Tag Archives: QE

Economics, Events

September 11th, and why Money does not Exist

9/11/2015 Portland, Oregon – Pop in your mints…

September 11th has become a day of remembrance in what was formerly the land of the free.  The horrific spectacle of the events that unfolded in New York and Washington that infamous day will be forever etched in the memory of our generation.  While we did not realize it at the time, it was the day that the United States lost a great deal of freedoms.

The external restrictions that have been imposed on society post 9/11 are well documented.  The passage of the Patriot Act has given the government carte blanche when it comes to surveillance and disregard for due process.  While these practices have always been employed to some degree, the Patriot Act in a sense legitimized them.

Perhaps more devastating, however, has been the mental shift that 9/11 caused in the thought of US Citizens.  Pre 9/11/2001, the US was a place where truly anything was possible, it was the Land of the Free, the sky was the limit.  Humankind had just “survived” the Y2K non-catastrophic event and credit flowed freely.

More importantly, though, our minds were free.

Naturally, we can only speak of our own experience, but we would be willing to bet that many who lived these events would agree.  Pre 9/11, the United States was a completely different country.

Ironically, 9/11/2001 was the day after we had been laid off from our first job.  We had cornered ourselves in Internal Audit, which for the uninitiated, is the first department to get the axe when cost cutting measures are employed.  Really, who wants to pay people to tell them what they are doing wrong all day unless they can justify the expense?

We received the memo and our final check on the 10th.  On the 11th, we woke up to the first day of freedom that we could recall, turned on Good Morning America, and watched the events unfold.  At that point they were speculating that the first tower was some sort of small aircraft accident.  A caller from New Jersey was on and said, with a grave seriousness in his voice, that it was not a small aircraft, but a commercial airliner.   Then, on live television, the second airplane hit the second tower.  We are embedding a YouTube video of this moment for those who did not see it.  Please be advised that it is indeed disturbing and skip it if you do not want to be shocked:

It was at that point that we knew something bigger than ourselves was occurring, and God had set us there to PAY ATTENTION TO WHAT WAS GOING ON!  We were new to Christianity, true Christianity, and had begun to truly commune with God over the past several months.  To those who have not had similar conversations with the creator, this will sound strange, but God does speak quite clearly to those who are paying attention.

Anyway, God said, “It’s time.”

This has set our life on a completely different course, one that you, fellow taxpayer, are now a part of.

Ah yes, we were going to explain why money does not exist, at least not in the sense that most understand it.

The Federal Reserve is set to meet in September.  There is an expectation that they will raise interest rates.  However, there is also a sense that the economy is somehow still in a funk.  What is the Fed to do?

We postulated earlier this year that the Fed would sooner raise interest rates than end its QE money printing programs.  We were wrong, QE ended before rates increased.  However, we hold out the spectre that, eventually, perhaps this month, the Fed will need to increase its target rate.  When it does, it will cause big problems for large banks.   Banks will need a buyer for the masses of Treasuries they have to hold as a result of Dodd-Frank.  The Fed will buy them at cost (not market, as their market value will be dropping), effectively reinstating their QE program.

They will raise rates on the short end and work to maintain lower than natural long rates.  Anything else would spell disaster for the economy.

Why can the Fed employ QE (electronic money printing) in the first place?  Because money does not exist.  What we use as money is really credit.  Credit and Money are opposite elements in the realm of economics.  They should cancel each other out.

Now that Money is credit, the productive activities of humankind are aligning themselves in direct conflict with the needs of the natural world.  And the chasing of non-existent money is causing humankind to strip mine the earth.

