Tag Archives: Federal Reserve

Climate Change, Economics, Gold, The Mint

Global Banking Collapse, Global Cooling, Opinions on Climate Change

8/10/2011 Portland, Oregon – Pop in your mints…

Gold hit $1,800 today.  That should tell you all you need to know about what is happening.

We are trying not to look at the markets today.  It gives us the morbid feeling that one gets as they are about to witness a train wreck or other catastrophe.  Our curiosity begs us to look but our morality forbids it.

What we are hesitant to watch as it gets underway is some form of global banking collapse.  From CNBC:

“Rochdale banking analyst Richard Bove said there is little chance of a French bank default.

“If a bank in Europe went under, it would cause huge counterparty risk. It wouldn’t be that bad for 99 percent of the banks in the country. It would be bad for the biggest banks…Why are all the banks falling in price? The deeper issue is what the Federal Reserve did yesterday,” said Bove.

The Fed, in an unusual move Tuesday, revealed that its “extended period” to hold rates at zero runs until the middle of 2013. The Fed also downgraded its view of the economy to a picture of slow growth.

“The Federal Reserve told me, number one, that the economy is weakening and my loan losses just went up,” Bove said. “The ability to make new loans is hampered by the weaker economy, and on top of that, the Federal Reserve said they were going to keep margins on my product down,” he said, explaining banks need higher rates to make profits on lending and deposits.”

As we alluded to yesterday, the Federal Reserve essentially ended its storied career yesterday.  In an all out attempt to goose the markets it spent its last bit of credibility.  It is currently being carted off the field to cheer its losing team from the sidelines.  It may come back, but, like Brett Farve, it may find its former glory elusive.

With the FED injured and out of the game, the world’s largest banks are readying to show the world that there really is no entity on the planet which is “too big to fail,” starting with themselves.  There is no doubt that the ECB will pull out all the stops to save the large French banks, as Mr. Bove suggests above.

They will be carted off behind the FED.  But enough of the markets, it is just too ugly to gaze upon.

Let’s talk about the weather!

It is an unusually cold “summer” day here in Portland.  We loosely use the term summer because it now seems that summer has taken its own vacation and left the inhabitants of the Northwest with a straight shot from Spring to Fall.  Not so bad, provided we get the best of both seasons.

Still, the lack of sunshine at this time of year seems to be taking its toll on people.  When the sun comes out here, you suddenly become aware that the city has about triple the number of inhabitants than you once thought.  People literally hibernate here and when the sun brings them out it can be startling if you are not expecting it.

Logic would follow that, with the recent weather data taking a turn for the cooler, the global warming crowd would declare victory and let the planet move on to bigger and better things.   Now that the myth of global warming is apparently being disproved by nature herself, scientists are clinging onto the term “climate change” to justify the right to determine who needs how much energy.  The right to energy in recent times was determined by wars so perhaps this is an improvement. 

Many will quickly note that we have certain facts wrong about global warming/climate change and will want to correct us in our error.  To them we say, please do not waste your time.  We do not pretend to be an expert at anything here at The Mint, we are merely opinionated.  The most normal thing is for us to be wrong, it helps keep us humble.

Flooding on the Missouri River at Omaha, Nebraska - July 2011

That said, we base our “the globe is now cooling” opinion on two anecdotes that we heard while in Nebraska recently.  First, Lake McConaughy, which just five years ago was nearly bone dry is now full to overflowing.  The “experts” said that it would take 50 years to reach normal levels.

Second, we spoke with a guy from northern Wyoming who said they are seeing new GLACIATION taking place right before their eyes.  In a valley where last season there was merely a stream coming down from the mountains now stands a new glacier over 50 feet high.  Not just snowpack, a glacier.  He could not recall this ever happening there before.  Let alone so quickly.

Then there are the bears.  Rumor has it that they are moving to lower altitudes in the Northwestern US because snowpack in the mountains is not receding as it normally did and this is driving the bears closer to populated areas in search of a feast to fill their bellies for the winter.

More Flooding near airport on the Missouri River at Omaha, Nebraska - July 2011

And finally, everyone is aware of the flooding taking place along the Missouri and Mississippi rivers this season.

To us, here in the Northern Hemisphere, it appears that the globe is now cooling at an alarming rate.  Is the solution now to burn more fossil fuels?

