We were fortunate to have the video below brought to our attention recently. As you can see, this brilliant video presentation of what is wrong with the current monetary system does in 30 minutes something that we have taken lengthy stabs at expressing via the written word over the past three years, and it does so with some nice animation to boot!
Enjoy this presentation of “How Currency is Made, How Debt is Created, and How you are Impoverished,” the fourth video in a series on the monetary system courtesy of Liveleak.com:
We are especially fond of the scene where the workers shovel the currency into the piggy bank, only to have a large bird swoop down, pick it up, and fly it to the offices of the tax authority. It is truly something that nearly all of our fellow taxpayers can related to, and this depiction drives the point home.
For better or worse, this is the monetary and taxing regime in which we live. Getting out of it is as simple as changing your mind with regards to such matters. The difficult part is changing the minds of others so that meaningful advances towards monetary freedom can be made. For if you act alone, you are merely a prepper, but if you act in concert with all of those in your community and circle of trade, you are a history maker.
One way or another, we will all find ourselves in the latter camp, but, like campsites on the fourth of July weekend, the best spots will go to those who get there early. Will you be one of them?
The New Year has come according to the Gregorian calendar, and we wish our fellow taxpayers a happy and healthy 2014. We can hardly contain our excitement, as the calendar change seems to have awoken the slumbering giants of economic progress who have been holed up the past five years.
As an aside, if you are in the Portland area, tomorrow evening at Good Samaritan Ministries in Beaverton there will begin an important series of Bible classes at 6:30 pm. For those who are just now joining us, at the beginning of each calendar year, we choose approximately ten books of the Bible to be taught on and teach one of them each Wednesday evening until the 10 are complete, wrapping up the series of classes sometime in March.
The classes are unique in that each year we are opening the Bible as if we have never opened it before, throwing out preconceived notions and opinions and letting the Bible study us, not the other way around as is the common practice in much of Christendom, where the faithful study the Bible, as if we had something to add to it or the Bible required our approval. It is a simple juxtaposition of subjects that makes all the difference. We do not study the Bible, the Bible studies us.
Starting from this place, the teaching is fresh and earth shattering every time, for all who are in attendance become both teacher and student in this unique format. Again, the series begins tomorrow evening, January 8th at Good Samaritan Ministries in Beaverton. Our assignment this season is on Deuteronomy, and we will be allowing it to study us in mid February.
Its 2014: Just do it
Janet Yellen becomes the first woman to chair the Federal Reserve
2014 is setting up to be an extremely prosperous year, and, now that Janet Yellen has been confirmed as the Federal Reserve’s first Chairwoman, what could possibly go wrong?
The answer, of course, is many things. The world’s economy is built upon a shaky premise and the obligation to use debt-based currency brings with it a whole slew of unknowns that may become known over the next several months, such as, “what happens when borrowing and lending of a debt based currency become so disjointed that trading in said currency becomes not just unpalatable, but nearly impossible?” or “what happens when a $2.2 trillion dollar corporate cash hoard gets deployed all at once?”
The answers to these and other burning questions are likely to reveal themselves over the next several months.
Here at The Mint, we have been busy churning out proposals and other documents in hopes of attracting a portion of the downpour of cash that awaits those of us just beyond the spigot of the Federal Reserve System, hence the lapses in our faithful correspondence.
As we alluded to above, it will be an exciting year and one in which our broad advice is once again best encompassed in the three words made famous by a neighboring company:
Just do it.
If there is something you have put off, a dream, an idea, a plan, 2014 seems like as good of a time as any to execute it, the wind is at your back in terms of monetary measures. There is more than enough of it to go around, and were the money supplies of the world not centrally managed in what is an essentially Socialist system, it would be more evenly distributed throughout the economy by now.
As this is decidedly not the case, prepare to see large scale dislocations exacerbated by the widespread confusion surrounding the newest provisions of the health care law taking effect which will be most noticeable in the fact that getting an appointment with a medical provider will simply not be as easy as it has been in the past.
In other words, you can give everyone the right to health care but you can’t create doctors and nurses to provide said care out of thin air.
For this reason, we drink to the health of all our fellow taxpayers as the earth begins its latest run around the sun on the Gregorian calendar. The odds are it may be the only thing one needs to maintain in order to prosper this year.
As 2013 winds down, it must be acknowledged that in the financial and monetary world, the story of the year has been crypto currencies. Our own awareness that Bitcoin may be something more than a passing fad, our monetary epiphany, if you will, came in March of this year, when we were contacted for assistance in forming a business plan for an exchange. The episode, while it has yet to be fully capitalized on, caused us to look deeply into Bitcoin.
Our Bitcoin Guide Available at Smashwords and Amazon
What we found was astonishing. You can read the details in our eBook on the subject but the jest is that it is digital gold.
As the crypto currency gained in price and popularity, many have been the detractors who have dismissed it on the grounds that it is “nothing”, or a “Ponzi scheme.”. What such detractors fail to realize is that it is they that do not comprehend the very nature of money.
Money, in any form, is nothing more than a concept. All that Bitcoins do is capture this concept, that we refer to as the monetary premium, in its purest form.
JPMorgan Steps Into the Fray
The latest news on the crypto currency front is that JPMorgan is dusting off a patent it filed in 1999 in what is surely a heavy handed effort to exert its primacy in the crypto currency space. Whether or not they will succeed remains to be seen, but one thing is clear, the digital currency space is divided into those who want to mainstream these currencies and being them under sovereign control, and those who do out.
These types of philosophical divisions are as old as time itself, that of the anarchist and the statist, and the schism will remain, though the thought of anarchists and statist sharing a blockchain is interesting indeed.
Dogecoin
Another development worth following is the rise of the Dogecoin, which is all at once a joke and a serious foray into the crypto currency space. You see Dogecoin is one of many cryptos that we foresaw coming into existence back in April and is further proof that the fiat currencies of the world are wholly inadequate and act as a restraint on human trade rather than a facilitator of it, which is really their only redeeming quality.
It is a beautiful irony that a fellow Portlander had a hand in creating it.
Why Long Term Unemployment Benefits Must be Extended
Those who have suffered through The Mint for any amount of time are likely aware of our Libertarian and Anarchist philosophical sympathies. As such, it may come as a surprise that we believe that most Social Safety nets should be maintained. As such, we think that lawmakers are making a grave error in failing to extend the emergency extensions to the Federal unemployment programs that have recently expired.
It is not that we champion sloth or laziness, as our position may cause some to assume, (though we admit that at times, our own inner-laziness gets the best of us).
Our reasoning behind this position is that poverty, joblessness, the skyrocketing cost of living and the like are largely a result of the current, insane debt based monetary system in which the United States and much of the world have been forced to live for over a century now.
As one looks back on the origins of what has become known as the Social Contract, it must be noted that they occurred in the 1930s after the great depression had ravaged the country. What the politicians realized was that they had a very big problem on their hands, the workforce was severely “dislocated,” to use today’s terminology. What they did not realize that the cause of this was the currency act that had been signed back in 1913, when debt, in the form of Federal Reserve Notes, became money.
The mandate for the American populace to use this system amounted to a cosmic shift in everything the American workforce knew about money and how to make it. The economic rules had been turned on their head, and it would take a very long time for an honest and hard working people to understand that in the new system, the only way to get rich was to severely indebt oneself.
Indeed, today many still do not get it. However, the debt based currency system must keep growing in order for it to remain viable, meaning that contrary to the beliefs of some, the Federal Government will always run a deficit, or at least strive to, and the largest companies will be the ones who are able to indebt themselves faster than their rivals and convince others to do so.
Using debt as currency changed the entire societal paradigm, making Social Safety nets a necessary part of the landscape, not because people were better off or well cared for as a result of them, rather, because the debt based currency system requires every member of society to participate in order for it to perpetuate itself. Even those who are unemployed must be given some currency to circulate so that they stay attached to the game.