Will we learn in time?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 11, 2015

Copper Price per Lb: $2.43
Oil Price per Barrel:  $44.79

Corn Price per Bushel:  $3.62
10 Yr US Treasury Bond:  2.19%
Bitcoin price in US:  $240.28
FED Target Rate:  0.14% 
Gold Price Per Ounce:  $1,106

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  5.1%
Inflation Rate (CPI):   0.1%
Dow Jones Industrial Average:  16,330
M1 Monetary Base:  $3,132,300,000,000

M2 Monetary Base:  $12,088,500,000,000

Economics, Monetary Theory, Politics, The Mint

A Brief Reminder of the Function of Central Banks circa 2013

An economist explains quantitative easing for the uninitiated, brought to our attention via Zerohedge:

Just in case you missed it earlier, the sovereign bailouts explained:

That pretty well sums up the political and banking sector’s strategy for dealing with the present crisis.
To quote Alfred E. Neuman:
“What, me worry?”

Economics, The Mint

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

Economics, Politics, The Mint

Federal Reserve Effectively Forgives US National Debt

12/11/2012 Portland, Oregon – Pop in your mints…

Last week, we made a vague promise to provide data to back a claim that the US Debt at the FED had already been largely cancelled via the various quantitative easing (QE) operations that have been realized over the past several years.  This fact makes any talk of solving the moronic “Fiscal Cliff” via extreme methods such as minting platinum coins with $1 Trillion face value unnecessary.

In an attempt to illustrate what amounts to an effective forgiveness of a portion of the US National Debt by the Federal Reserve, we offer the following graph, which plots the both the official US National debt as well as the official US National debt net of the Federal Reserve’s holdings as a percentage of GDP.

US Debt GDP QE Graph

 

As you can see, the real US National debt to GDP is closer to 94% rather than the projected 105% which the official US National debt figures would suggest.  The Federal Reserve, at last count, holds roughly $1.6 Trillion of US Treasury debt.  While this debt is still theoretically on the books, it can essentially be removed from consideration when arguing about the need to solve the debt problem, vis-a-vis the moronic Fiscal Cliff debacle that is playing out in Washington.

94% is an alarming level, but according to our projections, the current US Government current account deficit cycle is about to end as the waves of new currency released into the global economy by the Federal Reserve and other central banks begins to run through the coffers of the US Government.

Despite the desperate proclamations by Congress that it will be difficult to solve their (yes, this is their problem) impasse, indicators such as an EFT that tracks the Defense industry, XAR, which would theoretically be the hardest hit were the US to fail to address portions of the Fiscal cliff such as suspending the sequestered spending cuts agreed upon as a result of the infamous Debt ceiling debacle, are not showing any signs of trouble.

In other words, the financial markets are assuming that the US Congress and Executive, when push comes to shove, will wind up and kick the can a mile down the road, as they did when the debt ceiling was bearing down on them.

According to our projections, there is no debate, the Fiscal Cliff does not even exist, rather, it is a figment of the collective imagination.

We do not believe in money, at least not in the form of money that is currently used in America today, and it appears that the US Congress is beginning to come around to our point of view.  If the Federal Reserve will simply finance deficits ad infinitum, why even bother with the Fiscal Cliff charade?  We are still working to answer that question, and leave it for you, fellow taxpayer, to ponder along with us.

The real question, the one which we wrestle with every day here at The Mint, is when will the faith in the Federal Reserve be destroyed?  With the advent of the various QEs beginning in 2008, the Federal Reserve system effectively collapsed.  The creation of credit was no longer self sustaining in the economy.  The FED has been living on borrowed time.

As December 21 approaches and those who have misinterpreted the Mayan calendar wonder if December 22nd will come, we look forward to the 22nd of December, when the Federal Reserve’s charter is rumored to expire, and YouTube’s “Man of Truth” famously prophesied that the Federal Reserve would go bankrupt. Technically, he said “December 2012”, but, after 99 years, why split hairs?

Chances are that the world will wake up on December 22nd and carry on.  However, if you see the words “Force Majeure” in the financial headlines, get ready to calculate prices in a new currency for 2013.  For the US may swerve to avoid the Fiscal Cliff, but sooner or later it will drop off the currency cliff.

