

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

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

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

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

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

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

The Euro Prepares to Claim More Sovereignty

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

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

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

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

Are you one of them?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 11, 2011

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

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

Gold Price Per Ounce:  $1,663 PERMANENT UNCERTAINTY

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

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

Events, Portland

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

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

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

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

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

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

Who thought cows and tractors could be so much fun?

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

Your pumpkin is waiting!

Events, Oregon Politics, Politics, Portland

Occupy Portland: Widespread Discontent meets Acceptance in Portland

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

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

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

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

 

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

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

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

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

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

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

Events

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

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

Economics, The Mint

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

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

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

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

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

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

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

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

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

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

Why ask Why? Just stay away from the edge!

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

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

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

Debt is not money, the proof

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

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

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

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

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

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

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

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

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 5, 2011

Copper Price per Lb: $3.13
Oil Price per Barrel:  $79.51

Corn Price per Bushel:  $6.05  
10 Yr US Treasury Bond:  1.91%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,640 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.4%!!!   UP UP UP!!!
Dow Jones Industrial Average:  10,940  

M1 Monetary Base:  $2,052,100,000,000 RED ALERT!!!
M2 Monetary Base:  $9,511,300,000,000 YIKES!!!!!!!

Economics

A Chilling Coincidence in the S&P Chart

This chart came to our attention via the Business Insider Chart of the day.  Apparently it was produced by an analyst a Citi and is turning a lot of heads.  Three years on, the S&P closed yesterday at exactly the same level it did on October 3, 2008. After that, well, bad things happened.  Coincidence?

Economics, The Mint

If the FED is the only Lender of US Dollars, the System has Collapsed

10/4/2011 Portland, Oregon – Pop in your mints…

The dust is beginning to settle after what must have been a tense weekend for bank execs on both sides of the Atlantic.  We can only imagine that banks pulled out all the stops to somehow make their numbers for the third quarter end.  In a practical sense this meant putting the stranglehold on equity and commodity positions and hanging on to dollars with all their might.

The vacuum action in the dollar funding markets was so extreme that at one point it was rumored that US dollar funding for banks in Europe was apparently non-existent.  We speculated that banks were holding on to cash in the absence of clear direction from the Eurozone as to how they intend to bail out their large institutions and governments.

The action looks like a sumo wrestling battle royal on the edge of a cliff.

The FED came to the rescue and re- opened its swap lines with European banks to provide dollars and avoid widespread panic.  According to a report that we saw from Bloomberg, the FED had gone from its role as the lender of last resort to a role as the lender of ONLY resort.

We left off with a question which we will consider today:

Does the fact that the FED is the only institution willing to lend dollars indicate that the US Dollar system has technically collapsed?

On the surface, it would appear that the evidence points to just the opposite.  The US Dollar index has gone through the roof which would indicate a preference for dollars, making them more valuable.  Doesn’t this prove that the US Dollar is alive and well?

Bernanke Readies his Helicopters

Were the Dollar backed by something real, the above would be true.  However, in the current, insane, “Debt is Money” currency regime, it tells us quite the opposite.  The fact that the Federal Reserve, the creator of the current version of the US Dollar, is the only institution willing to lend said Dollars is in fact evidence that the system has failed.

It has failed because it is no longer self sustaining.  The willingness to take on new debt, which is the life blood of a debt based currency regime, is non-existent.  The usurers need fresh blood in order to sustain themselves and finding no new victims, are beginning to feed on each other.

Financial Institutions are attempting to hoard dollars on a net basis.  Instead of lending them to productive enterprises, they are paying down their dollar denominated liabilities.  In other words, the productive classes have begun to shun the dollar on a net basis and the ultra leveraged financial sector is beginning to vaporize as the productive debts are cancelled.

Financial institutions see this vaporization taking place at their counterparties and are unwilling to extend them credit on any terms.  The financial institutions which cannot meet their day to day funding requirements then turn to the Federal Reserve to lend them the Dollars necessary to meet their commitments.

The inter day funding action has, in effect, become a high stakes game of musical chairs.

While musical chairs is fun to watch, it is not evidence in and of itself of the collapse.  The evidence of the collapse emerges as we fix our gaze on the logical end of this vicious feedback loop.  The logical end is this:  The Federal Reserve ends up holding every worthless paper asset on the planet on its balance sheet which theoretically backs the dollars which it is emitting in exchange.  The banks, which are left with the dollars as their own “paper asset” and the Federal Reserve are left with staggering liabilities which they pass back and forth as investors, businesses, and consumers increasingly shun their paper.