Otherwise, if too many of them stayed out of the game for too long, as is the case now with youth in much of Europe and even here in America, they may just realize that there is much work to be done outside of the currency system, and that, in fact, the debt based currency system acts as a giant straight jacket on human potential.
If they dwelt upon the above clever metaphor, as you may find yourself doing now, fellow taxpayer, they might understand that Bitcoin, Dogecoin, and other crypto currencies are the latest attempt by humanity to break out of the straight jacket.
If efforts to hinder them, such as JPMorgan’s patent filing, ultimately fail, as we believe they will (at least in practice), the straight jacket of debt based currency will be off and the systems of the nation state which supported them will become relegated to the second class status they so richly deserve.
The very concept of Unemployment is made necessary by debt based currencies, as such, it is right that they should provide Safety nets to catch those who fall out of the workforce. At this stage, it is inconceivable that the current Congress would cut these benefits, for to do so is to plant but one more nail in the coffin of the current debt based currency system, and to encourage a new and better understanding of money, one that will benefit both humankind and the creation itself.
It is Christmas, God Created a Child – A Christmas Poem inspired by a revelation given to Bettie Mitchell regarding why God saved humankind in the most unusual manner that we celebrate during Christmas.
It is Christmas, God Created a Child
It is Christmas,
a babe in a manger lay,
Why has He come?
The reason of the mystery revealed.
“Adoration of the Shepherds” by Gerard van Honthorst, 1622
In the beginning,
God created them, man, then woman,
What would they do?
He walked with them in the garden.
Their betrayal,
broke His heart, and He sent them away,
with a gift of clothing,
the first sacrifice, but not the last.
God left them,
He pondered what went wrong,
and how to make it right again.
He watched them from afar, as a nervous parent.
He watched,
as they conceived and bore children,
outside of the garden,
the results were disastrous, murder, betrayal
He sent a flood,
to destroy them all, to wipe the earth clean,
for the earth was innocent,
He wrestled with the implications, and saw Noah.
He would allow them to live,
Abraham confirmed what he saw in Noah,
Humankind still loved Him,
Yet they were so evil, how could He come close?
Then it came to Him,
Like a muse from below, for in the beginning,
In the garden,
They were perfect, they were His, and they were adults.
He would create a child,
not cursed, as those outside of the garden,
but perfect,
As Adam and Eve were, in the beginning
He inhaled,
and breathed life into the darkness,
it was perfect,
They must see how to live, from cradle to grave, our perfect union
The perfect end,
The only way to blot out, the transgression in the garden,
Here at The Mint we are preparing for a record-breaking year in 2014. As we look out upon the horizon, we see that the eternal tension between inflation and deflation that is the bane of the insane debt is money monetary system is beginning to subside. While many at this point are standing on the beach watching the monetary tide recede to an unimaginable extreme, those who watch the weather know that this phenomenon is but the precursor to a tsunami.
Inflation will soon be here, and it is time to adjust revenue targets accordingly.
We make this forecast not out of any sort of clairvoyance, but largely as a hunch. The Federal Reserve, which just passed its 100th anniversary and appears to be going strong, has no choice but to inflate, as it is their only tool and default bias.
What is changing in 2014 are the Federal Reserve’s tactics. The FED will spend much of 2014 and beyond fighting inflation as a matter of policy. Each coming policy, such as the recent $5 Billion/month token (or courtesy) taper that was recently announced, in theory will serve to reduce the monetary base. What many do not realize is that the monetary base will not shrink as a result for at least three and a half years.
At this point our long-suffering readers are welcome to point out that The Mint was wrong. We had predicted that the Fed would increase the target rate before tapering, as the target rate was more of a random subsidy while the taper recipients have come to expect it as a form of state banking welfare. We humbly admit that, given the latest announcement, we were technically wrong.
What the taper reduction is accomplishing, in practice, is a form of marginal stimulus. The Fed is herding the banks and other lenders out of Treasuries, as holding too many Treasuries in a taper environment is categorically inadvisable. Some reports have the Fed representing 80-90% of the market for treasuries. As they scale their participation rate back via the taper, Treasuries will be forced to find a market price, and if what happened to the 7 year after the announcement (a roughly 264 bp drop) is any indication, the market has an opinion of Treasuries that is quite different from those held by the Fed.
The point is that, as the banks have the spigot open at .09%, this money will, at long last, find its way into the hands of credit hungry consumers and businesses.
The giant of the US Economy is waking up. Part of the activity can be attributed to the Christmas season, however, in early 2014, much of the initial uncertainty surrounding Obamacare will begin to sort itself out, and both businesses and consumers will find themselves both willing and, for the most part, able to do what they do best: spend.
The Fed has worked tirelessly to shore up the monetary base for five years, and, despite what one may think of Yellen’s dovish bias, she is likely smart enough to realize that the best shot the Fed has now to stimulate the economy is to appear to head to the closet to pick up the liquidity mop.
The Importance of Tribute, and the Fed Alternative
After 100 years, the Federal Reserve has done much. Their most amazing exploit, one that is lost on most, is that they made the US and much of the world believe that debt was money, and indeed, a great deal of the monetary premium has gravitated to Federal Reserve notes.
Clairvoyant Political Cartoon circa 2012 by Adam Crozier
{Editor’s Note: Click here to see more clairvoyant political cartoons circa 1912, just before the Fed was granted its monopoly on the US money supply}
In the end, what is a Federal Reserve note? It is a Central Bank liability, which is an irredeemable hot potato that at best represents an indirect claim on wealth but in the end maintains its allure on the part of those forced to transact in it because the US Empire requires that all taxes be reported and paid in them.
Think about it, the hammerlock that any currency has on a citizenry, no matter how putrid its fundamentals may be (and they don’t get much worse than the paradox of debt based money), is that the sovereign requires tribute to be rendered in said currency.
The logical proof is this, were the US Government to require payroll and income tax remittances in Euros or corn bushels, how long is the Federal Reserve Note likely to retain its value and usefulness in trade?
The requirement to use a monetary unit or currency in rendering tribute is a important component of what we call the “monetary premium,” which is loosely defined as the portion of aggregate value that something carries related to its relative function of a transmitter of value. It is embedded in the supply and demand dynamic of all quasi-monetary instruments, such as gold, silver, and most recently, Bitcoin and other crypto currencies.
While most fix their eyes on credit markets to determine the value of currency in trade, they would do better to observe the Monetary Premium, for it represents the collective hopes and dreams of humankind in the material world, and where it goes, relative riches follow.
For this reason, the Federal Reserve and other Central banks of the world will fight to the last (insert your preferred noun) to retain a share of the monetary premium, for it is their only value proposition in what is a terminally defective, if not purposefully fraudulent, product mix.
In 2014, the Fed will lose its iron grip on the Monetary Premium and take its place amongst currencies relegated to tax remittance and nothing more.
Bitcoin’s resilience is but one item in a long list of evidence that the monetary premium attributed to central bank notes is attaching itself to other indirect claims on wealth and items representing unencumbered claims on wealth.
The economic activity that this tacitly coordinated shift out of Federal Reserve notes will cause in 2014 and beyond will be breathtaking. They will call it inflation, and it will be the Fed’s death knell.
We are settling in for a long, productive winter here at The Mint. While there is a whirlwind of activity outside, the key to maintaining one’s sanity is to maintain an internal balance, no matter what happens.
The best way we have found to do this is to maintain a state of constant rest, the eternal Sabbath, if you will, together with the creator in the very core of our being. Rather than experiencing God in one’s mind or even heart, true peace is found when you experience Him in the abdominal region, often referred to as the soul.
