Tag Archives: inflation

Negative rates and the no bid Repo: It’s not your father’s overnight funding market

7/14/2014 Portland, Oregon – Pop in your mints…

A great deal has occurred since our last correspondence, most of it bad news for what passes today as monetary policy.

Fellow taxpayers have no doubt noticed that our once faithful correspondence has been less than faithful over the past several months. While explanations amongst chums the likes of which we have become are unnecessary, we offer a brief glimpse as to how The Mint has been spending his precious time as of late.

For starters, we have been frantically reconstructing 2013 and making various systems upgrades on our most recent assignment. Now that the work has been done and passed audit, we are moving through regular compliance reports and are about to begin the second part, (our personal favorite) of our not quite patented one/two accounting and treasury systems overhaul: The treasury overhaul part of the program.

Here we digress into what we consider our unique philosophy on data processing with regards to accounting information systems. If you could care less about such matters, please scroll to the next bolded heading to return to

A mere 11 years ago, we considered ourselves an accountant. We acted like an accountant, worked like an accountant, even smelled like an accountant (if indeed accountants can be said to have a smell about them.

Then we went to Spain, and had nothing short of an epiphany, which is as follows: Real business people could care less about proper accounting, they simply want the accounts collected and the bills paid, a steady stream of cash in the bank, and they want to get real-time financial metrics which will let them both know how their past decisions have fared and, more importantly, allow them to make better decisions about the future.

With this epiphany fresh in our mind, we realized that most accounting systems, while built by programmers to serve the business person, had been hijacked by accountants when they were set up, in most cases rendering the information the business person was to receive subject to seemingly infinite torture by the accountants before it could be presented, at which time the information was neither timely or useful to the business person.

With this realization, we developed our two-step approach to assisting business people in reclaiming their accounting data. The first step involves ensuring that the accounting system they are using is both adequate (it may come as a shock that many companies pay too much for systems that are no longer a good fit for them) and set up to capture and report the business’s financial data in a way that facilitates high level decision-making.

The second step involves addressing the issue of the timeliness of the data. We realized that in a great majority of transactions, the bank received the data before the accounting department did, and much valuable time and effort was wasted by waiting for the accounting department to input data into the accounting system, much of which was provided by the bank rather than internal sources, and then reconciling the system to the bank statement. The entire process was backwards, so we decided to perform data processing directly in the banks’ treasury management systems, where the transactions are initiated, approved, and executed, and have the bank data be easily uploaded into the accounting system, where it can be matched with vendor and client data and properly classified.

There you have it, it is much easier said than done, but once our program is complete, most companies we engage can get by with half of the accounting/fiscal personnel they had before, get their data in a timely and coherent manner, and usually end up saving money on their systems to boot.

In any event, between earning our daily bread in the above manner, watching the World Cup, and editing a taxonomic paper on Central American land crabs (which can be seen here: http://biodiversitydatajournal.com/articles.php?id=1161), we have been following the disintegration of the debt based currency system from a comfortable distance. Our observations on the most recent ruptures follow:

The No bid Repo: It’s not your father’s overnight funding market

In the late 1980’s, the Federal Reserve had just begun what would be a series of automatic bailouts to the larger financial system. After Black Tuesday in 1987, it became clear to most sober observers that the Fed would do everything in its power, which at the time was limited to rigging short-term interest rates, to ensure that financial markets remained liquid at all costs.

Perhaps not coincidentally, in the late 1980’s, Oldsmobile ran a series of commercials with the tagline, “it’s not your father’s Oldsmobile,” which seemed to be a vain attempt to minimize the “Old” and emphasize the “mobile” part of its name. In case you don’t remember how exhilarating it was, videoarcheology.com brings it to life for us once again:

What did the strategy of the Fed and the strategy of Oldsmobile have in common? They both assumed that demand for their product, no matter how unappealing it was, would be infinite. Oldsmobile gave up the ghost in 2004, maybe people did want their father’s Oldsmobile after all.

The Fed is still hard at work, but their product, the debt-based currency used by most financial institutions in the United States and indeed throughout the world, is going the way of the Oldsmobile.