For the moment, the world may have reached a peak in monetization, and the FED’s money machine is now backing up as the sewage of every bad loan on the planet begins to flood their balance sheet.

It is getting ugly.  How ugly?  So ugly that Bank of America’s website has been down for three straight days, presumably for technical reasons but avoiding an online bank run and forcing customers to pay $8 to bank at the branches come to mind as compelling technical reasons for a website failure.

Meanwhile, Europe is having their own “TARP moment” as Slovakian resistance is sure to be swiftly dealt with.  We know where that will lead.

Yes, the end of the insane system is approaching.  It won’t be long now until the authorities pull out their ultimate trump card, a wholesale change of the currency.  With nearly every government and bank on the planet heading to the poorhouse, it is the only trick that the currency regime has left.

Don’t fall for it, fellow taxpayer, for it too shall fail.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 4, 2011

Copper Price per Lb: $3.05
Oil Price per Barrel:  $78.31

Corn Price per Bushel:  $5.88  
10 Yr US Treasury Bond:  1.78%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,624 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.4%!!!   UP UP UP!!!
Dow Jones Industrial Average:  11,011  

M1 Monetary Base:  $2,052,100,000,000 RED ALERT!!!
M2 Monetary Base:  $9,511,300,000,000 YIKES!!!!!!!

Gold, Uncategorized

Watch “BBC Speechless As Trader Tells Truth: “The Collapse Is Coming…And Goldman Rules The World”” on YouTube

This interview on BBC is making the rounds.  A candid interview if I ever saw one. Protect your assets.  Be prepared!

Economics, Gold, Silver, The Mint

Reports of the FED as “Only” Lender of US Dollars, The Definition of a System Collapse

9/28/2011 Portland, Oregon – Pop in your mints…

We have taken a small breather here at The Mint.  What has occurred in the past week simply boggles the mind.  Precious metals have taken a beating and it is our guess that they will continue through tomorrow.  The most interesting reasoning for the drop in Gold and Silver that we have heard is that there will be an announcement on October 4th limiting short positions on the COMEX.

Guess who has a huge short position in silver that needs to be covered this week?  JP Morgan, to the tune of 121 million ounces.  We can only guess at the machinations but needless to say, it would be very convenient for them to be able to cover their positions at a discount.  Hence the increase in margin requirements at the COMEX last Friday which has shaken out the weak long positions this week.

Across the board in commodities, current prices reflect a rush to cash, not changing fundamentals.

Some interesting reading on the current, sorry state of employment in the US from US News:

15 Stunning Statistics About the Job Market

It is much worse than most imagine.

Other than that, chaos is reigning as the dollar funding markets for banks in Europe are apparently non-existent.  As September 30, 2011 approaches, banks are holding on to cash in the absence of clear direction from the Eurozone as to how they intend to bail out their large institutions.

In the meantime, the FED has apparently opened up swap lines (read printing presses) to provide dollars to these banks.  According to a report that we saw from Bloomberg, the FED has gone from its role as the lender of last resort to a role as the lender of ONLY resort.

We take this to mean that nobody is willing to lend US Dollars at any price to the largest banking institutions in the world.

Does this indicate that, at long last, the US Dollar system has technically collapsed?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 28, 2011

Copper Price per Lb: $3.21
Oil Price per Barrel:  $79.95

Corn Price per Bushel:  $6.30  
10 Yr US Treasury Bond:  2.00%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,610 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.4%!!!   UP UP UP!!!
Dow Jones Industrial Average:  11,011  

M1 Monetary Base:  $2,010,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,541,800,000,000 YIKES!!!!!!!

Politics

Watch 180

This is a graphic, powerful 30 minute documentary which is an attempt to open the public’s eyes to the moral problem of abortion.  It opened my eyes, will it open yours?