Our point is that the weather is something that no man, no matter how many terms he has spent in Congress, can control.  Those who believe that mankind can somehow master the weather (the logical implication and end of most policies invoked in the name of stopping “climate change”) are innocently deluded at best and in the worst case may be power hungry control freaks.

As for allowing Wall Street first dibs at selling us the air we breathe (cleverly disguised as “carbon credits”), any thinking person should quickly identify this notion as just plain insanity.

On the other hand, we have great respect for people who are deeply committed to taking care of the environment.  We wish them well and whole heartedly support their dream of bringing peace to the earth and balance to what occurs on it.

Our disagreement with most mainstream climate policy is a question of methods.  While most see a problem with what mankind currently uses to create energy, we see as a problem with what mankind has chosen to use as money.

Once the monetary system is fixed (which may be occurring shortly), we suspect that the earth will be cleaner and greener than even the most ambitious environmentalist has ever imagined.

Best of all, the change will be a product of mankind’s collective free will, not of the hollow decrees of a governmental edict.

Imagine.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 10, 2011

Copper Price per Lb: $3.91
Oil Price per Barrel:  $82.89

Corn Price per Bushel:  $6.78  
10 Yr US Treasury Bond:  2.13%
FED Target Rate:  0.10%  TIGHTENING?  NOT!

Gold Price Per Ounce:  $1,795 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:  10,719  TO THE MOON!!!

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

Economics, The Mint

Crash! The Mother of all Calls illustrated by Dave Kingman

8/4/2011 Portland, Oregon – Pop in your mints…

Today the Dow fell some 500 points.  Looking further, everything seemed to fall today.  We hope you have a good umbrella,  fellow taxpayer, it could be quite a storm.

Three noteworthy things seemed to have taken place in no particular order and for no apparent reason other than to unite to tank financial asset prices all over the globe, which is no small feat.  We will take them one by one.

First, overnight, the Japanese Central Bank intervened to prop up the dollar (or weaken the Yen, however you prefer to look at it).

Second, the world gave a collective thumbs down to the Eurozone’s “effort” to stabilize its bond markets.  The Euro Feds appear over matched in their currency union’s first true fidelity test.

This uncoordinated action led to the third event which we will call the “mother of all calls” on the US Dollar.  With short and long interest rates skipping around a zero as far as the eye can see, speculators have taken swings at the dollar like Dave Kingman at the 2-0 fastball.  The dollar is already sold short on an almost unimaginable scale.

Today, those speculators, ala Dave Kingman, whiffed and nearly fell over.  The only way this “mother of all calls” could be satisfied was for those short the dollar to quickly and injudiciously exit other positions.

This exiting injudiciously of  other positions is colloquially called a crash.

This crash, along with the foul smelling economic datacoming out of the US will give the Fed and Congress all the ammunition they need to launch both QE3 and any and every fiscal stimulus program they can dream up.

QE3 and fiscal stimulus on steroids will soon prove those speculators short the dollar right and the final, sordid chapter of the US Dollar’s history is about to begin!

Dave Kingman may have whiffed at the 2-0 fastball, but he has two more swings…

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 4, 2011

Copper Price per Lb: $4.19
Oil Price per Barrel:  $85.60

Corn Price per Bushel:  $6.93
10 Yr US Treasury Bond:  2.46%
FED Target Rate:  0.12%  TIGHTENING?  NOT!

Gold Price Per Ounce:  $1,649 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:  11,384  TO THE MOON!!!
M1 Monetary Base:  $2,012,200,000,000 RED ALERT!!!
M2 Monetary Base:  $9,226,100,000,000 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.

The Mint

Huddled Masses of European Capital Fly to US Shores

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

The crisis in the Eurozone is getting too big to ignore.  The gig is up, the Greek Government is in default, and Portugal and a host of private lenders, amongst them the ECB itself, are on their way there as well.  So certain is this fact that Moody’s even went on record and took the small step of downgrading Portugal’s debt.

Naturally, the Europeans  can’t believe it.  Don’t they pay good money for these ratings?

Whatever Moody’s reasons for stating the obvious, the news is having the effect of sending money fleeing across the Atlantic to US Markets any which way it can.  Commodities, Stocks, Bonds, even Real Estate are being bid up today as the European Bond Market collectively exhales capital.

