Tag Archives: BLS

S&P Prepares to pass Judgment on US Debt, Unemployed for the long haul

8/5/2011 Portland, Oregon – Pop in your mints…
Mercifully, today we have time for a brief Mint.  It appears that the people at S&P are finally going to give the US Government a well deserved, long overdue, courtesy downgrade on their sovereign debt rating.
This will cause havoc with any investment policy, rule, code, law, etc. that relies on the US Government to maintain an untarnished reputation as the safest investment in the world.  Ironically, an S&P downgrade will probably trigger a rally in US Treasuries.  However, this phenomenon is more a testament to the ineptitude of the debt raters at S&P rather than any firming up of the nation’s finances.
But what if tax revenues began to increase?  They almost have to, even if by accident, given all of the cash that is flying out of stock, bond, and money market funds and on to the streets.  Word has it that over $66 BILLION left money market funds for parts unknown last week, mostly due to the debt ceiling debacle, which last week threatened to wreak the same havoc that a downgrade will likely cause on corporate short term cash investment policies across the globe.
For perspective, $144 BILLION ran out of money market funds the week that Lehman Bros declared bankruptcy.  But that, by most counts, was a surprise.
As food for thought, we submit this scary chart for your perusal, courtesy of the Money Game:
Unemployed for the long haul!

Stay tuned and Trust Jesus.

Stay Fresh!
P.S.  For more ideas and commentary please check out The Mint at www.davidmint.com
Key Indicators for August 5, 2011
Gold Price Per Ounce:  $1,663 PERMANENT UNCERTAINTY

Don’t be Fooled! June Unemployment Numbers cooked to keep interest rates and wages down

7/8/2011 Portland, Oregon – Pop in your mints…

Sound the alarms!  The today the BLS took the pulse of the labor market today and market observers jumped back, aghast that the patient, the US labor market, should be so weak.  According to the charts, he was well on his way to recovery.  After being in a coma for the past three years, it appeared that he would be back to his old self and dancing in the halls in a matter of months.

Now, the prognosis has taken a turn, albeit a small one, for the worse.

Here at the Mint, we take numbers with a grain of salt.  We have nothing against numbers; on the contrary, we are rather fond of them.  They give one the ability to appear to make sense of extremely complex phenomena.  They make mankind appear intelligent, cunning, even clairvoyant at times.

It should come as no surprise, then, that mankind, specifically those bent on “improving the world,” should place so much faith in them.  To understand and interpret numbers and then act on the data gives man a power rush that is exhilarating.

It is a fatal conceit.

It is illogical, perhaps insane, to think that something as complex as creation and the countless phenomena that occur every nanosecond can be adequately expressed (much less understood) in numbers.

On a small scale, such as a family farm, a small town, or even a remote island, numbers can prove very useful.  They can provide accurate, timely information about productivity and relative scarcity.  In these instances, numbers can be invaluable.

Begin to aggregate theses numbers and try to use them to understand phenomena on a large scale and they become not only devoid of meaning but dangerous.

Why does this happen?  Simply because the farther removed that the decision maker reviewing the number is from the processes on the ground, both in space and time, the less able he or she is to react in a coherent manner.  This, in a nutshell, is why Socialism, Communism, and any other form of Centralized planning or “world improvement” does not work on a large scale.

With this in mind, we will interpret today’s BLS unemployment numbers for you.  Economic observers have been trained to understand that 9.2% unemployment is bad for the economy.  Why it is bad, few stop to wonder, but that is a rant for another day.

It is simply understood to be bad, and since the economy needs to be “good,” the world improvers must do something.  What will they do?  First, they will use this as an excuse for the FED to keep the short term rates insanely low for a longer period of time.  This will not create employment but will create hyperinflation.

Second, the US Congress will raise the debt ceiling and resort to the Bush era style of stimulus, they type where every taxpayer gets a check in the mail from the Treasury.

Third, and most importantly, this announcement is a desperate attempt to keep domestic inflation in check.  Inflation, and then hyperinflation, will begin once wages increase.  The rise in unemployment sends the subliminal message to the working classes that they cannot demand raises because they are just “lucky to have a job.”

Are you really lucky to have a job?  The not so subliminal truth is that YOU ARE IRREPLACEABLE AND ARE WORTH MUCH MORE THAN YOU ARE CURRENTLY MAKING!

Lives and economies were never meant to be measured in numbers.  Numbers used to make large scale policies generally do more harm than good.  Numbers produced by a central authority often are done so either with the intent to deceive or are so untimely and incompetently compiled that they become deceptive as they do not accurately reflect present circumstances.

“Fear not, therefore; you are of more value than many sparrows!”

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

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Key Indicators for July 8, 2011

Copper Price per Lb: $4.36
Oil Price per Barrel:  $96.20

Corn Price per Bushel:  $6.72
10 Yr US Treasury Bond:  3.02%
FED Target Rate:  0.07% JAPAN HERE WE COME!

Gold Price Per Ounce:  $1,544 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.2%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,657 TO THE MOON!!!
M1 Monetary Base:  $2,020,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,112,300,000,000 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.