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.

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.