For the moment, inflation on this side of the pond is only moderately accelerating as much of the cash is trapped on the Ellis Island of the US Banking system at the FED member banks.

Send me your tired, wadded up Euro capital looking for a home!

But as any banker knows, if you can’t lend the money then excess cash begins to crush your balance sheet.  This is why it is probable that the US will participate in a Eurozone bailout.  Even the threat of US intervention should get this newly immigrated capital looking for a new home shortly after arriving.

The trillion dollar question is now begging to be answered, will the US avoid default and keep the mushroom shaped debt sponge intact or will the current stalemate in Congress finally put the squeeze on the debt sponge and unleash the 500 year inflationary flood onto American shores from which there is but on escape (buy gold, silver, or anything real)?

We may know the answer sooner than we think!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at www.davidmint.com

Key Indicators for July 6, 2011

Copper Price per Lb: $4.30
Oil Price per Barrel:  $97.21

Corn Price per Bushel:  $6.47
10 Yr US Treasury Bond:  3.10%
FED Target Rate:  0.08% JAPAN HERE WE COME!

Gold Price Per Ounce:  $1,529 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,626 TO THE MOON!!!
M1 Monetary Base:  $1,954,300,000,000 RED ALERT!!!
M2 Monetary Base:  $9,098,400,000,000 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.


The Mint Finger Puppet Theatre

The FED to Drop Money From Helicopters

With consumer credit in a long term downtrend, the US Congress unable to come to an agreement to raise the debt ceiling, and the Euro system on the verge of collapse, The FED appears desperate.  Our speculation is that they are now plotting something we call “Helicopter Phase.”

Helicopter Phase happens when money is literally showered on the American people in a desperate attempt to keep the currency regime from disintegrating.  Ben Bernanke attempts to describe it in his own words in the latest edition of Mint Finger Puppet Theatre:

Helicopter Phase will most likely take the form of the stimulus checks that have been mailed out to taxpayers in the past as giving away money to the banks, defense contractors, and other special interests has failed to create any long term growth.

In rural areas, however, we suspect that Ben Bernanke‘s famous helicopter method is likely to prove useful:

So keep your eyes on the sky and Stay Fresh!

The Mint

Waiting for a Default, the Search for Knowledge, Final Prices, and What do Schlitz and the US Dollar have in Common?

6/22/2011 Portland, Oregon – Pop in your mints…

We search for answers, yet the questions are trumping them right now.  This phenomenon is inherent to human existence.  People are always chasing after knowledge.  In the Bible, the book of Daniel speaks of our times when the Angel tells Daniel in his vision:

“But you, O Daniel, shut up the words, and seal the book, even to the time of the end: many shall run to and fro, and knowledge shall be increased.”

Daniel 12:4, King James Version

A little bit of knowledge sparks a thirst for more knowledge, which, once quenched, sparks an even greater thirst for knowledge.  Like Carmex, which soothes one’s chapped lips for a time only to dry them out again, which appears to create a perpetual “need” for to the product, knowledge provides answers and understanding which lead the enquirer to even more questions, and the cycle repeats itself.

The phenomenon expresses itself in markets in the form of a search for a “final price”.  In a free, unfettered marketplace, this price, in money terms, represents all that is known about the value of the good that is being exchanged for money at that point in time.  However, this “final price” is in and of itself a new data point to be considered, as is the exchange of goods which it represents.  This changing data necessarily creates a new “final price” which, by definition, takes into account all factors know about the value of the good and so on.

Ever since we decided to eat the fruit of the tree of the knowledge of good and evil, the chase for knowledge has continued and will continue until Jesus returns.

But what does this have to do with the US Dollar, let alone Beer?

We are glad you asked as we were getting a bit side-tracked.  Our personal search for knowledge has brought us to the most recent of the endless questions that need to be answered:

When will Central Bank Currency Regimes and Sovereign Governments admit they are bankrupt and be allowed to default?

This is an URGENT and very important question as the entire financial world cannot progress until this question has been answered.

To be clear, most western governments and their Central Bank run currency regimes are now technically in default.  They have been ever since they began to “solve” liquidity problems via money printing or “Quantitative Easing” (QE for short).

