Tag Archives: Bitcoins

Our Latest Audio Book and Why the Fed will take Baby Steps

6/6/2015 Portland, Oregon – Pop in your mints…

Bitcoins: What they are and how to use them
Bitcoins: What they are and how to use them

Recently we have been working with some wonderful producers to make many of our volumes here at The Mint available in audio format.  The experience has been great as those with talent in the voice department, such as Robert Fox, who brought our newest audio offering, Bitcoins:  What they are and how to use them, to life.

We imagine the producers get a good chuckle as they read our prose, to which Long-suffering readers of The Mint are accustomed.  We know we do!

Why the Fed will take Baby Steps when it comes to raising rates

The US Economy added 280,000 jobs in May of 2015, which was positive no matter how you slice it.  To our readers, this should come as no surprise, every one of our key indicators indicates an economy that is roaring ahead.  Take the price of oil, which continues to hover near the $60 per barrel mark.  While to some, a lower oil price may signal weakness in demand due to a slowdown in underlying activity, we see it as incredibly positive for US consumers, as oil, which translates into gasoline prices, acts as a quasi tax for many consumers whose demand is relatively inelastic.

We also see the steady prices of copper, around $2.70 per ounce, and corn, clocking in at $3.60 per bushel, as signs that the United States economy is on extremely solid footing looking ahead.  These prices tend to tank when bad omens are on the horizon.

The only negative (depending upon who you are), as reflected in the Jobs report, is that wages have not risen at a healthy pace.  This is great for employers and the Fed, who can maintain their margins on the backs of the working class, but not so good for those employed.

We sense this will change, as the productivity gains of the past several years are not likely to replicate themselves over the next several.  The economy is transitioning to the second half of the chessboard (as Thomas Friedman would say) and it will take a ton of work to get it there.  Once it is there, we will see hyperactivity in the economy, it will be a whirlwind that people will either embrace or run direct the other way from.  To an extent, humankind will benefit, but mother nature will suffer perhaps a fatal blow.

If proletariat wages remain low, then why has the stock market reacted negatively to what would otherwise be considered most excellent news?  We can only guess that equity traders, who at times are clairvoyant to their own detriment, look around at the plethora of good news and smell a Fed rate hike on the horizon.

They are correct, of course.  However, we believe that the Fed learned its lesson back in 2008.  The blind 0.25 per month basis hikes that were implemented to cool off the sizzling post 9/11 economy were blunt and oversized for the sheer breadth of the Fed’s economic sphere of influence.  It is doubtful we will see such blunt and misguided policy from the current Fed.

Instead, we see baby steps, increases of 0.01 basis points emitted over time so that the economy can absorb the shocks in a manageable way, rather than taking them square on the kisser as it did in 2008.

Will it work?  Only time will tell, but for the moment the US economy looks like it’s running full speed ahead, and nobody at the Fed is interested in being the next Ben Bernanke.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for June 6, 2015

Copper Price per Lb: $2.69
Oil Price per Barrel:  $59.13

Corn Price per Bushel:  $3.60
10 Yr US Treasury Bond:  2.40%
Bitcoin price in US:  $227.55
FED Target Rate:  0.13%
Gold Price Per Ounce:  $1,172

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  5.5%
Inflation Rate (CPI):   0.1%
Dow Jones Industrial Average:  17,849
M1 Monetary Base:  $3,029,600,000,000

M2 Monetary Base:  $11,853,900,000,000

The Difficulty of Bitcoin Denominated Debt

4/8/2013 Portland, Oregon – Pop in your mints…

The following is an excerpt of our brief, hastily compiled yet infinitely useful practical guide to the evolving world of Bitcoins.  It is an encouragement to dive into Bitcoin acceptance, a monetary analysis of the Bitcion, a high level how to guide, and a word of caution all with a lesson in character embedded within its pages.

With any luck, it will hit digital shelves before the Bitcoin hits $200 USD, which will be tomorrow.  Enjoy!

