Tag Archives: Bill Bonner

Oh My, The Giant Snowball is now Rolling Down Hill, can the Central Banks Stop it?

8/8/2011 Portland, Oregon – Pop in your mints…

Oh my.  Two words, four meager characters, made famous by Jesse “The Body” Ventura during his ringside blow by blow commentary in the glory days of the WWF (circa 1986).  These words, which so eloquently summed up the effects of a pile driver, seem strangely appropriate to describe what is occurring in equity markets around the globe during their first chance to “react” to the S&P downgrade of the US Government’s sovereign debt rating.

As we write, the Dow is down 5%, ditto for Oil.  Gold is up over 4% and the downgraded bonds of the US Government of the 10 year variety are up (in other words, yields have fallen) approximately 4%.

What is going on?  We will give you a clue, Bank of America (BAC) is down almost 20% on massive volume.

Still guessing?  We won’t keep you in suspense.  This downgrade, whether deserved or not, early or late, is wreaking havoc with mutual fund investment policies which call for excess funds to be held in AAA rated debt.  There are not enough German bunds or UK gilts in circulation to pick up the excess funds gushing out of Treasuries.

The obvious implication is that USD bank deposits should rise.

More deposits that it can’t lend at a profit would tank behemoths like B of A, and Uncle Sam may have trouble saving it.  That, and B of A is being sued for fraud, again.

Enough of B of A, back to the money flying out of US Government obligations by investment policy edict.  Where will this money go?  That is what is currently being sorted out in the markets.  And at the moment it is UGLY for equities on a global scale.  Don’t worry, by late next week, so much money will be pumped into the system that equities will have no choice but to rise.

We can’t help but think back to this chart (BELOW) showing the proliferation of AAA debt in the world.  It seemed as if it was everywhere, like pine trees in a forest.  Now, with one simple action, those who trust S&P’s judgment (which history has show is at one’s own peril) find themselves with at least $14 Trillion less AAA issues to choose from.  More, if you count the implied downgrades of government agency and other government guaranteed debt.

"AAA" Government dominates the market and it is beginning to smell funny!

Stepping away from the technicalities of investment policies and looking at the downgrade in a philosophical sense, it is like a minor earthquake that triggers a tsunami that the financial world is now helplessly watching roll ashore, or like a giant snowball has been pushed downhill and threatens to start an avalanche.

The financial world is looking at these twin disasters and now realizes that the only thing standing between them and the demise of the current financial and currency systems is, are you ready for this?

The Central Banks of the World!!!  Not exactly knights in shining armor, if you ask us.  We might be more comfortable if Pee-wee Herman were on the case.  At least he could provide entertainment as the demise unfolds!

The downgrade is another chink in the armor of the world’s largest knight in shining armor, the United States of America.  Every day, more people are coming to grips with the fact that the US of A cannot provide security and social benefits at such low rates.   Bill Bonner of the Daily Reckoning regularly explores this decline of the American Empire. 

As we touched on the other day, what man calls nations today are, for purposes of analysis, simply competing security agencies which have a man-made geographical monopoly.  The problem, as any businessman will tell you, is that nowadays the agency’s customers can’t take the price hikes.  Neither can they easily choose to move their business to a competitor.  Expatriating is not cheap and involves a host of logistical problems.

The book of Isaiah, chapter 40, God refers to the nations as a “drop in the bucket” and “dust on the scales.”  The obvious implication is that nations do not last, and in extreme cases, dealing with a government may feel like one is dealing with the Mafia.  The need to preserve a geographical monopoly can make an analysis of the actions of a government or a mafia eerily similar.

Seen through this lens, S&P is like the snitch who broke Omerta and tells everyone that the Mafia boss can’t pay on his contracts.  Now the boss will likely face an increase in the vig on what he owes the loanshark. 

How long before the rat gets whacked?

Don’t forget to keep your eye on events in the Middle East, especially Palestine.  Something bigger than we image is brewing there and our guess is that the eyes of the world will soon be focused there.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 8, 2011

Copper Price per Lb: $3.97
Oil Price per Barrel:  $83.36

Corn Price per Bushel:  $6.78
10 Yr US Treasury Bond:  2.37%

FED Target Rate:  0.09%  TIGHTENING?  NOT!