The Federal Reserve got by for nearly 95 years by monopolizing the ability to provide something for nothing, something that appealed to governments, companies, and consumers alike. They substituted debt for money, and in the process opened up a world of possibilities never before fathomed.

The plan went well, people began to circulate the debt in place of money, with those closest to the Fed paying the least and those furthest way paying more, and people toiled day in and day out to move further up the food chain.

Sure, using debt as money left the occasional sinkhole in the economy, on those rare occasions when more debts were being cancelled than issued, but the Fed simply lowered interest rates to provide adequate incentive for people to demand more debt, lowering the perceived price of getting something for nothing.

Now, circa 2014, the Fed has lowered interest rates to zero and has taken the extra step of creating even more debt of its own to circulate. While things should be going gangbusters at the Fed factory, we open the pages of the financial news to find that:

a) The Fed can no longer control the interest rate mechanism as it did before and;

b) The Repo market, which funds $1.6 trillion in short-term loans every business day, is going no bid on an increasingly regular basis thanks to the 2010 Dodd-Frank Act, which was supposed to fix these sort of problems.

{Editor’s Note:  For a primer on the Repo Market, read this paper by the NY Fed:  Key Mechanics of the U.S. Tri-Party Repo Market, we dare you}

The Federal Reserve’s debt based monetary system has reached its theoretical limit. While the ECB has toyed with the idea of negative interest rates, the US market, specifically US Treasuries which are sucked into the Repo Market nightly, is rendering negative rates on its own, and the Fed is powerless to stop it.

In layman’s terms, the game has flipped on the Fed, and now people and companies are essentially saying “lend me $100 today, and I’ll pay you back $97 in a year and we are square.” Crazy as it may sound, this is the reality on the fringe of the credit markets, and it is the price of continuing to deal in a debt-based currency that is passed its prime.

Let’s face it, Oldsmobile wasn’t cool in 1988. They had tinkered with it to such a degree that it would never again be your father’s Oldsmobile, and that was not a good thing. In the same way, between QE, Operation Twist, and near zero short-term rate targeting, Ben Bernanke has so severely mangled the Fed’s balance sheet with his tinkering that maintaining the integrity of the US dollar and US Treasuries as any sort of measure of reliable benchmark is all but impossible.

Now, the engine of the Fed’s debt based currency is beginning to lose speed via negative nominal rates, and Janet Yellen is looking into the toolbox, only to realize that Ben left most of the tools rigged in the engine of the Fed’s Balance sheet, and that moving any one of them will cause a catastrophic failure of the currency. Not to mention that long-awaited, highly inflationary wage – price spiral is about to kick in.

Academic economists will one day struggle to explain what is happening now, while inflation rises, interest rates continue to dip further, going negative at the top of the financial food chain, and the Fed is left with nothing but rhetoric with which to attempt to execute monetary policy. This is likely to get ugly and, if possible, defy the laws of finance and perhaps even mathematics before the game is up.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for July 14, 2014

Copper Price per Lb: $3.25
Oil Price per Barrel:  $100.51

Corn Price per Bushel:  $3.78
10 Yr US Treasury Bond:  2.52%
Bitcoin price in US: $618.00
FED Target Rate:  0.09%
Gold Price Per Ounce:  $1,339

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  6.1%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  16,944
M1 Monetary Base:  $2,961,000,000,000

M2 Monetary Base:  $11,284,500,000,000

 

More Evidence of the Impending Wage/Price Spiral Appears

4/2/2014 Portland, Oregon – Pop in your mints…

The wage/price spiral.  It is a nasty economic phenomenon where the labor market suddenly tightens, causing a chain reaction of relative scarcity of output, which leads to higher prices for goods, which leads workers to demand higher wages, which employers pay for by raising prices and attempting to increase output, which finds itself back staring back at the tight labor market, where each available worker now knows he or she is worth much more.

The wage/price spiral, which is generally only possible on a broad scale in times like our own, when credit passes as money, appears to be accelerating.