The Difficulty of Bitcoin Denominated Debt

Bitcoins:  What they are and how to use them
Bitcoins: What they are and how to use them

Another rare but often unrecognized barrier to Bitcoin acceptance is the inability for the widespread formation of debt markets denominated in terms of Bitcoins.  The reason that debt contracts will not be created in terms of Bitcoins has to do with the very thing that makes Bitcoins valuable in the first place:  The mathematical limit on their issuance.

As of this writing, slightly over half of the 21 million Bitcoins scheduled to be created are in circulation.  The rest will be emitted in decreasing increments over the next twenty years.  The trajectory of the Bitcoin logarithm against the national currencies is negative, which is causing the inverse relationship in their prices.

Again, in layman’s terms, it would be a fools bet to take promise to pay a debt in Bitcoins, as they will, by definition, become increasingly difficult to obtain.  If anything, one would need to factor in a Bitcoin appreciation to the debt instrument, meaning that it would have in implied negative interest rate.  While we can foresee the emergence of such instruments, we also foresee that they will be too complex to be understood by most.  As such, an important medium of currency acceptance, the existence of deep and liquid debt markets, will be lacking in the case of Bitcoin.  While this is not a bad thing, it must be recognized by anyone who deals in Bitcoins.

The book will hit digital shelves near you shortly.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 8, 2013

Copper Price per Lb: $3.38
Oil Price per Barrel:  $93.40
Corn Price per Bushel:  $6.33
10 Yr US Treasury Bond:  1.73%
Mt Gox Bitcoin price in US:  $186.90
Gold Price Per Ounce:  $1,571 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,613
M1 Monetary Base:  $2,534,800,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,501,300,000,000

Bitcoin takes off and earns a place in our Key Indicators

4/2/2013 Portland, Oregon – Pop in your mints…

If you haven’t paid attention, there is nothing short of a seismic event occurring in the world’s monetary base.  It started with the threat of government confiscation of savings accounts in Cyprus and is transmitting itself not through the ordinary channels of the financial and commodity markets, but into what is one of the least recognized developing markets on the globe:

Decentralized digital currency.

Welcome to digital money's wild ride
Welcome to digital money’s wild ride

For those in Cyprus with an internet connection and a reasonable amount of technical savvy, the Bitcoin represents an escape hatch from the government’s currency grab.

Again, while we personally have reservations about keeping too many eggs in any form of digital currency, be it bank accounts, fiat currency, or Bitcoins, the utility of Bitcoins as a temporary store of value cannot be overlooked.

While we do not classify anything as money, rather, we recognize various things or concepts tend to carry a monetary premium, it is quickly becoming clear that Bitcoins and similar digital currencies which will no doubt emerge must be considered by any serious monetary theorist, amongst which we count ourselves and few others.

As such, the price of Bitcoins as it appears on Mt. Gox, the most established exchange of the digital medium, will be listed amongst our Key Indicators.

It will be quite a ride, for we suspect many senators and those in government whom the public suppose are caring for monetary matters are just now getting briefed on what it is, and why it threatens their hammer lock on the money supply.

At some point, the Central Banks of the world will intervene in the market the way they do with the rest of the markets in our Key Indicators, either directly or indirectly.

Until then, it will be quite a ride, and mostly upward sloping, as the two elements of the Bitcoin/USD ratio are on nearly opposite trajectories.  Should confidence in the Bitcoin go mainstream, the action could get downright silly.  Not just in the Bitcoin price, but on main street, where banking as we know it will be publicly executed by a lifeless logarithm.

It is a form of poetic justice that Mark Twain would have loved.  We invite you to join us in enjoying it for him.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 2, 2013

Copper Price per Lb: $3.38
Oil Price per Barrel:  $96.89
Corn Price per Bushel:  $6.40
10 Yr US Treasury Bond:  1.86%
Mt Gox Bitcoin price in US:  $115.29
Gold Price Per Ounce:  $1,576 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,662
M1 Monetary Base:  $2,425,000,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,547,600,000,000

On Bitcoin deflation and why we are now accepting Bitcoins

3/19/2013 Portland, Oregon – Pop in your mints…

On our two year anniversary here at Davidmint.com, we wish to take a brief moment to thank you, our fellow taxpayers, for tuning in and reading from time to time.  We pray that you are well and that we can continue to be of service to you.