Gold Price Per Ounce:  $1,718 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  -0.2%!!!  PULL OUT THE HELICOPTERS!!!
Dow Jones Industrial Average:  10,899  TO THE MOON!!!

M1 Monetary Base:  $2,012,200,000,000 RED ALERT!!!
M2 Monetary Base:  $9,226,100,000,000 YIKES!!!!!!!

A Debt Deal is Struck, America further Seals Her Fate

8/2/2011 Portland, Oregon – Pop in your mints…

After a long absence, we offer a brief Mint.  As the entire financial world knows, the US Government decided to go deeper into debt to the tune of $2.4 Trillion.  Something was mentioned about spending cuts but they are inconsequential and probably will never materialize.

America continues to march towards Her Imperial destiny, as Bill Bonner of the Daily Reckoning has been expounding upon recently:

“The US is now conducting war-like operations in at least six different countries. The problem, of course, is that it is ruinously expensive. In all of history no empire has been able to resist the urge to overdo it…to commit suicide – either by military or financial “overstretch.” In America’s case, it does both.

The cost of maintaining the empire…fully loaded…is about $1.2 trillion a year. That’s the Pentagon, the Department of Homeland Security, fortified embassies – everything. Take it away, and the US budget is almost in balance.

But Washington won’t seriously cut military spending.  Why not?  It’s the way destiny works.  First, she disarms you of your critical intelligence.  And they she shoots you in the back of the head.

An empire continues until it drops.  It does not back up.  It does not reconsider its mission – not until it is forced to.  How is it forced to?  In the usual way…it runs out of money…”

Yes, it appears that America is intent upon losing its place as the leading private security agency on the planet, for as a practical matter, that is all that what we frequently refer to as nations are.  More on that to come.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  Don’t believe what you read about the Nebraska corn harvest, it will be just fine and as abundant as ever!

Key Indicators for August 2, 2011

Copper Price per Lb: $4.36
Oil Price per Barrel:  $93.33

Corn Price per Bushel:  $7.11
10 Yr US Treasury Bond:  2.62%
FED Target Rate:  0.17%  TIGHTENING?  NOT!

Gold Price Per Ounce:  $1,660 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.2%
Inflation Rate (CPI):  -0.2%!!!  PULL OUT THE HELICOPTERS!!!
Dow Jones Industrial Average:  11,866  TO THE MOON!!!
M1 Monetary Base:  $1,937,200,000,000 RED ALERT!!!
M2 Monetary Base:  $9,260,300,000,000 YIKES!!!!!!!

*See the MINT Perceived target Rate Chart.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

Economy to suffer Rolling Blackouts, A Flare up in Palestine, Does the FED have an Expiration Date?

6/7/2011 Portland, Oregon – Pop in your mints…

Summer has arrived in Portland.  We had hoped that it would arrive months ago but as with 41% of our predictions here at The Mint, we were early, which is a polite way to say that we were wrong.

In the financial markets, it continues to rain.  The authorities have done everything in their power to stop the effects of the rain, hoping to simply ride it out.  They are now exhausted and the ominous prospect of rising flood waters to accompany the constant drizzle adds to their misery.

The storm began innocently enough and that was the problem.  Despite the dark clouds forming on the horizon, most people thought that they simply needed to stay indoors for a while, maybe move the patio furniture inside, and wait it out.

As it turns out, loading up the wagon and moving to higher ground is the only thing that can save them.  In a practical sense, this means paying off debts and moving assets into precious metals or anything else real.  It means cutting ties with any and all counter-parties because the probability of default is increasing and can strike without warning.

This financial storm did not necessarily require the divine insight afforded Noah in his day but to adequately prepare for it one needed to at least have in mind the possibility that this storm was no ordinary storm.

Yes, fellow taxpayer, the world economy is not in a recession or a depression (unless you are trying to describe a certain level of misery and not an economic phenomenon).  The economy is in the process of being completely retooled.  Bill Bonner at the Daily Reckoning calls it the “Great Correction.”  We do not have a name for it here at The Mint but Mr. Bonner’s term seems a bit mild to us.