It was in the midst of this rest today that we had a profound revelation. While the revelation was centered on the present Bitcoin phenomenon, it has implications far beyond the Bitcoin, and, for those of us who are paying attention, may reveal something of the nature of the divine as well as that of humankind.
Longsuffering readers of The Mint know that our musings on Monetary Theory often lead us to dabble in Eschatology, the study of what are commonly called the end times in world religions that hold apocalyptic worldviews. Today’s revelation, as you will see, is a further dabble into this inherently speculative subject.
Before we dive into today’s revelation, we must provide a bit of context with regards to Bitcoin.
Bitcoin, an Unregulated Ponzi Scheme
We have watched the rise of the Bitcoin/USD ratio, which now stands near $909, ever since April. In this short time frame, we have observed that every time there is a surge in the Bitcoin price, it attracts an increasing amount of attention, both positive and negative. As it is with most things in life, the negative opinions are played at a higher volume. In the case of Bitcoin, those who hold it in disdain throw around two flavors of arguments:
1. It is a Ponzi scheme and, 2. There is no regulation of it.
The detractors are correct on both counts, however, what they fail to recognize is that the same is true for fiat currencies, equities, and all other indirect claims on wealth.
“But what about the FED, SEC, the Government, etc.? Don’t they regulate currencies and equities?” come the shrill voices from the public.
Again, this rebuttal is correct if one takes the narrow view of both of the unregulated Ponzi schemes in question. The Federal Reserve does attempt to regulate its Ponzi scheme within the framework of the IRS and Banking system, and the SEC attempts to regulate various Ponzi schemes within its purview on various stock exchanges.
However, the unregulated universe in both equities and currencies is much larger than most realize, and Bitcoin’s apparent lack of regulation stems from the fact that it is a mere four years in existence. Given time, sovereign governments and Bitcoin exchanges will begin to erect a regulatory framework for the Bitcoins that pass amongst their citizens or participants. Indeed, these efforts are already underway.
The narrow analysis of Bitcoin that its critics lean on is that Bitcoin is either an equity or a currency. In this faulty analysis, they point to the fact that as an equity or currency, there is nothing immediately recognizable within its framework that would lend it valuable. Therefore, they state smugly, Bitcoin is a Ponzi scheme to be avoided and derided, case closed.
Yet supposedly educated, computer literate persons are willing to pay $900 USD per Bitcoin despite the risks. What gives? What the failed analyses of Bitcoin do not recognize is that Bitcoin is neither a currency or an equity, but rather the purest reflection to date of something that is pursued by nearly every person on the planet the world over on a daily basis in some form or another.
It may come as a shock to you, fellow taxpayer, and indeed much of humankind, that a great majority of humanity pursues what Bitcoin represents without even knowing how to articulate what they are pursuing.
While a portion of Bitcoin’s value stems from its functionality as an open source international money transfer channel, we believe that most of Bitcoin’s value stems from the fact that it is the purest reflection of what we call the Monetary Premium. In an academic sense, the Monetary Premium is the relative increased value attached to an item that is attributable to a specific, ephemeral part of the item’s value that is related to its function, no matter how minimal it may be, as money.
As the common person’s view of money is generally limited to fiat currencies, it is understandable that most would not know what makes a fiat currency act as money. It then follows that Bitcoin, which is the purest form of the Monetary Premium, would be widely misunderstood by most of humankind.
Bitcoin, The Monetary Premium, and Eschatology: The Revelation
With the lengthy but essential matter of defining what Bitcoin is out of the way, the revelation that follows should now be clear.
The revelation is best presented in the following bullet points:
1. Bitcoin may be the purest reflection of the Monetary Premium known to humankind.
2. The Monetary Premium is manmade and cannot be seen.
3. Pursuit of the Monetary Premium in some shape or form is what a majority of humans dedicate a large portion of their daily activities towards through the acts of producing, consuming, and investing.
4. When God warns of the choice between God and money, as He does in Matthew 6:24:
24 “No one can serve two masters, for either he will hate the one and love the other; or else he will be devoted to one and despise the other. You can’t serve both God and Mammon.”
The Mammon (money) being referred to is not an inanimate object, but rather the Monetary Premium.
5. The Ultimate choice between full, dedicated worship to the invisible God and continuing to pursue the invisible manmade Monetary Premium will be presented to those who are still present on earth with the ultimatum presented to mankind described in Revelation chapter 13:16-18 (for those who are familiar with eschatology, this last statement makes it clear that we hold a pre tribulation rapture view):
16 He causes all, the small and the great, the rich and the poor, and the free and the slave, to be given marks on their right hands, or on their foreheads; 17 and that no one would be able to buy or to sell, unless he has that mark, the name of the beast or the number of his name. 18 Here is wisdom. He who has understanding, let him calculate the number of the beast, for it is the number of a man. His number is six hundred sixty-six.
Click the image above to read more on Eschatology and Money
What does it all mean?
The Bitcoin is not the Mark of the Beast or any such thing. However, Bitcoin’s unique reflection of the Monetary Premium is illustrative for purposes of understanding money in Biblical contexts where the worship of money is juxtaposed with the worship of God, as it is in Matthew 6:24, and the implications for such an understanding within the context of eschatological studies, specifically when pondering the events described in Revelation chapter 13.
Beyond the monetary realm, Trusting Jesus today is the single most important step that one can take in the search for inner peace. For chasing the fickle monetary premium around will never allow for rest, peace with God can be found in Jesus. He is closer than you think, waiting to commune with every one of us in the eternal Sabbath.
As the most recent arctic air blast rushes across the Northwest, the economies of the world appear to be at a crossroads. The coming three months are critical in determining humanity’s path forward. Will we cower with fear or step bolding forward with faith and courage into the unknown?
The past five years have taken a toll on the psyche of the financial markets and those who participate in them. On one hand, the cards have been stacked for raging inflation to take hold and decimate the debt based currencies the world has come to rely on, on the other, this obvious outcome has been stayed because 1) it is obvious, meaning bets are disproportionately placed on the side of inflation and 2) in a debt based currency system, new currency creation by definition means new debt creation, as debt obligations have rolled over into lower interest obligations over the past five years, a heavy undercurrent of deflation has been running against the inflationary pressures.
It is becoming clear that the ACA is having a more dramatic impact on the US landscape than anticipated. The good news is that after a few months, most consumers fates will have been sealed, for better or worse, and many will be able to carry on. By extension, many companies will be ready to deploy the capital that they have accumulated over the past several years through cost cutting and debt restructuring (for lack of a better term). Again, the table is set for inflation, will the scenario play out?
Hugh Hendry seems to think so, ceding the obvious case that inflation in asset prices is to be a part of the investment landscape for the foreseeable future. In his December 2013 Eclectica investment letter, which can be read over at Zero Hedge via the link below, he appears to be throwing in the towel on the bear case. In doing so, he makes a revealing statement on the current state of equity markets:
“…I have had to put aside qualitative analysis and be in this trending market.” as “…Playing it safe may be the greatest risk of all.”
Ultimately, the case for inflation or deflation rests with the consumers of the world. Will they cower in fear or step out boldly in faith and courage? We believe the next three months will yield the answer to that question, and that they will step out boldly.
What’s with the Bitcoin Roller Coaster?
Bitcoins, which continue to garner attention on numerous planes, as a novelty, a speculative vehicle, and the answer to creating a worldwide currency and payment system, has seen its price swing from $550 to $1,200 and land around $760 at this writing.
The price swings are normal for such a small, relatively illiquid market. Any large scale adoption event, which in the final analysis, is the driver of Bitcoins’ price at this stage, triggers a sell-off by those who have learned to speculate in the crypto currency.
The latest large scale adoption event in question this past week has been the increased interest in the currency by the Chinese.