 

Silver

SilverDoctors: Silver Open Interest Drops Slightly to 108,858, Backwardation Holds Steady

Silver’s price manipulated, from $40 to $26 to ???  The blow off is nigh:
http://silverdoctors.blogspot.com/2011/09/silver-open-interest-drops-slightly-to.html?utm_medium=twitter&utm_source=twitterfeed&m=1

Economics

The Law of Diminishing Marginal Returns

Editor’s Note: Please welcome our guest contributor here at The Mint, Mr. Jason Holmes.  Mr. Holmes is a regular contributer at Debt Consolidaton Care and various other financial websites and has authored several e-books.  Without further adeiu, Mr. Holmes:

One of the popular laws in the theory of economics is the law of diminishing marginal returns. This law states that as the application of one factor of production is increased continuously, marginal product of that factor increases up to a certain point until it reaches a maximum and thereafter it begins to fall and eventually the marginal product of each additional factor of production becomes negative.  When the marginal product reaches zero level, total production can be said to have reached the maximum level.  When the marginal product of that factor is negative, total product starts falling.  This particular theory, as with many economic theories, is framed under the assumption that all of the other factors of production are kept constant.

One of the classic examples of the law of diminishing marginal returns is the use of fertilizers in agriculture. Increased application of fertilizers augments agricultural production, but only up to a certain extent. Once that point is reached, increased application of fertilizers no longer increases agricultural output, rather agricultural output starts declining.  Once the maximum amount of production is reached, the law of diminishing marginal returns starts operating and marginal increases in agricultural output begins to decline.  In the case of fertilizers, this occurs because with increased application of fertilizers, the fertility of the soil increases up to a certain extent.  However, as the application of fertilizer to the soil increases, the fertility of soil no longer improves, rather it starts degrading.  As a result, the agricultural production of the soil starts to decline. 

Another oft-cited example of the law of diminishing marginal returns is the addition of more workers on a car assembly line.  Up to a certain point, the addition of more workers results in the production of more cars. However, after that point, the addition of more workers no longer leads to the production of more cars. In fact, quite the opposite may happen.  Some workers may find others in their way making it difficult to perform their respective tasks while other workers may now have to wait to get access to a certain part, etc.  In this chaotic situation, the production of cars may actually start falling relative to the additional inputs of labor.

Many large scale examples of this law can be observed today.  In an attempt to expand or develop at any cost, the countries of the world have engaged in a widepsread unmindful use of resources. The time is approaching where we may soon see the complete depletion of valuable natural resources. The tremendous proliferation of the usage of petroleum products and natural gas threatens the environment.  Emissions of CO2, greenhouse gases and unchecked deforestation of timberlands have added to the danger of disruptive climate change.  Meteoric increases in the usage of cars and electronic gadgets have created some negative side effects as well.  As an indirect result, human civilization may be more vulnerable to various types of diseases and natural catastrophes.

These examples all point to the operation of the law of diminishing marginal returns. The law can also be applied to personal finance. If one takes on more and more credit card debt in order to pay off other existing debts, the consequences can indeed be grave and ultimately the individual may have to file for bankruptcy.  One  needs to be more disciplined and restrainted in their personal financial matters or they may also opt for credit consolidation to relieve the burden.  Discipline and restraint are advisable in all fields of life.  Otherwise, human civilization will  continue to be threatened as the day of reckoning approaches.

Jason Holmes is a regular writer with http://www.debtconsolidationcare.com/ and is also a contributor at other financial sites.  His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, ‘Take Creditors and Collection Agencies to Small Claims Court’ and, ‘My Story- From Depression To a Smile’.

Events

Watch “Ron Paul: Gov. doesn’t have authority to tell us what to do” on YouTube

This is why Ron Paul will be the next President:

Economics, Events, The Mint

A run on BNP, Europe’s Financial Collapse begins in earnest

9/22/2011 Portland, Oregon – Pop in your mints…

While it was a rough day for equity markets everywhere, in light of what is occurring, they (the markets) were amazingly resilient.  A testimony to how fast the monetary spigots at the Central Banks are running.

There are two events that appear to be on a collision course with destiny today (No, neither of them is the NASA space junk hurtling towards the earth).  It feels as if the world is reaching a sort of inflection point in modern history.  Perhaps a great awakening is about to occur.  Will people’s faith in Central Banking finally be broken?

The colliding events are the Palestinian bid for official recognition by the United Nations, scheduled for tomorrow, and the emerging institutional bank run on BNP Paribas.

The Palestinian situation needs no further discussion.  It is clear to most that it is an explosive topic to which the bid for recognition threatens to detonate, much in the way the Israeli Declaration of Independence ignited war in Palestine in 1948.