Now that the FED’s firepower and credibility are completely expended, the economy is set to experience something akin to random “rolling blackouts.”  As the cash and credit that flowed steadily downstream for the past 50 plus years begins to dry up, a wall of water in the form of stimulus and monetary accommodation is barreling down the canyon and is literally destroying everything in its path and is PERMANENTLY changing the river’s channel.

Beyond the wall of water is a dry riverbed.  This has been confirmed as the FED’s credibility is shot.  Even if they could continue sending what water is left down the canyon it wouldn’t even come close to filling the new channel or be capable of forming anything that resembles the river that once was.

It is difficult to imagine a more desperate state of affairs.  This is one of the miracles of central planning, that it always and in every sense is a failure for everyone.  In some rare cases the planners benefit but for the most part, in the long run, even they are poorer for their efforts.

So what awaits the economy are unpredictable rolling blackouts as the lack of water causes random and unexpected defaults and quasi-defaults to occur until all participants learn to not trust each other.  Oddly enough, only then will something resembling organic growth begin anew.

An interesting idea was brought to our attention yesterday.  The idea is that the FED’s charter as America’s Central Bank is set to end on December 21, 2012, which nicely coincides with the final date on the Mayan Calendar.  We then further investigated and saw that someone with the Youtube user name “Man of Truth” predicted that the FED would be bankrupt in December of 2012 back in 2009.

While back in 2009 the Man of Truth may have sounded like a lunatic, circa 2011 his prediction seems not only possible but highly likely.  While the December 2012 date is arbitrary, all of this taken together with the fact that many people believe the Mayan Prophecy may be enough to disrupt life as we know it for an extended period of time.

Courtesy of http://bizarrocomics.com/

While we at the Mint do not personally believe in the Mayan Prophecy or the FED for that matter, we have a feeling that enough people do believe to warrant being prepared for an extended period of random rolling economic blackouts which will probably begin early in 2012, making the best time to prepare for them, well, now.

How to prepare?  First and foremost, accept Jesus Christ as your personal savior.  Then, not matter what happens, you have absolutely nothing to fear, not even death.

Second, financially act as if a flash flood is coming down the canyon and get whatever you think you may need to ride out the blackout period close at hand because the probability of obtaining it later is diminishing with each passing day.

Third, help others to do likewise.  In the process of helping others, you will literally be laying the foundation for the bright future that awaits you.

Piece of cake, right?

Meanwhile, the security situation in Palestine the Middle East continue to deteriorate.  Will it be enough to distract the West from its own perilous situation?

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Wednesday, June 7th, 2011

Copper Price per Lb: $4.15
Oil Price per Barrel:  $99.67
10 Yr US Treasury Bond:  3.01%
FED Target Rate:  0.10% FED IN DESPERATION MODE!!!!
Gold Price Per Ounce:  $1,545
MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!
Unemployment Rate:  9.1% ITS NOT WORKING
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,071
M1 Monetary Base:  $1,949,300,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $8,985,800,000,000 MORE FUEL FOR THE CRACK-UP BOOM!!!!

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

Da Tung & Xi’an Bao Bao

image

Da Tung & Xi’an Bao Bao which is loosely translated as “Universal Peace & a Baby Elephant” stands in the middle of the park block at Burnside & 8th avenues in Downtown Portland, Oregon.

The statue, dedicated in 2002, is a 16:1 scale replica of a wine pitcher dated from the Shang Dynasty.

The baby elephant riding peacefully on its Father’s back is a symbol of a prosperous offspring.

Bill Bonner of the Daily Reckoning has been writing recently about a concept that He calls “Compound effort over time” which you can read here:

http://dailyreckoning.com/compound-effort-over-time/

and a follow up piece He calls “Generations of Wealth” here:

http://dailyreckoning.com/generations-of-wealth/

At The Mint, we love the concept and think this statue captures the concept in a delightful imagery.

Who can argue with baby elephants?