In a recent interview, Bobby Lee outlined the reasons he believes that Bitcoin has garnered considerable interest in China over the last several weeks. Lee has a front row seat to this phenomena from his post at BTC China and cites two main reasons that the Chinese have taken a keen interest in the crypto currency.
First, the Chinese are, on whole, extremely gifted in math and sciences, which makes the concept of a digital currency fit into the cultural nomenclature more readily. As simply understanding what Bitcoin is may be the biggest hurdle to adopting and using it, the Chinese have a cultural leg up on many other cultures.
Second, and perhaps more importantly, is that the Chinese are net savers. As such, they are constantly seeking out investments and places to park their savings for a rainy day. Bitcoins appear to offer a strange form of asset protection, despite the breathtaking volatility in their price, as they are limited in the number that will be created by an algorithm.
Finally, one must remember that China does still impose capital controls on its citizens. Bitcoin, while not its chief aim, gives the Chinese investor a handy tool by which to move his or her capital out of the country with their mobile phone or PC. Something that simply cannot be accomplished with a bank account.
The Chinese, like the Cypriots and Argentines, are finding their culturally specific use for the world’s most popular crypto currency, and the price action, which has ranged from $1,200 USD to $700 during the past 72 hours, reflects just how volatile a freely traded, finite global currency can be.
Bitcoins are a rough equivalent to gold in the digital realm, and, as Lee notes, volatility is not going away any time soon. Yet if one can see past the price movements to understand the value in what is essentially the world’s largest collective math problem, one will see that Bitcoins at any price serve a very important purpose: They capture the monetary premium in action.
“It is winter, a time to pause, the driveway is half shoveled out, but I lay down the shovel, and I pause to enjoy this moment, after all, this is my first heart attack.”
A Poem recited by Red Green during The Winter of our Discount Tent show segment
For those who were fortunate enough to see Red Green in his prime, circa 1991, the words “it is winter” immediately bring a sense of comic anticipation to mind. Really, the mere sound of the man’s voice will bring a smile to your face if not cause one to break out in laughter.
Red Green, a Canadian, brought a unique brand of humor to the late night airwaves. While there is really nothing to compare it to, if one were to imagine a cross between Al Bundy (Married with Children) and Crocodile Dundee in Canada doing a variety show against the backdrop of an ongoing storyline in his men’s lodge, you would be in the ballpark.
Yet as the poem above hints at, you never quite knew what would come out of Red’s mouth, but his dry delivery and lighthearted machismo made nearly anything the man said pass for hilarious. (see the poem read live by Red below and see for yourself).
It is winter, and while any number of narratives continue to fill the financial landscape, they all have one thing in common: Inflation is here to stay and the Federal Reserve and it cohorts around the world are not about to do anything stupid, like raise rates or end bond buying programs, at this stage of the game. From their standpoint, risks are on the side of deflation, no matter what your grocery bill is.
In the context of this stance by the caretakers of the world’s currencies, a developer known as Satoshi Nakamoto launched the Bitcoin Genesis block back in 2009, like a self replicating message in a bottle to the world that reads “try using this as money.”
Today, as we near the end of 2013, it is becoming clear that the message is reaching quite a few individuals, and that they are taking action. The message came to us in March of 2012, when the Bitcoin/USD ratio hovered around $5-$16, and it took us until March of 2013, when the ratio was near $150 to act upon it. The ratio now sits at around $1,100 and has garnered so much attention that a US Senate committee called a hearing in a feeble attempt to understand what it is and why it is valuable.
As anyone who has followed such hearings can attest, they rarely, if ever, shed light on the subject being discussed, and it was clear in watching that the Senators who attended as well as their expert witnesses have no idea what Bitcoins truly are.
Misinformation regarding Bitcoins abounds, indeed, a discussion we have been following in one of our Treasury groups has drug on for weeks with the participants vacillating from the stance that Bitcoins are a good idea and viable fiat alternative to them being a Ponzi scheme. Our take is that those who are obviously confused are not hindered in their understanding of what Bitcoins are as much as they are hindered by their failure to understand what money is in the first place {Editor’s Note: If you count yourself among the confused, stay with us for a spell or pick up a copy of one of the following publications: What is Money, Of Money and Metals, or Bitcoins: What they are and how to use them}
Our take here at The Mint is twofold. First, Bitcoins are clearly a Ponzi scheme, however, they are a self-limiting Ponzi scheme with no clear beneficiary, and in these respects are superior to other widely accepted Ponzi schemes such as equities and fiat currencies, which share similar characteristics to that of Bitcoin in terms of representing and indirect claim on wealth.
Second, and more importantly at the moment, Bitcoins are the gold standard with regards to digital currencies by virtue of being the first and most widely accepted. All other digital currencies to come are practically forced to use the Bitcoin market as a point of reference in the same way the gold market looks to comex prices.
During the past few days, a Welshman named James Howells has been in the news because he tossed out a hard drive containing approximately 7,500 Bitcoins. The same article mentions a man named Stefan Thomas who allegedly lost 7,000 Bitcoins according to Der Spiegel. Indeed, we have a friend who told us he had wiped “thousands” of Bitcoins off of his hard drive.
While these types of stories may seem to offer a reason not to dabble in Bitcoins, we see them as yet another reason that the Bitcoin/USD ratio will continue to go vertical for the foreseeable future, as there will only be 21 million Bitcoins ever created, and, if the system is as tight as it appears to be, neither Mr. Howells’, Mr. Thomas’, nor our friend’s lost Bitcoins will ever be circulated again, making the remaining Bitcoins that are tradable all the more scarce and, at the moment, valuable.
A bit of free advice from The Mint. While it seems counterintuitive, we encourage you to store your wallet online at a service such as blockchain.info to avoid the fate of the above mentioned individuals. This goes without saying, but choose an extremely complex password.
Finally, if you are convinced that Bitcoins are a Ponzi scheme, remember that so are equities and fiat currencies, the only difference is that Bitcoins are still in an extremely early stage. Think of it as buying Apple or Microsoft in the 80s, only better, as Bitcoins represent a confluence of technology and commerce that has just begun the search for its value.
It is winter, do you know where your Bitcoins are?
Inflation in asset prices is beginning to appear at a breathtaking pace, and, while $1000 Bitcoins and 10% month over month increases in the London property market appear to scream “bubble,” the truth of the matter is that we are just getting starting. The Federal Reserve and every other Central Bank on the planet have given up on any sort of meaningful restraint, and there are Trillions of fiat currency units that are just looking for a reason to stir up what passes for economic activity circa 2013.
There will be plenty of time to watch numbers tick higher and even more plentiful opportunities to be had for ventures of all sorts in the weeks and months ahead. Today, we must pause, reflect, and give thanks.
For tomorrow is Thanksgiving.
“The First Thanksgiving at Plymouth” (1914) By Jennie A. Brownscombe
Thanksgiving is the Greatest North American Holiday, for, in an age where most holiday traditions can be only dimly observed beyond the lights of commercialism, it is one of the few that most purely reflects its heritage.
And what a heritage it is. While the general idea of “Thanksgiving” has existed in religious and other faith centered communities from time immemorial, the Thanksgiving that we will celebrate tomorrow traces its origins to a three day feast held on the Plymouth Plantation in November of 1621, which was the culmination of a series miraculous events that came to pass for a group of Pilgrims who boarded the Mayflower in mid-July, 1620 and brave companions from the Speedwell who were determined to carry on despite the Speedwell springing a leak and being forced to turn back to England.
The Mayflower, like many ships of the day, was a trading ship, and the Pilgrims, who were English Dissenters (to give one an idea of conditions in England, Guy Fawkes Night had occurred a mere 15 years earlier, and religious tolerance was non-existent on the isles), were on their way to freedom having been financed by merchants eager to tap the riches of the New World.