The Institutional run on BNP Paribas is an event that is occurring as we write and it is unclear how it will play out.  Reggie Middleton at the BoomBustBlog, is chronicling this event in real time.  If you are interested, we highly recommend following the event there.

Real Money Fleeing the Continent!

We have read reports of Lloyds of London, the famous Insurance Marketplace, pulling a great deal of its deposits out of banks on the continent.  We have also read reports of Siemens pulling deposits and parking them directly at the ECB.

Then there was the report of the ECB making an emergency loan of $500 million US Dollars to an unidentified bank (read BNP) with similar loans to other institutions in the cue.  It is clear that the banking crisis in France is dwarfing the ability for the French government to deal with it.

There is no use pointing out the many lessons that society will learn from this, for only one is expedient at the moment.  That lesson is that digital bits on a computer screen or numbers on a bank statement are worthless if the counterparty cannot make good on their commitments.

The run on BNP will intensify the focus on Western Central Banks, which have balance sheets that make BNP, BAC, and all of the other large sinking banks look good by comparison.  This is important because a good part of the world is to some extent a counterparty to the Central Banks.

Need proof?  Open your wallet.  If you have US Dollars or Euros, you are a counterparty to (owed money by) the Federal Reserve or the ECB, whose management is currently buying every worthless paper asset on the planet with leverage that is unimaginable for mere mortals.

Dollar and Euros are about to become extremely hot potatoes, which makes trading them for potatoes, spuds, or anything real, a real good idea.

Let us pray for the peace of Jerusalem, and that tomorrow passes uneventfully on all fronts.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 22, 2011

Copper Price per Lb: $3.45
Oil Price per Barrel:  $80.41

Corn Price per Bushel:  $6.50  
10 Yr US Treasury Bond:  1.72%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,736 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.4%!!!   UP UP UP!!!
Dow Jones Industrial Average:  10,734  

M1 Monetary Base:  $2,010,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,541,800,000,000 YIKES!!!!!!!

Portland

Reflections on the Stump on the Park Blocks

The other day, as we strolled down the Park Blocks between NW Flanders and Glisan, we came upon a stump.  Trees in this part of the Northwest are not uncommon.  Neither are stumps, for that matter.  Yet this was no ordinary stump; it was a large, low cut stump which bore a striking resemblance to Gondwanaland.

What was also striking about this stump was its location.  The Northwest Park Blocks, stretching from Burnside to NW Hoyt street along 8th Ave, are home to a great many oversized trees.  The trees stand, lining the blocks like a royal guard creating a corridor for kings and queens to pass.  The kings and queens of Portland’s NW Park Blocks represent all ages and walks of life.

The Stump: Evoking memories of Gondwanaland

These grand trees have observed and endured many a changes in their surroundings as Portland the frontier town has grown into the pleasant city which we now enjoy.  The trees, circa 2011, enjoy the delight of children racing through the playground, the musings of men and women as they commune on the many benches lining the blocks, and the gentle, respectful pace of both car and bicycle as they quietly traverse the paved portion of the blocks.

The trees serve as a constant reminder to the contemplative passerby that our noble lives are but a whisper on the winds of time.  Much of what one does will be forgotten, and in an age where information is abundant but wisdom is in short supply, the trees offer a humble reminder that in order to stand tall, one needs roots which run deep and branches which extend to embrace.

This day, amongst the grandeur and wisdom which the trees continuously display, the stump served as a reminder that even the grandest of trees can be laid low on a temporal whim.  There is nothing to gain by lamenting its passing.  Rather, as with all loss, we must take the opportunity to pause and reflect on our daily actions.  Perhaps the stump’s resemblance of Gondwanaland is not an accident, for it offers a glimpse of the eternal time in which everything around us yearns to live.

Economics, Politics, The Mint

Markets go up, Slovenia goes down, Dissing the State, Embracing Anarchy

9/20/2011 Portland, Oregon – Pop in your mints…

The Stock market is absolutely resilient in the face of news ranging from bad to UGLY.  Presumably, the slow motion debt market collapse occurring in Europe is priced in, and it may be this very collapse that is driving money into US equities.  In the insane “debt is money” system, the money can only go so many places, and there is currently so much money sloshing around that it is a wonder everything isn’t going up in price.

Oh, wait, it is!  The CPI came in at 0.4% for August.  Nothing to write home about but at this pace the annual CPI could hit 5%, well above the FED’s 2% target.