In honor of this occasion, we have two announcements:

1.  We are giving away 100 PDF copies of our latest eBook, “What is Truth?  On the Nature of Empire” for free over the next 7 days.  Click here to download your copy from our new store.

What is Truth? On the Nature of Empire
Click here for your free download – Limited time offer

2.  We have launched a new store right here on the site.  We are taking measures towards accepting Bitcoins and, should the need arise, other forms of digital currency in exchange for our silver coin offerings.Bitcoin

While the first announcement is essentially shameless self promotion, the second is one that we suspect will be taken by any number of merchants in the Silver and Gold bullion space in the not too distant future.

Why?  While we do not advocate holding a significant amount of long term wealth in digital formats, it may become important to do so in the short term.  It may also be important to be able to transact in Bitcoins, regardless of whether or not the proceeds are held in Bitcoins or converted via an exchange to a national currency.

As the events in Cyprus continue to unfold, we here at The Mint have taken the decision to accept Bitcoins as a form of payment for Silver bullion products.  While we accept that the Bitcoin, as a purely digital medium of exchange, is not without its risks, the mere prospect of a week long banking holiday, like the one the Cypriot banks are currently on, occurring closer to home demands that we create a contingency plan.

Being locked out of the bank, as the residents of Cyprus appear to be, can be downright lethal for commerce.  Should the unthinkable happen in your neighborhood, it will be essential to have a backup plan.

Silver bullion is the ultimate backup plan.  Should the lights go out, it is the most likely to function as a medium of exchange once the inevitable chaos wanes into some sort of order.  Should the lights stay on and one’s bank accounts be randomly frozen by a government official, the ability to trade in Bitcoins will be essential for any merchant to be able to operate.

Will it work?  Only time will tell.  We can already foresee one possible glitch:  Bitcoins have the distinct advantage of being anonymous.  This is both their strength and weakness when it comes to selling bullion via mail, as in order to properly ship coins, this anonymity is likely to be temporarily relinquished into our care (silver coins are not like delivered pizzas as they must be paid for up front).  While we have no immediate plans, other than to subscribe our customers to The Mint, something we see as benign, if not beneficial.

Beyond having a plan B should the banking system become “Temporarily Unavailable” on an individual or collective basis, in theory, accepting Bitcoins is beneficial as they should theoretically continue to appreciate in value against the fiat currencies of the world.  The reason for this, for the uninitiated, is that Bitcoin creation is set to occur on a fixed timeline and to be ultimately finite.  As of this writing, Bitcoin adoption is running well ahead of the logarithm, which is causing massive deflation in terms of Bitcoin pricing.

Mind you, Bitcoins can be traded fractionally up to 8 decimal places.  Should Bitcoin adoption continue to take off, the Bitcoin’s rigid logarithm will not allow for the Bitcoin’s continued use in commerce.  This has been described as its fatal flaw.  The Bitcoin will, in theory, take its place in the digital realm as “Good money” in the terminology of Gresham’s Law and exit circulation.  In its place will appear a plethora of digital currencies which would then come into existence via their own logarithm and trade against the Bitcoin, as today’s fiat currencies do.

In this sense, Bitcoin is the current gold standard of digital currencies.  As such, our planned acceptance of Bitcoins for Silver is like trading physical silver for digital gold, as Bitcoin’s trajectory will theoretically track that of gold with one notable exception:  Barring any subsequent changes to the logarithm, there will be no new “discoveries” of Bitcoins to augment the stock.

It seems like a good trade, and one we are willing to engage in to a point.  However, we must reiterate that wealth must be held in the real world to be of any worldly good, and trading in Bitcoins, while temporarily solving the problem of rapidly depreciating fiat currencies, will serve to further throw the earth out of balance.  For man’s activities to achieve balance with the earth, the monetary premium must be attached to something in the physical realm, not an inordinate amount of credit or data stored on a servers.