Graphic courtesy of Deutsche Bank Research
Graphic courtesy of Deutsche Bank Research

The tightness in the US labor market has been happening in near stealth mode.  While the Unemployment rate remains above 6.5%, the line drawn in the sand by the FED for consideration of tighter monetary policy, what is lost in the data is that Baby Boomers are retiring.  While it is true that their overall consumption will likely decrease, it is also true that their staggering output as a generation is falling even faster, leaving fewer workers to fill the gaps, especially in highly skilled positions.

What does it mean?  If you are a worker feeling squeezed by higher prices, ask your boss for a raise.  If they won’t comply, start looking for another employer.  Chances are, by the time you have found a better offer, your current employer will realize what is happening, and make you an even better offer to stay.  This is a hypothetical situation, of course, and each person must carefully consider their own situation.  However, when this spiral takes off, you will want to be well ahead of the curve.

Stay tuned and Trust Jesus!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 2, 2014

Copper Price per Lb: $3.04
Oil Price per Barrel:  $99.20
Corn Price per Bushel:  $5.05
10 Yr US Treasury Bond:  2.80%
Bitcoin price in US:  $469.48
FED Target Rate:  0.06%
Gold Price Per Ounce:  $1,292
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  6.7%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  16,541
M1 Monetary Base:  $2,694,800,000,000
M2 Monetary Base:  $11,229,900,000,000

The Mint Money Supply Digest for May 7, 2013

5/7/2013 Portland, Oregon – Pop in your mints…

The Dow has briefly touched the 15,000 mark once again and frankly, from a money supply standpoint, it may just be getting started.  Ditto for the S&P 500, which is cruising past 1,600 and shows few signs of looking back.

The stock market is front running something.  Conventional wisdom, that of seven years ago, would say that it is front running the economy, that a brighter future is on the horizon.

Here at The Mint, we see the stock market as an indicator of the bloat in the money supply and the default primary beneficiary of those who are unloading the monetary premium embedded in the US dollar.

From the dawn of time, up until 1994, the M2 money supply ran ahead of the stock market.  Logically, money needed to be created before it could be invested.  Then, in 1995, the Glass-Steagall act, which had created a chasm between the commercial and investment flavors of banks since 1933, was effectively repealed as Citicorp and Travelers merged, forcing (or anticipating) the effective repeal of 28 firewalls that Glass-Steagal had set up between the banking sectors.

Graph of Normalized DJIA and Gold assets classes vs. M1, M2, and Federal Funds Rate measures
Graph of normalized DJIA and Gold assets classes vs. M1, M2, and Federal Funds Rate measures

This repeal allowed commercial banks to fund purchases of “Section 20” affiliates, effectively unleashing the credit of the Commercial banking sector into the stock market, and stock indices have front run the M2 money supply ever since (with one notable exception at the height of the 2008 crisis right before the FED threw caution to the wind regarding monetary policy).

The FED will not make the same mistake again.  They have embedded expectations that they are willing and able to print money in quantities necessary to avoid another wholesale collapse in the nominal price of financial assets, what we call the chocolate disaster.

However, the FED cannot avoid a collapse in the relative value of financial assets, which is currently underway.  While the Dow may be headed to 17,000 before its next scheduled breakdown, the wise among us (that’s you and I, fellow taxpayer), must move our gaze to the diminishing relative value of those 17,000 Dow points.

Take the example of gold.  Despite its recent collapse in price, gold, which may have yet another leg down, has shown itself to be incredibly resilient in the face of insurmountable odds, for the same credit mechanism that is used to shamelessly juice the stock market is also used to shamelessly short precious metals.

What is surprising, then, should not be that gold has collapsed some $350 in recent months, but that it has bounced back at all against a financial enemy with an unlimited supply of ammunition.

The physical supply of gold is another story.  As anyone who has attempted to source gold or silver at these rock bottom prices can attest, it has been difficult to say the least, and it will be mid summer before supplies recover from the recent price shock.

Another non productive asset that is gaining on the Dow in relative terms is the Bitcoin.  While the digital currency continues to be too volatile to trade, it is still attractive anywhere under $80.  While not the panacea that many believe it to be, the Bitcoin fulfills a human need that will not soon go away.