The journey was perilous, and the storms in the North Atlantic took a heavy toll on the ship and its passengers. At least twice during the more difficult stages of the journey the idea of returning to England was debated. Frankly, anyone who has been on a journey that has become imperiled by weather conditions will understand the nature of such conversations.
The Mayflower, as we now know, pressed on and landed in the New World on November 11th, 1620. After a difficult journey, they had now arrived on land, and their true perils were about to begin.
After failing to find land suitable for a settlement, the advance party again boarded the Mayflower and sailed down to what is now known as Plymouth Rock, where they found an area that was ideal for both settlement and agriculture. As it turns out, the Patuxent tribe had inhabited this land until a plague wiped out all but one of its members just four years earlier.
The surviving member of the Patuxent tribe was named Squanto, and he was to play a key role in making the first Thanksgiving possible.
In November of 1620, the Pilgrims set about the first order of business to be tended to before the winter would set in, building a common house (in what turned out to be our own strange homage to this event, we spent today racing against the winter rains to complete a tree house/play structure/deck in our backyard).
Over the winter and early spring, 49 of the 101 who had made the journey on the Mayflower (during the journey, two perished at sea and one baby was born) had perished, and the prospects for the coming spring were grim, as there were now just 20 adults and 30 children.
It was then that a series of miracles began to occur.
First, a Native American named Samoset, who spoke English well enough to communicate, came to the settlement to welcome the Pilgrims. Samoset then went to get Squanto, who was at first hesitant to come near to the settlement, as he had been captured and sold into slavery twice by English ships prior to this encounter. However, he had been observing this group of Englishmen and found them to be quite different than the others.
Squanto taught the Pilgrims how to grow corn and other key survival tactics to the new inhabitants of his native land, who he now called his people. He then brought Massasoit, the chief of the Wampanoag and the leader of the tribes of the region. Massasoit provided foodstuffs to the Pilgrims and agreed to a peace treaty with them that would last for 50 years.
With the aid of the Native Americans, the Pilgrims survived and, in the fall of 1621, had a bountiful harvest. They declared a feast of Thanksgiving that lasted for three days and was attended by Massasoit and 90 other Natives. It was a feast of Biblical proportions in the sense that it was a true tithe, where the first fruits of the season were brought together and enjoyed by all in the community.
Massasoit and governor John Carver smoking a peace pipe
And the rest, for better and for worse, is history.
Thanksgiving is a time to celebrate the miracles that occur in the lives of each and every one of us. It is a time to reflect upon the people and the providence that have provided for us in miraculous ways throughout the year.
For each circumstance in which we live is a miracle simply because it is, and our lives are tapestries that are woven together by the Creator of such awe inspiring beauty that any difficulties encountered along the way simply pale in comparison to the whole.
Thanksgiving is a time to step back and celebrate this tapestry with the Creator, and, when contemplated along with the abundance that fills our lives if we would only pause, reflect, and open our eyes, join together with our loved ones and all of humanity, lifting songs of praise and Thanksgiving to the Father of us all.
As it was at Plymouth in the fall of 1621, so let it be with us tomorrow, for it is what our present circumstances call for each and every day.
The gift of time we have been given here at The Mint has not been wasted. In a way, it has given us a chance to reevaluate what we are doing and how we can best serve humankind. Now that we have discovered the key to reversing the effects of climate change without limiting human reproduction or dooming large swaths of land to “conservation,” we wish to encourage others to embrace these ideals and employ them to their benefit.
How can we accomplish this? By assisting them not only with strategy planning, but execution of said strategy. It is perhaps a little known fact that there is very little, if any, bad strategy that makes it past any form of group debate (bad strategy is almost always born in a vacuum and dictated). What tends to go badly is the execution of said strategy. It is then commonplace to pin the blame of what was really a failure to execute on the only one without a voice and a job to save, the strategy itself. Voila! Bad strategy.
Strategy is generally good because it does not just guide action, it demands action. It may come as a further shock that, while there are a great deal of tasks that are associated under the umbrella of the English word “work,” it is almost at the point that one acquires a job and is remunerated for it when they stop what we call action, or striving forward to improve conditions so that less work must be done to achieve the same or superior results.
Sadly much of the work done today is aimed at maintaining and increasing efforts to justify why the “work” must be done.
Action is progress, work is, well, work. This is not to say that all work is like this, but it is a nasty tendency that is the byproduct of the insane “debt is money” currency system that we trade and save in, a system that, in just over 40 years of widespread operation, has distorted incentives to the point to where GDP is increased by increasing debt, which by definition is consumption, not “Product.”
But we digress, as we are excited to help you personally and your organization stop working and start progressing. How can we do this? Read on…
The Mint Strategy Planning and Execution Services for Individuals and Businesses
The local and national economy is undergoing a large scale reset which will impact nearly every business model. This is creating both challenges and opportunities that may be a once in a generation event. Are you an individual, business owner or division head in need of fresh ideas from an outside perspective? If so, we invite you to have a Mint.
Here at The Mint, we offer both group and one on one strategy sessions for small to mid-sized companies who wish to grab hold of the opportunities that await them as their larger counterparts go the way of the dinosaur. Initial consultations will generally last one hour and can be done via email, over the phone, or in person if located in the Portland area.
The purpose of the strategy session is to brainstorm with you about your business and the challenges and opportunities you face. It is often best done outside of one’s normal office environment, as being surrounded by day to day tasks (we call them distractions) often stifles creativity and blinds one to what is occurring outside one’s own four walls.
Napoleon at Borodino, poor execution, and plan B was even worse!
While strategy is important, what is even more important is the execution of a strategy. Strategies, from the battlefield to the boardroom, are well thought out, detailed plans. Plans that can be utterly useless and counterproductive if there are persistent errors in executing it.
At The Mint, we do not want to see that happen to any of our clients, and our hope is that we will find something practical that we can assist with in aiding you with said execution of your shiny new strategy, such as seeking funding or streamlining processes.
That said, we consider the strategy session to be sacred and confidential, and it will never be reduced to a petty sales pitch.
We are carrying out this exercise chiefly because we want to play a small part, if possible, in invigorating our local and national economy. We have an international MBA, hold the designation of Certified Treasury Professional, and 18 years of experience in finance and accounting in various industries and would love to hear from you!
If you are interested, please send and email to davidminteconomics@gmail.com with your industry, approximate annual revenues and assets, and the biggest challenge you see on the horizon as well as your preferred method of contact (phone, email, in person) and, of course, a way to contact you.
Let The Mint help you avoid approaching Waterloo or Gettysburg unprepared or, should you find yourself at Borodino, let us help you plan your retreat.
The virtual currency known as the Bitcoin has achieved what has become a badge of honor in the finance industry, it has become the subject of a Senate hearing.
Senate hearings have, in the past, starred noble characters such as MF Global and its lead actor, John Corzine, who still roams free after punting roughly $1.6 Billion USD to another Wall Street leading man, Jamie Dimon, who remains the head of JP Morgan, who added a $13 Billion fine to its list of greatest hits related to its dealings with other entities during what has become known as the Financial Crisis of 2008.
And who can forget the Gorilla, Lehman’s Richard Fuld, who starred in one of the earliest versions of such hearings and gave us the phrase, echoed by insolvent bankers throughout the world, “why us?”
As the Bitcoin has no central authority to speak of, the Senate Committee on Homeland Security and Government Affairs called Jennifer Calvary, head of the Financial Crimes Enforcement Network, Edward Lowery of the Secret Service, and Mythili Raman of the Justice Department to testify on its behalf.
As may be expected by three persons who are cast in the role of antagonist to anything offering anonymity to private citizens, a privilege that the government refuses to recognizes, they expressed concern about “what could happen” and “who may be using” virtual currencies such as Bitcoin.