Besides, credits and data on servers has a strange knack for disappearing when you most need them.  Silver typically does not.

One last word to the wise, NEVER, EVER GO SHORT BITCOINS IN FIAT CURRENCIES, as doing so places one on the wrong side of a trade against a deep pocketed adversary:  A fixed mathematical limit.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 19, 2013

Copper Price per Lb: $3.40
Oil Price per Barrel:  $92.22
Corn Price per Bushel:  $7.28
10 Yr US Treasury Bond:  1.91%
Gold Price Per Ounce:  $1,613 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,456
M1 Monetary Base:  $2,466,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,499,300,000,000

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

We’ve been at it again!  Be the first to download our newest e-book,  now available on Smashwords and Amazon’s Kindle:

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

Of Money and Metals: The Operation of a Free Money Supply Explained is Volume II in the “Why what we use as Money Matters” series. Of Money and Metals presents the fallacies of the current day practice of circulating debt in the place of money and explains the urgent need for and the operation of a free money supply. This volume also explores the phenomenon of Bitcoins and digital currencies.

It is available to our dear readers for free until January 31, 2013 at smashwords.com, just enter coupon code: MA65L

Thank you for your support!

Of Money and Metals by David MInt


Are Bitcoins Money? The concept of digital currency and the desperate need for a Free Money supply

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

We would be remiss here at The Mint if we did not enquire and make an honest attempt to understand the phenomenon of bitcoins.  Bitcoins, according to wikipedia, are units of a peer-to-peer digital currency.  They are a purely digital attempt to solve the eternal problem of what to use as money.  Are they to be trusted?  Lets take a look.

First, we must look at them from a purely conceptual standpoint.  Are they money?  Yes, bitcoins, as we understand their operation, meet our pure definition of money in the sense that they are not debt.

However, they have a rather severe limitation in that universal or even regional recognition as money in exchange and convertibility to other forms of money could prove elusive.  This is a psychological barrier that theoretically could be overcome, however, it is difficult to assume that a majority of persons would, in time, learn what a bitcoin is and then take the time to sign up for and monitor a bitcoin account.

The market penetration for bitcoins could be as large as the number of internet and mobile phone users in the world but would more likely be similar to that of banking customers who use online and mobile banking services.  In other words, those who are comfortable storing a portion of their wealth in a digital media.

Given the barriers to recognition and acceptance, at this point, bitcoins are probably best thought of as a share of stock in an amorphous payment clearing mechanism whose business model consists of the free exchange of its own shares of stock between account holders and the constant validation of transactions and subsequent logging of ownership of said shares.

These shares, then, would need to be converted into a local currency to be of use outside of the realm of bitcoin account holders.

The validation of the exchange and the logging of ownership of the bitcoins must be done by someone for the bitcoins to maintain their integrity and therefore any value which others may attach to them apart from a fickle monetary premium which is, at present, compromised by the barriers of recognition and convertibility refered to above. 

This validation is currently undertaken voluntarily by the bitcoin account owners themselves and is accomplished by the users offering their resources, in the form of computer processing power and the use of computer hardware and electricity which makes the processing possible, to the greater bitcoin network for this purpose.

In return for the computer processing power and use of hardware and electricity which they dedicate to these processes, the bitcoin account owner receives a quantity of newly created bitcoins in exchange for the completion of a set quantity of computing (read bookkeeping and auditing functions) completed.  These newly issued bitcoins serve to dilute the overall stock of the existing bitcoins. 

The process of bitcoin creation realized through computer processing is refered to as “mining,” a name which is a fairly accurate description of the way in which bitcoins come into creation, even though the process more resembles accounting than strip mining.

As of this writing, we understand that mining bitcoins on a small scale is not profitable, which in layman’s terms means that the cost of the electricity needed to perform the computer processing involved in mining is greater than the amount of bitcoins which would come into existence as a result of the computer processing performed. 

This calculation is naturally expressed in dollars as we are not yet aware of a utility company which accepts bitcoins as payment for electric bills.