That is when things will get very interesting indeed.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for December 11 2012

Copper Price per Lb: $3.65
Oil Price per Barrel:  $85.84
Corn Price per Bushel:  $7.24
10 Yr US Treasury Bond:  1.65%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,710 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  13,284
M1 Monetary Base:  $2,457,800,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,275,200,000,000

Economics, The Mint

QQE – Quantum Physics meets Central Banking

10/4/2012 Portland, Oregon – Pop in your mints…

There is much confusion amongst economists regarding the effects of the various programs which are currently being run by the largest of the Western Central Banking cartels known as Quantitative easing, better known by its keystroke saving acronym, QE.

For the uninitiated, QE involves the Central Bank issuing currency in exchange for government debt and all other manner of otherwise worthless financial assets provided to it by the banking class.  In the best of cases, it provides liquidity for what would be a temporary hiccup in an otherwise healthy economy.  In the worst of cases, which most who have taken a sober look at the financial industry would agree we are in, it serves as a backstop for financial asset prices, placing an artificial floor under the price of what passes as collateral in the financial system.

In any case, the Central Bank agrees to swap the wine of its currency for the sewage on bank balance sheets.  As anyone who has put this theory to the test will tell you, if you add a teaspoon of wine to barrel full of sewage, you get sewage, while if you add a teaspoon of sewage to a barrel full of wine, you get…sewage.

Wine barrels
QE – Sewage in disguise

Following this analogy, the existence of QE means that the currency of all of the Western world is now sewage.

While the pure, hard money Austrian school analyst sees it as a prelude to a hyperinflationary event, the Keynesian sees it as a necessary evil.  At this point, there is no real argument that QE, by definition, is inflationary.  However, the perverted feedback loop between the Central banks’ issuance of currency, the Governments’ issuance of debt, and the banking sector serving as an increasingly weak middleman, has managed to keep a large portion of the freshly created currency parked in either the Treasury or at the Central Bank in the form of excess bank reserves.

As the logic of the Central Bank goes, once the storm blows over, the stars will align and all of the sewage will turn back into wine.  The currency created as a part of QE will simply disappear, as it never really left the FED anyway.

Simple logic, right?  You can almost cut the naivety with a knife.  The fact is that the freshly minted currency is here to stay.  As long as the Governments, Central banks, and banking cartel exist in their present form, none of them can afford for even a cent of the sewage they have created to disappear.  It is there for the long haul.  All the average man or woman can hope for is that the sewage doesn’t spill off of their balance sheets or work its way to the water supply of the real economy.

All of this is old hat to fiat currency hounds and bond vigilantes.  The dangerous new twist which is just now in its infancy is the application of quantum theory to the mix.

Here, we must turn to the razor sharp intellect of Mr. Walayat, whose analysis over at The Market Oracle is on the cutting edge and generally spot on.

Walayat, along with Lee Adler of the Wall Street Examiner, are amongst the handful of analysts with a true understanding of the banking system and the motives and logical consequences of the actions of the Central banking cartel.

As the currency event in Iran unfolds, those of us in the “secure” West would do well to read up on what awaits as the Western Central banks throw their inflationary machines into overdrive, what Walayat refers to as “The Quantum of Quantitative Easing, or the keystroke saver: QQE.”

The operation of QQE is simple and predictable, yet unnecessarily mind-boggling.

As in a standard QE operation, it begins with the Government issuing debt which is purchased by members of the banking cartel in exchange for currency, which it then spends on any number of pet projects.  The Central Bank then buys the Government debt from the banks and receives the interest which is paid by the Government.  The Banks park the currency they have received from the Central Bank at the Central Bank and earn interest on it.

QQE ensues when the Central Bank then returns to the Government the difference between the interest paid by the Government on its own debt and the interest paid out to the Banks to keep them afloat.  As the Central Bank will never take a nominal loss on their debt holdings, and the Government will never default as long as QE remains in place, The Government is not borrowing at the implied interest rate that it auctions its debt at, rather, it is effectively borrowing at the rate that the banks earn on their reserves deposited at the Central bank, less the cost of the Central Bank’s operations!