Finally, corn, which took a similar early April bath along with a number of commodities, is raging back as well.

It will be an interesting summer indeed as the vanilla disaster continues to pile up.  Soon, owning real assets will be not simply a luxury, but a necessity, as gains in the stock indices are dwarfed by real inflationary pressures.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 7, 2013

Copper Price per Lb: $3.26
Oil Price per Barrel: $95.80
Corn Price per Bushel: $6.79
10 Yr US Treasury Bond: 1.79%
Mt Gox Bitcoin price in US: $105.20
FED Target Rate: 0.15% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,449 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*: 0.25%
Unemployment Rate: 7.5%
Inflation Rate (CPI): -0.2%
Dow Jones Industrial Average: 15,012
M1 Monetary Base: $2,565,500,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base: $10,571,400,000,000

On Debt Jubilees and the Fed’s Inflationary Crazy Train

2/21/2013 Portland, Oregon – Pop in your mints…

It has been an exciting couple of days in the financial markets.  We almost can’t bear to watch.  From what little we can tell, the out-sized effects of short-term funds, which are jittery in nature, are determined to drive anyone who is taking a long view on the market mad.

Most of what passes as equity investing today is done with short-term funding provided by the Federal Reserve.  No matter how much propaganda the Fed puts out promising to maintain their QE programs in full force or keep the pedal to the metal on ZIRP, it is an inescapable fact that funds at many of the Primary Dealers are short-term and can be pulled by the Fed on a whim.

Lately, between the sequester threat and the Federal Reserve meeting notes which can only be described as anti-inflationary propaganda, the short-term funds have been taking flight.  How long this will last is anyone’s guess, but it is and always has been the Fed’s prerogative.  Whatever market participants anticipate that they will do with the regards to the money supply flashes through the equity markets, as equities are essentially on the margin of visible economic activity.

Today we wish to bring two things to the attention of our fellow taxpayers, unfortunately both of them are somewhat ominous.  They are nothing new, mind you, but as the warning signals of the next crisis and its probable outcome begin to appear on the horizon, we thought it best to keep interested readers informed.

First, Lee Adler over at the Wall Street Examiner, who performs a great service to the economic world by slicing through the economic propaganda to analyze the true data, shared this piece which is worthy of reading.  It explains how the mountains of customer deposits are piling up at Commercial banks.  If, and more probably when these deposits begin to be deployed in the real world, asset bubbles and inflation will begin to pop up in the US economy like lava flowing down the side of a volcano.

His article can be read here:

Bloomberg Reports Biggest Story of All Backwards As Fed Blows Dangerous Deposit Bubble

If Mr. Adler is correct, the Fed’s inflationary crazy train may be about to leave the station.

We are compelled to warn you that the next quote, from a piece by Jeff Neilson at www.gold-eagle.com, may be enough to make your blood boil if you are not one of the privileged classes (in other words, most of us) that he believes will likely benefit from the upcoming “Debt Jubilee,”

So what will our 21st century Debt Jubilee look like? With History’s most-corrupt governments, expect the most-corrupt “solution.” The debts of our governments, the Big Banks, and the wealthiest Oligarchs will be totally erased. We will be told they are doing this to “save us” from drowning in their (reckless/fraudulent) debts.

However, the Little People will face a somewhat different future. Their debts will be maintained at 100-cents-on-the-dollar. The bankers, politicians and Oligarchs (via their Corporate Media) will tell us that this is necessary to “protect the integrity of the System” (their System).

Think this level of perversity/injustice is impossible? We already have precedent. After the Wall Street banks had caused (created?) the Crash of ’08 (with their reckless fraud/gambling); and after they took their $15+ trillion from the U.S. government in assorted hand-outs, 0% loans, tax-breaks, and “loss guarantees” (i.e. more hand-outs); the Wall Street banksters kept their massive bonuses.

We were told this was because of “the sanctity of contracts.”

Then after this massive give-away; various U.S. governments began unilaterally hacking-and-slashing the wages, pensions, and benefits of their own workers – which had been freely/fairly negotiated in their own contracts. The reason? After giving $trillions to the bankers; the workers were told the government “couldn’t afford” to honor their contracts.