And we haven’t seen anything yet.  Tomorrow, the Federal Reserve will meet and be expected to “do something.”  Lately, “do something” has meant that the FED offers to throw perfectly good Federal Reserve notes at various forms of bad paper issued by companies and governments who never intend to make good on them.

At this stage in the game, it is now a given that if perfectly willing market participants won’t buy the paper, surely the FED must do it.  “So what?” say you, “Let the FED waste its own money!”  If only it were that simple, fellow taxpayer.

Unfortunately, the FED’s money, by decree, is everybody’s money.  Every bad decision by the FED reduces the purchasing power of every dollar holder on the planet, making nearly all of us involuntary shareholders of this worthless enterprise, and management at the FED has been making some very bad decisions with very large sums for about four years now.

As a concerned involuntary shareholder of the FED we are compelled to offer the following unsolicited advice:  Why not just wait until January, when the 0% FED funds “trickle” their way down to Main Street?  Then things will really be interesting.  That is when the US Dollar in its present form will go the way of every other paper currency in the history of mankind. 

Fellow taxpayer, prudence demands that one make immediate plans to replace anything that depends upon the value of the US Dollar with something real.  By the time the FED gets around to doing it for you, by introducing a New Dollar, current inaction will have caused anyone with faith in the dollar to suffer horrendously tremendous losses in relative purchasing power.

Back in the rotting old world, to quote Nabokov, the Euro debacle just became more complicated as the Slovenian government failed a confidence vote.  The President is now left trying to cobble together a government and the rest of the Eurozone will presumably have to wait at least 30 days to get Slovenia’s approval for the next round of good money to be thrown at Greece.

It is useless to point out that the Eurozone governments, like their American counterparts, are simply throwing good money after bad.  As we have observed here before, throwing money at failing enterprises is their only solution.  Besides, they have banking interests to protect.  Soon they will be spreading propaganda that ATMs won’t spit out Euros and the world will end if the Greeks are not supported.

That may be true, but these unpleasant outcomes will eventually come to pass no matter what the Euro FEDs do.

This is how the State, which by definition can do nothing but destroy wealth, operates.  Western societies, and dare we say, the entire world are now beginning to suffocate under the weight of the current form of welfare/warfare state which exists to make promises on behalf of its productive citizens to its unproductive citizens.

Then, after enslaving the productive citizens, the State then makes promises to support the banking and military interests in order to ensure that the productive citizens remain enslaved.

Is Anarchy the Answer?

At some point, each citizen decides that they are either better off becoming an unproductive citizen, working for the State taskmaster as a banker or provider of “security”, or fleeing beyond the State’s ability to enslave them.  Western society is quickly approaching the tipping point where a majority of its productive citizens will be forced to make this choice.

Faced with such facts, an intelligent fellow taxpayer such as yourself is surely asking (or should be asking, if we may prompt you), “Isn’t there a better way?”

In other words, is the State really necessary?  Today we read a brilliant essay on this very subject by Stefan Molyneux.  We encourage you to peruse it at your leisure.  You can see it by clicking on the link below:

The Stateless Society – An Examination of Alternatives

If you are limited on time, it is enough to say that Molyneux lays out compelling, logical arguments about how the free market would more effectively take care of the tasks which are currently relegated to the State.  Specifically, he examines three activities which pro-State apologists claim that the free market will not solve on its own, making the State’s existence a necessity:  Dispute Resolution, Collective Services, and Pollution.

After reading Molyneux’s arguments, it seems that now more than ever that embracing Anarchy is the answer to what ails society.

Much more than simply the answer, it is clear that the true chaos in not created by the Stateless Anarchist model, rather the present chaos is a product of entrusting the State with too much power.

How else can one explain how every present effort the Government uses to ”improve” its citizen’s lives serves to collectively impoverish them?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 20, 2011

Copper Price per Lb: $3.76
Oil Price per Barrel:  $86.43

Corn Price per Bushel:  $6.90  
10 Yr US Treasury Bond:  1.94%
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,805 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.4%!!!   UP UP UP!!!
Dow Jones Industrial Average:  11,409  

M1 Monetary Base:  $2,101,100,000,000 RED ALERT!!!
M2 Monetary Base:  $9,540,500,000,000 YIKES!!!!!!!

Fresh ideas on Economics, Monetary Theory, Politics, and Less Pressing but Equally Entertaining Matters for the English and Spanish speaking worlds