Is your head spinning yet?  Stay with us, it gets better.  The longer that the policy of QE continues (and it will continue until the currencies of the world blow up, as the Iranian Rial is in the process of doing,) the Government is effectively swapping out its old debt, issued 30 years ago at anywhere between 11 and 14%, for new debt at an effective rate of 0.25%!  Those interest savings on the rollover are the rocket fuel of QQE.  They are what will allow the Governments to both ramp up spending and reduce the relative size of their balance sheet.

By the way, those “savings” come at the expense of every person and organization which holds the currency as a savings vehicle.

In order to gain a fuller understanding of just what is going on, read the articles linked in the above paragraphs at your leisure.  They will help to make sense of what is occurring as we begin to see the paradox of increased government spending and reduced or stable levels of national debt.

Oh yes, and double digit real inflation rates, despite the irrelevant claims of the BLS propaganda machine.  Plan accordingly, this is not a drill.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 4, 2012

Copper Price per Lb: $3.77
Oil Price per Barrel:  $91.45
Corn Price per Bushel:  $7.57
10 Yr US Treasury Bond:  1.67%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,790 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.1%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,575  
M1 Monetary Base:  $2,355,800,000,000
M2 Monetary Base:  $10,070,300,000,000

Economics, Personal Finance, The Mint

The Bernanke Ka-Put

9/19/2012 Portland, Oregon – Pop in your mints…

Most of the world who bothers to keep up with monetary matters, as we at The Mint are tasked with doing, have now digested and “evacuated” (to use the medical terminology) the jest of the FED’s last communication to the world.  Amongst other things, the FED’s public image, Ben Bernanke, indicated

Ben Bernanke Testimony
Bernanke’s Put will leave a painful mark on household budgets

that the all knowing Federal Reserve Bank, protector of the US currency and guarantor of full employment for all, will take the following actions:

1.  The FED will keep the FED funds rate target zero bound through 2015.  Since the FED funds rate has been zero bound for over three years now, the FED has taken to increasing the year at the end of this statement, in this case 2015, since they are reluctant to target a negative interest rate.  Think of the year as just another decimal point in this absurd equation.

2.  They will take Quantitative Easing (QE) to a whole new level.  Starting with $40 Billion in free funds to holders of mortgage notes and other rehypothecated asset backed (the astute will note the oxymoron) trash each month, for the rest of their existence.

This is not a drill.

The FED has tipped their hand so far that even most bankers (save Morgan Stanley) and government officials now understand what is going on.  We are witnessing what will come to be known as the Bernanke Put, or Ka-Put, as we now refer to it.

As Ira Epstein eloquently put it in his most recent Gold Report:  “Basically, the Fed threw the kitchen sink at the market.”

The Bernanke Ka-Put, taken together with the recent comments by Mario Draghi of the ECB and the ruling of the German High Court, which further sealed the Euro currency’s inflationary demise, leave no room for doubt as to what the MO of the world’s Central Banks is.

What does it mean?  The FED will print money to prop up the system no matter what happens.  Rampant price inflation and intermittent panics (due to the malinvestment which is occurring as a result of the FED’s money printing) must now be assumed in any financial model and household budget.

Additionally, contingency planning, with the assumptions of the disruption of services and supply lines, must now take place.  Malinvestment means that things will begin to “not work” (an understatement, to be sure) in the real world as a result of the financial engineering being practiced by the FED and every other Central Bank and banking cartel on the planet.

Again, This is not a drill.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 19, 2012

Copper Price per Lb: $3.77
Oil Price per Barrel:  $94.57
Corn Price per Bushel:  $7.40
10 Yr US Treasury Bond:  1.77%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,771 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.1%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,609
M1 Monetary Base:  $2,470,800,000,000
M2 Monetary Base:  $10,103,400,000,000

Mint Classics, Poetry, Uncategorized

If I Had a Trillion Dollars, A Ballad From Ben Bernanke to the Banks (With Apologies to the Bare Naked Ladies)

We send you into the first weekend of December with another Classic Mint.  This was written when Quantitative Easing was still relatively new, and the Federal Reserve was on the verge of printing another slew of money.  Enjoy and have a great weekend!
11/2/2010 Portland, Oregon – Pop in your mints…

Today and tomorrow the entire world, that is, the investment world, will be watching what the Federal Reserve and its poster boy, Ben Bernanke.  What will he do?  Most money managers and bond traders are operating under the assumption that he will proceed to create approximately $1 Trillion US dollars out of thin air through a process known as Quantitative Easing (QE), which is nothing more than indirectly confiscating at least $1 Trillion worth of goods and services from those who produce them in good faith and are compelled to accept US dollars in exchange for them.