The acts of Quantitative Easing, which have been embarked upon by the US, Euro, and Japanese Central Banks is only necessary when the faith based currency regime in question has failed.  The necessity to print money which is not demanded by the market nor provided at market prices provides concrete proof that people are no longer willing to further enslave themselves by incurring additional debt.

As we have explained in this space before, debt is the lifeblood of the currency regime.  In these mindless confiscatory monetary systems where the only way to create money is to coax someone else into incurring debt, shrinking debt is the equivalent of someone pushing the currency regime’s self destruct button.

But instead of recognizing this fact for what it was, a failure of the system, much of western civilization continues in willful denial.  Soon, however, everyone will be rushing for the exits.

But we promised you a beer, fellow taxpayer, so crack yourself a cold one (on your own dime, of course, this is, after all, a free newsletter) and see if you tell us what the Federal Reserve Notes that we currently use as money and Schlitz Beer have in common?

What do Schlitz and the Federal Reserve Note have in Common?

Need a hint?  Think quality, or lack thereof.

Give up?  Here are the answers, as always, we invite inquiring fellow taxpayers to add to this list by commenting below.

First, both Federal Reserve Notes and Schlitz were once the gold standards of their product class (currency and beer, respectively).  Federal Reserve Notes took the place of US Dollars in 1913 and maintained the US Dollar’s tradition of quality and enjoyed increased market share until finally overtaking the British Pound Sterling as the world’s currency of choice.  In the beer industry, Schlitz rose to overtake rival Pabst as the most popular beer in the world in 1902.

In the 1970s, the Schlitz brewing process was changed to make use of high temperature fermentation in order to further speed production.  This change and subsequent changes in the formula had disastrous results which came to a head in 1982.  On the US Dollar front, then President Richard Nixon began to tinker with the US Dollar formula in the 70s, namely making the US Dollar no longer convertible into gold.  This watering down of the dollar supply had disastrous effects which also came to a head in the early 1980’s.

Both Schlitz and the US Dollar then continued to generally decline in status for close to 30 years.

In 2008, however, the old Schlitz formula was discovered and has been revived by Stroh’s Brewing Company to give new life to an old beer that everyone had left for dead.

Circa 2011, the US Dollar is still yearning to return to the “gold convertibility” formula that made it so insanely popular for the first half of the twentieth century.

Is there anyone who can find it?

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  If you enjoy or at least otlerate The Mint, please share us with your family, friends, and colleagues.

Key Indicators for Wednesday, June 22, 2011

Copper Price per Lb: $4.10
Oil Price per Barrel:  $95.06 A FAILURE TO INFLATE

Corn Price per Bushel:  $6.07 MONETARY POLICY IS NOT WORKING
10 Yr US Treasury Bond:  2.99%
FED Target Rate:  0.09% FED IN PERMANENT DESPERATION MODE

Gold Price Per Ounce:  $1,549 BENEFITING FROM PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.25%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,163
M1 Monetary Base:  $1,921,900,000,000 RED ALERT!!!
M2 Monetary Base:  $9,084,400,000,000 YIKES!!!

*See MINT 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.

72 Hour Call

72 Hour Call for June 22, 2011

Today’s Call:  Yield on 10 US Treasury to fall, price to rise.  Currently 2.99%.

Rationale:  The combination of the FED downgrading the economic assessment and announcing no further stimulus along with no clear progress on the debt ceiling will cause, paradoxically, talk of a fiscal stimulus package so that authorities can claim to be “doing something.”  Problems in Greece will cause most funds to repurchase US Treasuries by default to stay away from the Euro.

Result of Call for June 17, 2011:  Dow Jones Industrial Average to rise.  Was 12,004, Currently 12,163.  Good Call.

Calls to Date:  Good Calls: 30, Bad Calls: 25, Batting .545

Key Indicators for Wednesday, June 22, 2011

Copper Price per Lb: $4.10
Oil Price per Barrel:  $95.06 A FAILURE TO INFLATE

Corn Price per Bushel:  $6.07   MONETARY POLICY IS NOT WORKING
10 Yr US Treasury Bond:  2.99%
FED Target Rate:  0.09%  FED IN PERMANENT DESPERATION MODE

Gold Price Per Ounce:  $1,549 BENEFITING FROM PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.25%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,163
M1 Monetary Base:  $1,921,900,000,000 RED ALERT!!!
M2 Monetary Base:  $9,084,400,000,000 YIKES!!!