The sanctity of contracts is important, as all that men and women ultimately have in this world is their word.  Unfortunately for most of us, we may soon find out just how much the government’s word is worth.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for February 21, 2013

Copper Price per Lb: $3.55
Oil Price per Barrel:  $93.03
Corn Price per Bushel:  $6.90
10 Yr US Treasury Bond:  1.98%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,577 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,881
M1 Monetary Base:  $2,384,300,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,419,300,000,000

The GDP and Unemployment Red Herrings

2/1/2013 Portland, Oregon – Pop in your mints…

As we begin the month of February, it would appear that the US Economy has suffered from a couple of data shocks, which, taken at face value, would call into question the validity of the current rally in nearly every asset class (save bonds) and give rise to fears of the US slipping into another Recession or worse.

First, the Gross Domestic Product read came in at a negative 0.1% for the fourth quarter.  The GDP is mostly a bogus data point in an economy with a debt based currency.  At this point, the negative data, like most data that will appear this year, will give the Federal Reserve the statistical cover they need to continue QE and decimate the dollar.

The Unemployment rate, which inched up slightly, falls into the same category.  Given the paradigm shift that the US workforce is undergoing as the internet makes geography a non issue for anyone who works from a computer, and the demographic shift as the Baby Boomers ease into retirement make it hard to say what would constitute an appropriate amount of Unemployment at this time.

Full employment has always been a slippery concept, and at this point, the BLS statistics can be counted on to err on the side of covering the inflationary consequences of QE as well.

What has not changed is that people, when given the chance, will tend to spend more money than they have.  This tendency is again being allowed to manifest itself as credit restrictions are easing in the US and soon, even your cat will begin to receive credit card offers as they did in the good old days of 2005.

The Federal Reserve and every Central Bank on the planet have stuffed every orifice of the financial system with cash, so much so that they must lend gobs of it out to remain solvent.  The consumers are taking the bait, and the wave of inflation is now rolling through stocks and commodities.  It will not stop until QE stops.

And given the propaganda that passed as economic data prints this past week, QE will be with us for quite some time.  Plan and invest accordingly.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for February 1, 2013

Copper Price per Lb: $3.75
Oil Price per Barrel:  $97.77
Corn Price per Bushel:  $7.36
10 Yr US Treasury Bond:  2.01%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,667 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  14,010
M1 Monetary Base:  $2,455,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,412,500,000,000

The Repo man goes Basel on funding markets

1/25/2013 Portland, Oregon – Pop in your mints…

We have been remiss in our regular correspondence to you, fellow taxpayer, and we pray you will forgive us.  We have completed and published the first two volumes in our series, called “Why what we use as Money Matters.”  It is our humble attempt to explain, well, why what we use as money matters.  The volumes are currently available on Amazon’s Kindle as wells as in various eBook formats on Smashwords and can be accessed at the following links:

What is Money? – Volume I – Free until February 7, 2013 at Smashwords

What is Money? By David Mint

Of Money and Metals -Volume 2 – Free until January 31, 2013 at Smashwords

Of Money and Metals by David MInt

Our objective in writing the series is to convince humanity of two truths:

1.  That if the activities of the earth are to be in balance with the available resources, money must be something natural, in other words, not debt or a sort of promise or idea.

2.  That Anarchy is an ultimate given, and that Capitalism is the best response to this given.

The governments of the world, as we have known them, are disintegrating, but this will be addressed in our upcoming volumes in the series.

We would be honored if you would give them a read and keep watch for the upcoming volumes, for these ideas are exceedingly important.

Back to finance

While the Fiscal cliff and subsequent fallout have taken a toll on the average working American to the count of 2% right where it counts, there is a something altogether wonderful and dreadful knocking at the door:

Inflation

The wave of inflation that has been on the horizon ever since Federal Reserve monetary policy gave us new acronyms such as ZIRP and QE, appears to be breaking and will soon wash ashore.  Now that it is breaking, the only thing that stands between it and the average working American is some flavor of collective default by the nation’s banks.  Thanks to the programs which are represented by the above mentioned acronyms, this is highly unlikely.