It would then follow that bitcoin creation would slow as long as this price relationship exists.  We will ignore, for the sake of simplicity, the fact that a great deal of bitcoin “mining” is done via bots which use the electricity and computer processing capacity of unwitting hosts, which makes mining profitable for some at the expense of others, and simply state that bitcoin creation, on net, is currently a losing proposition.

The fact that the mining of bitcoins is not profitable should make the existing bitcoins more valuable in the future as the stock of bitcoins will either cease to be diluted will be diluted at a lower rate.  This would theoretically cause the value of bitcoins to increase until it again became profitable to “mine” them, which in turn would lead to an increased rate of dilution of the bitcoin stock and lower relative value in exchange, etc.

In this sense, the economics of bitcoins is similar to that of mining precious metals.  Another similarity that the bitcoin has to precious metals is that theoretically there is a logarithm which ultimately will place an absolute limit on the number of bitcoins in existence.  The logarithm places a mathematical limit to the stock of bitcoins in the same way that nature places a theoretical limit on the extractable amounts of precious metals which can be used as money.

However, bitcoins have a distinct disadvantage to precious metals owed to the fact that bitcoins require constant bookkeeping and auditing to maintain the integrity and therefore value of the bitcoin as money.  Precious metals, on the other hand, do not rely upon administrative functions to maintain their value and rely entirely upon their relative value in trade.

Further, we must assume that the bookkeeping and auditing needed to maintain the integrity of the bitcoin will increase exponentially as bitcoin production approaches its logarithmically imposed limit, just as the incentive to perform these functions (mining, as it were) continues to diminish.

Given this inevitable dynamic, it is unclear if the integrity of the system can be maintained once the incentive to maintain the integrity of the system, which is currently supplied by the ability to “mine” bitcoins, is removed. 

Having said all of that, it is now time to point out the obvious flaw in the bitcoin model, the flaw which lands bitcoins squarely in the realm of equity and makes them unfit for long-term use as money:  The threat of competing digital currencies which would surely come into existence if the bitcoin were to gain widespread popularity and acceptance.

Even with the digital checks and balances on production which are mathematically built into the bitcoin model, the bitcoin, like gold, silver, seashells, and fiat currency, fails to completely solve the happy problem which has no solution:

That the infinite increases in trade due to the increased division of labor in the world will require money and debt markets with the flexibility and dynamism that only a completely free money supply can offer.

Gold and silver may hit physical limits, bitcoins may be limited by logarithms, and debt based fiat currencies tend to collapse upon themselves.  This is proof that none of them, by virtue of physical and psychological limitations, completely fulfill the role of money for man.  They were never meant to.  

The determination of what will serve as money must be left in the hands of the people who are involved in trade.  Left to their own devices, we would be amazed at the speed and efficiency with which the problem of what is money can be solved.

In other words, let those engaged in trade decide what is most suited as money at a given time and allow them to trade with it without hindrance.

For it is not the costs associated in the production of a monetary unit which remove value from the economy, rather, the administrative burdens, unnecessary conversion costs, and the rigidity of an imposed monetary unit which deals mortal blows to trade and consequently the ability of all humans to flourish to the greatest of their abilities. 

Unnatural restrictions on the money supply, which solutions like bitcoin attempt to solve, are devastating to trade.  The destruction wrought by monetary hegemony should surpass hunger, poverty, and climate change as global concerns, for allowing a free money supply to operate would serve to eradicate all of these problems and their symptoms, namely social unrest, terrorism, and health care crises.


Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 9, 2012

Copper Price per Lb: $3.70

Oil Price per Barrel:  $96.42

Corn Price per Bushel:  $6.41

10 Yr US Treasury Bond:  1.84%


Gold Price Per Ounce:  $1,589

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

Unemployment Rate:  8.1%

Inflation Rate (CPI):  0.3%

Dow Jones Industrial Average: 12,835

M1 Monetary Base:  $2,275,100,000,000

M2 Monetary Base:  $9,832,700,000,000