 *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.

72 Hour Call

72 Hour Call for June 21, 2011

Today’s Call:  US Dollar Index to fall.  Currently 74.61.

Rationale:  The Federal Reserve is beginning its policy meeting today surrounded by the news of an economy that is “headed for” (already in) a depression.  Anticipation of Greek “progress” via a confidence vote to lift the Euro temporarily.  This, along with news that Obama and Boehner are making progress on the US debt ceiling standoff, should shoot the dollar higher.  The Fed cannot let this happen and may even recommend more direct stimulus to taxpayers since QE measures have failed to spur consumer confidence.  This should weaken the dollar.

Result of Call for June 16, 2011:  Capital One Financial Corporation (COF) to fall.  Was $49.00., Currently $50.40.  Bad Call.

Calls to Date:  Good Calls: 29, Bad Calls: 25, Batting .537, seriously reverting to the mean!

Key Indicators for Tuesday, June 21, 2011

Copper Price per Lb: $4.10
Oil Price per Barrel:  $93.40 A FAILURE TO INFLATE

Corn Price per Bushel:  $7.07   MONETARY POLICY IS NOT WORKING
10 Yr US Treasury Bond:  2.99%
FED Target Rate:  0.10%  FED IN PERMANENT DESPERATION MODE

Gold Price Per Ounce:  $1,546 BENEFITING FROM PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.25%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,207
M1 Monetary Base:  $1,921,900,000,000 RED ALERT!!!
M2 Monetary Base:  $9,084,400,000,000 YIKES!!!

 *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.

Economics, The Mint

Inflation set to Bloom, Bernanke Resorts to Desperate Pleas to Raise the Debt Ceiling

6/14/2011 Portland, Oregon – Pop in your mints…

The Rose Festival has dominated the city’s waterfront park for the past two weeks.  Carnival rides have been up since Memorial Day weekend and an assortment of ships from the US and Canadian Navy (affectionately known as the “Canavy”) arrived late last week.  After no fewer than four parades, the annual Dragon Boat Races rounded out the festivities.

The Festival usually marks the beginning of summer, which is defined as the absence of rain for four delightful months, here in Portland.  While the rain seems to have done its part, the weather remains colder than one would expect.

This year was the first year that anyone can remember the roses not being in full bloom during most of the festival.  An uncharacteristically cold spring has caused many of the plants to hold back here from showing off their blooms.  When they do finally bloom, it tends to happen quickly and spectacularly.

For some reason the plight of the roses has us worrying about inflation.  We have been certain that inflation is on the horizon for some time now, and while there has been an uncomfortable rise in food and gasoline prices, it is hardly the degree of inflation that we had been anticipating.

Are we early or just plain wrong about inflation?  The question is troubling.  What is certain is that many of the things that we have speculated would happen are coming to pass.  Most significantly, the US Government appears to be approaching a moment of truth regarding its dire finances.  The simple question of whether or not to raise the debt ceiling has opened a Pandora’s box of questions about the nation’s spending priorities.

Now the 2012 election cycle is beginning and US lawmakers have rushed out the door to the campaign trail and have left Pandora’s box wide open on the Capitol floor with its questions racing about the room:

Should we cut entitlements?

Enact more economic stimulus?

Will the Government really go bankrupt on August 2nd?

Is the activity on Twitter accounts really open to the public?

With the national political circus about to go into full swing, any hope of a serious discussion about a realistic budget or debt ceiling is gone.  What we are now left with are desperate pleas for action from none other than Ben Bernanke, the ace lobbyist for the nation’s largest banks.

Today’s plea was made by Bernanke at the Committee for a Responsible Federal Budget’s appropriately titled annual conference: “The Debt Ceiling, Fiscal Plans, and Market Jitters, Where Do We Go From Here?”

Mr. Bernanke, in his classic, diplomatic style, told the Republican leadership in attendance that he appreciated what they were trying to do in trying to get the nation to live within its means, but that their use of the debt ceiling as a hostage was not an appropriate tool for the job.  Instead, he advocates deficit reduction goals which trigger automatic cuts if they are not met.