However, the antagonists did show a measure of empathy for their crypto-foe, the same way viewers feel empathy for characters like John Q or Walter White. While taking the government line that what people may do with Bitcoins may be bad, the Bitcoins themselves are generally harmless and, in fact, may provide a great benefit to society.
As pageantry that generally accompanies a finance related Senate hearing unfolded, the Bitcoin market went ballistic, touching $900USD before the elevator moves inherent in the Bitcoin/USD (or any other debt based currency) market took hold and thrust it back to $600, it is now climbing past $700 as we write.
While it is interesting for Senators to listen to how various branches of government propose to regulate Bitcoins, it is clear that, while they may have a glimmer of a chance of understanding the technological framework of Bitcoins, they have no clue what it means in the monetary realm, for they do not understand money.
Alas, much of humanity is in the dark as to monetary theory. It is for this reason that we started The Mint, to explore this deep “mystery” that lies in the wallet of each and every one of us.
To be sure, Bitcoins have an Achilles heel, but it is not what many people think, want to know what it is and when to get out of Bitcoins? Someday we will give them away, for now, it will cost you $0.99 USD, or 0.00141 BTC to find out. Please pick up our hastily written guide to Bitcoins, which, to our knowledge, is the only one that has examined Bitcoins through the lens of monetary theory with clarity and coherence.
All we can say for the moment is that Bitcoin is a buy, you can sort out the details later.
As for the government’s concerns regarding Bitcoin’s inherent anonymity in the monetary realm, we propose the following Quid pro quo. Rather than the public being obligated to respond to the straw man argument of “If you have nothing to hide, what are you worried about?” what if the public’s retort to the government became a universal, “if you have nothing to fear, what are you worried about?”
A Salute to the Veterans we have been privileged to know
With most of the markets we follow taking a breather for the holiday, save the Bitcoin, which bows to no sovereign and raced up to $383 today, we turn our gaze and tip our hats once again to veterans, not just those of the United States, which has specifically set aside this day to honor them, but of all men and women who have thrown themselves into the face of danger and worked in extremely difficult conditions to defend a national ideal that they believed in with all of their heart.
Here at The Mint, we wish to honor them by remembering the four veterans that we have known, three have passed on and one remains. Each story is woven in with our own, and has changed the course of history for us.
First, there is our Grandfather Collins, who, as World War II raged on, managed to memorize the eye chart so that they would allow him to enlist in the Army. While leaving our grandmother behind with countless other young women in the same situation at an Army base in Kansas, he boarded a troop transport which zigzagged its way across the Atlantic Ocean, dodging German U Boats, while sleeping on a rack with many other men, packed in like sardines for roughly 18 days until they safely reached their destination in England, where, as an ambulance driver he witnessed first hand the casualties returning from the D-Day invasion of Normandy.
“They didn’t tell us, but you could see they were mounting something big,” he told us of the preparations for D-Day. He mentioned that they would ride bicycles 20 miles for a beer at the Pub on weekends.
When VE day arrived, he said they were allowed to stay in some of the finest hotels in Paris, but he was extremely anxious to get home to his young bride and could not enjoy it as one might imagine in retrospect.
Next, there is our other Grandfather, Victor, who enlisted in the Army early on in World War II and was sent to the Pacific Theater of operations. While all of the Veterans we knew passed for difficult things, it was he who had the most difficult time. He was an excellent baseball player in the Army and had the bad fortune of rupturing his spleen while playing ball in Hawaii. While the surgeons were able to successfully remove it, they sewed up his abdomen with a sponge still inside! The incision became so infected that they shipped him back to San Francisco to be operated on once again as he was close to dying.
When he recovered from this ordeal, he was sent into back to the Pacific Theater and, from what the family knew, contracted malaria and got lost in the jungle. It was not until much later, after he had passed away, that we found out that he had actually been a Japanese POW and, at the end of the war, weighed just 98 pounds and again was at the brink of death.
They sent him on a train to his uncle’s farm in western Nebraska, where, fortunately, he was nursed back to health.
Third comes Edgar, our Grandfather Victor’s brother (our great uncle), who fought Germany’s Rommel, the Desert Fox, in Northern Africa. Uncle Ed’s observations of the war that he related to us were that dentistry in the field involved a drill that was powered by a stationary bike. As such, it was best to have a cavity filled when the men with the best bicycle legs were able to help.
He also observed that water was scarce, and it vexed him as to how the villages they visited during the war, who seemed short of water then, had grown to tens of thousands of people some 40 years later. He and his wife, Ethel, were featured in the Reader’s Digest as a letter Ed sent to Ethel was found among a bag of US Army mail that had been found 40 years later. It had words cut out of it to prevent the letters from giving away troop positions and planned movements that the servicemen may have inadvertently included in the letters to their sweethearts.
Ed often said that if any of us youngsters were drafted, he would pay for us to go live in Canada. After the events of 9/11, he recommended that we read The Haj in order to understand Arab culture.
These three brave men above went on to live long, full lives and, while we have recounted some of the difficult things they were called to live during World War II, they did not doubt the call of duty which was given to their generation, and were glad to have served, and even gladder to be home when it was over.
The final veteran that we’ve known is a friend and former colleague who left the company before we did to occupy a UN post in Geneva. We went to visit him once and he led us on a hike through some of the hills leading up from Ouchy, a nearby village, where at the top, we took in a pot of fondue and enjoyed the views over Lake Geneva.
We knew that Ryan, our friend, had been in the military before we knew him. During our ascent over short rock walls and past cows donning bells, we took the opportunity to ask him about his experiences. He was the leader of a tank unit in desert storm in 1991, and recalled how he would have to run up to holes in the sand to see if there were any Iraqi soldiers that had survived in their foxholes in the desert as the tank units advanced. Not for the faint of heart.
The sacrifices of men like Collins, Victor, Ed, and Ryan all too often go unrecognized and, even more often, are not recounted, even by the very men who lived through the horrors of war to their immediate families.
We tip our hats to them and to all veterans across the United States and throughout the world of all nations, for they have demonstrated that at times it requires uncommon valor to keep the light of freedom burning in this world.
May they be remembered fondly and often, and may those who made the ultimate sacrifice rest in peace.
For those who have not yet taken notice, the USD/Bitcoin ratio now sits at $322, after touching a high of $395 today. For those who are unfamiliar with what a Bitcoin is, we strongly encourage you to read our brief primer on Bitcoins entitled “Bitcoins: What they are and how to use them.”
Bitcoins: What they are and how to use them
While the title itself is cryptic by design, the book is a straightforward analysis of not only what Bitcoins are, but also what their design and function as money means. Now that we have a bit more time on our hands (more on that below), we hope to return to edit and update this volume. While the Bitcoin itself is unlikely to change, there are now many more applications for it than there were when we penned it back in April of this year.
The combination of they monetary premium and technology has made the Bitcoin industry run on jet fuel, and it won’t slow down anytime soon. The simple reason is that Bitcoins are a bizarre yet perfect form of equity that, like Twitter, is more of a public service.
In the case of Twitter, the need to randomly comment or blow off steam at someone else’s running digital commentary may only be marginally, if at all, profitable, but the value of it as a tool that people will rarely pay to use is priceless.
In the case of Bitcoin, the need for a means of exchange which can both hold a large portion of the monetary premium and be completely portable and ethereal is self evident and, while the Bitcoin itself generates no revenues, its value as a tool that people will use but not necessarily pay for is priceless.
Contrary to most of financial theory, discounted cash flows cannot capture the concept of value, as much of what people value in this world cannot be neatly summed up in financial models. The Bitcoin falls squarely into this lofty realm where finance fails and dreamers soar.