At this point, then, the only entities whose default could cause such a chain reaction are the Federal Reserve, US Treasury, or possibly the ECB.  However, here at The Mint we believe that the tidal waves of cash that have been unleashed may even make the default of one of these institutions manageable.

The Federal Reserve has succeeded in the sense that they have flooded the system with so much cash and have repeatedly stated in no uncertain terms that they will backstop the Treasury and MBS market until the US Dollar’s last dying breath.  While for a time, maturing debt obligations were mopping up the liquidity that the FED was pumping in, most consumers have now moved to extend maturities via refinancing or, on the conservative end, have closed out both cash and debt positions by paying off mortgages with savings which had been “ZIRPed” into dormance as an income producing asset.  This collective action has put the economy in a sort of warped reset where the fiat currency debt monster can run amok for the foreseeable future, with the attendant fatal real world consequences.

Oddly enough, as the FED begins to claim victory over the financial crises which its own policies have made possible, the double whammy of the Basel accords and Dodd-Frank regulatory regimens may eventually eliminate many of the financial institutions which today are household names.

The Repo man cometh

In what is perhaps an unintended consequence, the afore mentioned regulations have given what is known as a REPO contract its walking papers.  In our oversimplified understanding of the matter, for simplicity is a virtue here at The Mint, the REPO arrangement, which is a glorified demand deposit, has allowed banks to hold their client’s funds on their balance sheet as Tier I capital.

In 2017, these arrangements will be forced to be properly classified as demand deposits, and many of the wiser financial institutions, who already have a long way to go to reach the Basel Tier I requirements, are already steering their clients away from these arrangements.

How much capital will this pull out of the banking system?  Nobody knows.  But what is for sure is that unwinding these REPO positions will leave some institutions exposed and unprepared.  They will probably become aware of their exposure via the classic individual financial panic mechanism:

The margin call.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for January 25 2013

Copper Price per Lb: $3.64
Oil Price per Barrel:  $95.88
Corn Price per Bushel:  $7.21
10 Yr US Treasury Bond:  1.95%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,659 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.8%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,896
M1 Monetary Base:  $2,397,900,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,501,100,000,000

Open Debauchery of the Money Supply

12/21/2012 Portland, Oregon – Pop in your mints…

As the world carries on we offer a glimpse of what is to come.  Two playful headlines that have appeared in the past two days which is essentially an advertisement that inflation has taken hold and will not soon go away:

U.S. Mint testing new metals to make coins cheaper

This article confirms what metals watchers have known for some time now, that the US Mint will have to change the content of pennies and nickels, at a minimum.  The Nickel inflation hedge we’ve mentioned before is about to go into effect.  You can read the gory details in the US Mint’s 2012 Biennial Report to Congress on the matter.

Next, we see that, strangely it seems, demand for $100 bills has begun to pick up.

Cash is King:  Printing of $100 Bills Soars

It appears that the dollar debasement is hitting main street.  To keep tabs on the matter, we refer you to the M2 money supply which we present below in our Key Statistics.

The debauchery of the US currency is now hitting the street, which may mean its days are numbered.  Once the moronic Fiscal Cliff and the upcoming Debt ceiling redux in March 2013 are resolved, the party will begin in earnest.

We reckon that over the next few months there will be a narrow window to get precious metals at what, in retrospect, will be a bargain price.  We look for the price to rise in fits and starts from early January through March, then take off through May.  Part of this is seasonal, and part of it is the debauchery related above.  However, it is the debauchery which will punctuate the upcoming move.

We would like to take this opportunity to send you all a big hug and wish you and yours a Merry Christmas and a Happy Holiday Season from us here at the Mint!

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for December 21 2012

Copper Price per Lb: $3.55
Oil Price per Barrel:  $88.66
Corn Price per Bushel:  $7.02
10 Yr US Treasury Bond:  1.75%
FED Target Rate:  0.17%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,657 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  13,190
M1 Monetary Base:  $2,374,000,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,428,000,000,000