Leading Lobbyist for the Banking Sector

The United States is one of the few countries with a congressionally mandated debt ceiling.  Contrary to Mr. Bernanke’s belief (which we must say defies logic), the debt ceiling is the perfect tool to use if a lawmaker wants to put an end to out of control spending but doesn’t have the time to gain consensus for a reasonable budget plan.  It is the ultimate way to “trigger automatic cuts.”

Perceptive readers will note that what Mr. Bernanke’s proposes is the same fiscal spending control model that has worked spectacularly in Europe. Just ask the Greeks!

Still, the question remains, where is the inflation?  Our simple analysis led us to believe that under current circumstances the FED would print money to give both to its member banks and to the US Treasury until things either got better or the dollar was completely worthless in exchange for goods.  Our money is on the latter passing before the former.

It now appears that the US government has temporarily thrown a wrench in those plans.

But this should come as no surprise.  As Henry Hazlitt so eloquently explains in his book Economics in One Lesson, government intervention in the economy always fails to achieve its desired ends and almost uncannily brings about results contrary to those that the government intended.

Would it not make sense, then, that the current efforts to produce price inflation turn out to be dramatic failures as well?

Then, long after the government has abandoned its inflationary policies, a tidal wave of cash will appear quickly and spectacularly, not unlike the rose blooms in Portland this year.

This inflation will occur when the US Government, whether on its own or under compulsion from the bond markets, turns its clumsy machinations towards austerity.  In other words, when it least wants or expects it.

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  If you enjoy or at least can stomach The Mint, please share us with your friends, family, and colleagues!

Key Indicators for Tuesday, June 14, 2011

Gold Price Per Ounce:  $1,524 MINT Perceived Target Rate*:  2.25%
M2 Monetary Base:  $9,005,800,000,000 STARTING TO DRY UP?  NOT!

*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.

72 Hour Call

72 Hour Call for June 14, 2011

Today’s Call:  US Dollar Index to fall.  Currently 74.44.

Rationale:  It appears that the march out of US Treasuries and into cash has begun.  Big banks really have no choice.  With the US political establishment in gridlock on the debt ceiling there is now growing principal risk in holding US Treasuries.  Without the prospect of further debt expansion to mop up all of the excess cash in the system in the short term, the Fed is resorting to the tactic of deflationary propaganda in a futile attempt to quell inflationary pressures.

Result of Call for June 9, 2011:  July Corn Price Per Bushel to rise.  Was $7.85-4, Currently $7.55-4.  Bad Call. 

Calls to Date:  Good Calls: 28, Bad Calls: 21, Batting .571

Key Indicators for Tuesday, June 14, 2011

Copper Price per Lb: $4.16
Oil Price per Barrel:  $99.43

Corn Price per Bushel:  $7.55
10 Yr US Treasury Bond:  3.10%
FED Target Rate:  0.10%  FED STILL IN DESPERATION MODE

Gold Price Per Ounce:  $1,524

MINT Perceived Target Rate*:  2.25%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,076
M1 Monetary Base:  $2,022,700,000,000 RED ALERT!!!
M2 Monetary Base:  $9,005,800,000,000 STARTING TO DRY UP?  NOT!

*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.

Economics, Events, The Mint

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.

72 Hour Call

72 Hour Call for June 7, 2011

Today’s Call:  NY Crude Oil to rise.  Currently $98.42.

Rationale:  Stocks of Oil tanker transporters are turning slightly higher which generally leads to an increase in the spot price of oil.  This, combined with the effects of Bernanke’s market soothing words today should push commodity prices more than stock prices.  This is the new trend, fresh money is moving into higher commodity prices which will eventually erode stock prices on a relative basis.

Result of Call for June 2, 2011:  10yr Bond Yield to fall (price to rise).  Currently 3.064%, Currently 3.042%.  Good Call. 

Calls to Date:  Good Calls: 26, Bad Calls: 18, Batting .591

Economics

The FED to go Bankrupt in 2012?

We came across this video today posted by the “Man of Truth” who apparently makes these sort of predictions.  He made his in 2009 and we have to admit that every day that passes the financial world is careening towards this inescapable outcome.  Last week we read how it is technically possible, no, probable, that this will occur.  What do you think?  The “Man of Truth” has his opinion, enjoy!