{Editor’s Note: If you would like assistance investing in Bitcoins or Bitcoin related ventures, please write us an email with the word BITCOIN in the subject. There is much to be done and, consequently, much money to be made in this nascent industry that is moving like a wave across the earth}
Time on our hands
We have recently been notified that we are soon to be relieved of the burden of what is best described as our day job. Over the last year, we set out to work ourselves out of a job through a series of process improvements in the Treasury Department. Shockingly, it worked.
While on one hand the prospect of quickly ramping up our other activities (The Mint being one of many) is daunting, it is also exhilarating as we are of the peculiar breed that lie awake at night and early in the morn and watch a light show of ideas cross our mind. Some we are able to capture and quickly act on. Others we take note of and treasure them in our heart as we await the time that they come around again in and present themselves ever more brilliantly to our mind’s eye.
As we have one other time in our life, on September 10th, 2001, we are faced with the choice to either carry on in the 9 to 5 world or to pause and chase these ideas to their conclusion, watching where they lead and enjoying the ride as we chase them there.
These types of choices, frankly, are too much for us to bear, which is why we leave them in God’s hands. It is He who opens and shuts doors. Our job is to pursue the ones that are open until He shouts “enough!”
What we do have on the horizon, along with a number of projects that are providently moving towards fruition, are the preparation of a class on Deuteronomy, a 20 page biology article to edit, and any number of tasks that, while each one on its own would appear to be from different fields, when taken together make up the colorful tapestry of our life, as we blindly chase through the open doors with only one clear mandate:
Help people.
If you care to join us on this adventure, feel free to drop us a line. You never know what we might accomplish together!
For those who let the 5th of November go unmarked, as so many still do, by all means, do carry on. “For those who see what I see, and feel what I feel…”
Guy Fawkes, the last man to enter Parliament with honest intentions
Apart from taking the name “Guy” and enshrining it so deeply in the English language that today many commemorate him without even knowing it, the actions of Guy Fawkes on November 5th, 1605, for those today who have taken time to connect the dots and draw the parallels between the time Fawkes lived in and our own, now serve as a somewhat unlikely rally cry for freedom.
In modern-day jargon, Guy Fawkes would be labelled a terrorist and no doubt be on many a no fly list. His bank account, telephone, and electronic communications would be monitored, and his Facebook friends would be suspects along with him.
In Fawkes’ day, taxing beards and regulating dress codes was high on the government’s priority list, a far cry from innocent government actions which we take for granted today, such as taxing tanning beds and regulating health insurance.
The more one reflects on what occurred over 400 years ago, the more one begins to understand why it still resonates with those who love freedom across the planet, as the million mask marches which took place today demonstrated.
For better or worse, Freedom is one of the few God-given rights of humankind. It is so basic and vital to our existence that one tends to assume that all people think alike on the matter, as they would access to food and water supplies. It is so vital and ever-present that one does not take notice until it is credibly threatened.
Whether you don a mask or not, we wish you a Happy Guy Fawkes day, may we all cherish our God-given freedom, and may those who choose to don a beard continue to do so in a duty-free manner.
For those of you who thought we had forgotten to complete our mini-series on Fine Wine Investing, we admit that we nearly did. Between the excitement of Halloween and painstakingly formatting the print version of our Economic and Philosophical Treatise, a proper completion of the Fine Wine series nearly escaped the steel trap of our mind, until today!
Throughout this series, we have dabbled into a world that, for a time, appeared to be the playground of those with a penchant for refinement or those with enough money to appear refined. After all, mustn’t one have an intimate knowledge of the Bordeaux region and at least have heard of Robert Parker;s nose before daring to invest in Fine Wines, an asset class which not only carries principal risk, but the risk of direct consumption?
Today, thanks to the world’s leading electronic exchange for fine wines, the Liv-ex, price discovery is now within grasp of the commoner.
The London International Vintners Exchange,or Liv-ex, is like COMEX for Fine Wine. Since is was established in 1999, it has performed an important public service, as do all exchanges, it allows the commoner a peek into the most recently discovered price points for certain vintages, which can greatly aid them as they begin their adventure in Fine Wine Investing.
Understanding the Liv-ex is crucial to today’s serious Fine Wine Investor. The following are excerpts from a recent report on the market. Enjoy!
THE LIV-EX and the Financial Markets
Liv-Ex, London International Vintners Exchange, is the world’s one and only leading electronic exchange for fine wines, based in London, UK. Founded in 1999, Liv-Ex provides a marketplace and online platform for wine merchants, traders and brokers to trade wines freely and easily, just as it is done by equity stockbrokers.
Liv-Ex FEW Compared to other methods of fine wine procurement, such as auction houses, the main difference is that not everyone can trade on the Liv-Ex wine platform; only registered wine professionals/experts who have a proven track record in the industry are able to place bids (buy) and offers (sell) on the platform.
Only investment grade and blue-chip fine wines are traded on the Liv-Ex platform. Moreover, unlike auctions, no antique or collectible items are traded. Therefore, the majority of trades carried out on Liv-Ex are for French wines, usually from the highest rated vintages, mainly the more recent ones.
The Liv-Ex online wine platform also publishes its own price indices based on the amount of transactions made and has developed further into becoming the leading information source for fine wines; current prices, price fluctuations, historical stock data and the fine wine market in general.
Like any exchange, the Liv-ex has also produced a series of indices, which allow the casual observer to gauge the performance of the overall market for fine wines at a glance. It is these indices that give us the means to compare the Fine Wine Market’s performance with that of other major asset classes. The results may surprise you.
The following are the Liv-Ex Fine Wine Indices:
• Liv-Ex Fine Wine 50 Index
• Liv-Ex Fine Wine 100 Index
• Liv-Ex Fine Claret Chip Index
• Liv-Ex Fine Wine Investables Index
• Liv-Ex Fine Wine 500 Index
The Liv-Ex 100 Index is the fine wine industry’s leading benchmark index and even listed on Bloomberg. It includes and represents the price movement of the 100 most sought after wines, for which there is a strong secondary market and is calculated on a monthly basis.
By looking at the trading history of the fine wine market in the last decade, one may notice FWI demonstrated excellent track record which is appealing to absolute return investors.
According to the Liv-ex, FWI has consistently delivered positive absolute return over every. Next 5-year holding period since 2000. Figure 1 below also highlights that the average 5-year foreword performance since 2000 is as high as 111%!
While the returns on the Liv-ex 50 are compelling, they become even more compelling when considered within the context of other asset classes. The report continues:
It is also worth to note that while comparing FWI with global equities, FWI generated significant outperformance to global equities over any 5-year investment horizon since 2000, with hit rate as high as 98%, as shown in figure 2 below.
FWI provides diversification benefits to global equities portfolio. Besides outperforming global equities, FWI also gives diversification benefits as the correlation of FWI to global equities is only 0.19.
Whilst the above suggest FWI is attractive, recent trend has been less encouraging. Not only has the correction of the FWI market started to drag down the recent returns and out performance, but the diversification benefits also seem to have been diminished.
Like any market, the Fine Wine Market must be enjoyed in moderation, as out performance tends to attract attention which generally leads to…underperformance.
It is worth noting that the Fine Wine Market, while unique, has behaved similarly to that of Crude Oil over the past 10 years, as pointed out by this excerpt from a 2011 post in the Sizemore Letter:
From 1990 to 2010, the correlation between fine wine and crude oil returns was a staggering 90 percent!
What is the takeaway from all of this? While Fine Wines now have an established exchange, corresponding price index, and are a nice way to diversify from equities, they may offer returns similar to other commodities.
In the end, returns are returns, and from a pure numbers standpoint, the higher the returns, the better. From a semantic standpoint, it is much more fashionable to talk about one’s Fine Wine investments than crude oil in many social settings. Given this criteria, the answer is clear:
Fine Wine trumps Texas Tea.
This concludes our brief yet informative jaunt into the world of Fine Wines. Again, if you are interested in hearing more about Fine Wine investing, please email us at the address below.
After one last goblet, The Mint must carry on, for the Bitcoin has nearly doubled in price, and there is much to explore in the fine autumn that is upon us.
Could it be that it is not how, but what we use as money that matters when contemplating the root causes of Climate Change and other global problems? This is the question that is at the root of our Economic and Philosophical Treatise which bears the cryptic name:
Our Monetary Magnum Opus is now available in print at the following embedded links on Amazon.com and Createspace.com.
While there seems to be an endless debate as to what humankind should do in order to reduce our impact on the environment, ironically most of this and indeed countless other political debates result in more action being taken, either to cease and desist an activity or mobilize to clean up and reduce future environmental impacts of certain actions.
However, every action brings about some sort of reaction, often in the form of an “unintended consequence” which serves to negate any good that the carrying out of the well intended initial mandate had managed to accomplish.
Despite Al Gore’s call to action, realistic and manageable solutions to Climate Change remain elusive. As such, where Gore and other Climate crusaders have failed, we have been compelled to step in. You see, there is really a quite simple, certain, and palatable solution to Climate Change that could be implemented today.
The solution lies not in well-known solutions such as recycling, Cap and Trade schemes, development restrictions, technological advances, or taxes and other social engineering methods. In fact, it has absolutely nothing to do with what people do or what they or their governments spend their money on.
It lies in What we use as money circa 2013.
What the world uses as money is not really money, but a highly liquid debt instrument. While the difference is imperceptible to most, the accumulation of mistaken incentives and resulting actions on behalf of humankind which are inherent in the insane debt as currency model are beginning to manifest themselves in nature, and nature itself is beginning to bring itself into balance unilaterally.
Where humankind and the land once lived in a peaceful, mutually beneficial balance with one another, the relationship has become antagonistic and will remain so until the defects in the money supply are remedied.
How, then, can these defects be remedied? Ah, fellow taxpayer, it is for this reason that the above mentioned book contains 400 pages, for while the answer is simple, it will require that humankind let go of some deeply ingrained ideas which a vast majority of us do not even know we hold fast to.
The financial world took a big step closer towards a new currency over the past week. First came revelations that the US Treasury increased its net debt by $1 Trillion in ONE MONTH, which, in and of itself is shocking. Perhaps not coincidentally, Bitcoin prices blew through the $200 mark once again. We have written extensively on why Bitcoin is likely to rise, you can purchase a copy of what is now our most popular ebook on a number of ereading platforms here:
Today, we turn our attention to the area of morality here at The Mint. We must warn you, however, that what you are about to read may turn everything that you once understood about ethics and morality on its head. Read on at your own risk.
Do the Right Thing
“Ask not what you are to do, for you are called to do the right thing, not the expedient thing, not the easy thing, but the right thing. You will know what the right thing to do is when you learn to see your neighbor not as a rival, but as a brother.”
From our youth, when we were confronted with a form of temptation or, perhaps more commonly, the opportunity to choose between selfish gain or pursuing the good of others, we were often exhorted by our elders with a phrase that is both etched in our memory and charged with meaning: “Do the right thing.”
The phrase is alive and well today and continues to drip with authority, for it implies that in the situation that is being confronted, there exists a common body of knowledge which, if consulted, would lead the person confronted with the opportunity to “Do the right thing,” with an obvious course of action.
When this phrase is uttered, more often than not it is uttered by a person whose good intentions are matched only by their complete lack of a direct interest in the outcome of whatever is transpiring. It is also often uttered by someone who, if they were to be in your shoes, would more often than not be completely incapable of “doing the right thing” that they benevolently have advised you to do.
Today, we hear the phrase in discourses by those charged with national government. In this context, even the feigned benevolence which is the hallmark of the way the phrase is delivered in political settings is overshadowed by the fact that by “doing the right thing,” the politician invariably means “submit to my will and ask no questions.”
Imperial governance, which is the form that the world labors under today, is paradoxically predicated on categoric refusal to “do the right thing,” as, at its base, modern governance results in the enslavement of men and women via a myriad of rules and threats in order to convince them to render tribute and allegiance. We have explored this phenomenon thoroughly in our volume entitled “What is Truth? On the Nature of Empire.” The inescapable irony which engulfs every utterance of the phrase by a public official means that, at this point, we cannot hold a straight face when we hear it.
To draw on a recent example, when the President states that Congress must “Do the right thing” and fund the government, the statement may have been the most presumptuous ever to escape human lips, for the underlying assumption is that whatever the government does is right, which is, from most rational and religious standpoints, absolutely incorrect.
Politics aside, at its base, even the seemingly disinterested “do the right thing” offered by a friend,a parent, or colleague is a thinly cloaked act of moral superiority on display, for the phrase is all too often offered as thinly veiled advice which, once decrypted, is read to imply “do what I want you to do.”
If the term has indeed been hijacked to lay claim to the moral high ground in a debate, shaky as it may be, humankind must strive to understand the noble origins of this seemingly important and universal saying.
Life is complicated, and, contrary to what many would say, it does not come with an instruction manual which tells humanity what is categorically right and wrong in all situations which we may encounter.
For this reason, the Bible, which we believe to be the closest thing to a users manual, reads not like a how to or self-help book, but a series of events where people, both individually and corporately, are thrown into unimaginably complex and dire situations (once one looks beyond the surface to understand the Biblical settings) ostensibly to see what they will do. The question that is being asked constantly of the Biblical characters as well as each and every human being today is this:
Will we do the right thing?
Doing the right thing is beyond important, it is imperative that anyone who is genuinely seeking God and His Kingdom Do the right Thing at all times that the circumstances demand them to choose a course of action.
However, what constitutes doing the right thing in any given circumstance is not a matter of democratic preference or legislative action, it is purely a mater left to God and the individual of whom the right thing is required, for it is they and they alone to whom the ability and intuition has been given to make these life and death determinations.
The right thing cannot be legislated or encouraged, it can only be done or not done. Each time it is done, the Kingdom of God draws near to us all. Each time it is neglected, we all suffer the consequences.
So Do the right thing and, more importantly, be close to God, for it is He who is the only judge of such matters. The logic can be carried further to imply that everyone who utters the phrase “do the right thing,” to someone who is faced with a difficult situation is, perhaps unknowingly, both usurping God’s role as well as inhibiting that person’s ability to learn for themselves how to choose the right thing, which is an ability that all of mankind must learn deeply and permanently. The right thing is a lesson that can only be learned through personal experience and exercise of one’s own decision-making processes.
This however, does not mean that the right thing must be learned on the field of battle. There are more often than not subtle clues which will guide us as to which situations demand us to respond by doing the right thing as well as what the right thing to do is. For instance, in our observation doing the right thing often involves an initial sacrifice to be made of time or resources. It is often a choice to pay the cost. While it is not universal, this minor detail is often a clue that one is doing the right thing.
Only those with a perfect knowledge of all of the circumstances involved are qualified to ultimately judge what is right or wrong. Even in the hypothetical case that the actors are in a position to understand all of the circumstances involved, the observation is limited by our über short human timelines which ignore the concept of eternal justice.
Doing the right thing is imperative, and all human judgement as to what the right thing is in any specific circumstance is null and void unless it is agreed upon by all parties who are directly (not indirectly) affected by a course of action.
Perhaps the distinction is best illustrated in the Gospels. While the religious leaders were left legislating the right thing, Jesus was doing it. It is a contrast that is emphasized for a reason, for the doing the right thing is deeply personal and immensely powerful.
There is one thing and one thing only that one can be absolutely certain that is always the right thing to do from an eternal perspective: Forgive
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