You see, Mr. Bernanke and his cohorts are presented with an impossible dilemma.  If they do nothing, bondholders get absolutely annihilated in short order and the dollar continues as a viable currency.  If they proceed with the $1 Trillion QE game, the currency is the sacrificial lamb and the bondholders get a lifeline, but will get annihilated in the end anyway.  Essentially it is the choice of when to feel the pain of massive default on dollar denominate paper.

But what must Mr. Bernanke be thinking at this very hour with so much at stake?  The world presumably expects $1 Trillion dollars.  Logic would follow that, at a minimum, what he must provide to avoid “disruption” in the markets.  You see, the markets have long since baked in these $1 Trillion dollars and if they do not appear will adjust prices accordingly.  Guessing which prices will change and when is what keeps things interesting.
Our guess here at The Mint is that Mr. Bernanke is not thinking at all.  He has his orders; the markets will wait and see if he follows them.  What he is likely doing is strumming his guitar and warming up his academic tenor voice with a song that goes something like this:
“If I Had a Trillion Dollars”  a Ballad from Ben Bernanke to the Banks (with Apologies to the Bare Naked Ladies):
To the tune of “If I Had a Million Dollars“:
If I had a trillion dollars
(If I had a trillion dollars)
I’d buy the US a house
(I would buy the US a house)
If I had a trillion dollars
(If I had a trillion dollars)
I’d buy the US furniture for its house
(No interest or payments for a year)
And if I had a trillion dollars
(If I had a trillion dollars)
Well, I’d buy the US a Ford
(And get everyone’s clunker off the road)
If I had a trillion dollars I’d buy your bonds!
If I had a trillion dollars
I’d buy some junk paper from your books
If I had trillion dollars
They could help, it’d be less you’d have to cook
If I had trillion dollars
Maybe we could put like a little collateral in there somewhere
You know, we could just act like everything’s cool
Like show off the CUSIPs and stuff
Then there would still be liquidity available to us
As if we never bought subprime CDOs and other things
They have endless liquidity but they don’t have asset quality anymore
Thanks to me, of course,
Uh, yeah

If I had a trillion dollars
(If I had a trillion dollars)
I’d buy up asset backed securities
(But not with real money I’d be a fool!)
And if I had a trillion dollars
(If I had a trillion dollars)
Well, I’d buy up Synthetic CDOs
(Yep, like a Hybrid or non-performing SIV)
And if I had a trillion dollars
(If I had a trillion dollars)
Well, I’d buy up Lehman Brother’s remains
(Ooh, all them crazy Hudson Castle assets!)
And If I had a trillion dollars I’d buy your bonds!

If I had a trillion dollars
We wouldn’t have to tax the people more
If I had a trillion dollars
Now, we’d stick to the foreign creditors
If I had a trillion dollars
We wouldn’t have to eat our bad debts
But we would eat our bad debts
Of course we would, we’d just eat more
And pad our tier 1 ratios with new cash
That’s right, all the free cash… FED credit!
Mmmmmm, Mmmm-Hmmm

If I had a trillion dollars
(If I had a trillion dollars)
Well, I’d get us out of this mortgage mess
(But not the homeowners, I’m no fool!)
And if I had a trillion dollars
(If I had a trillion dollars)
Well, I’d buy financial reform
(Ala  Dodd-Frank and Obama)
If I had a trillion dollars
(If I had a trillion dollars)
Well, I’d make you solvent
(Haven’t you always wanted to be solvent?)

If I had a trillion dollars
I’d buy your bonds!

If I had a trillion dollars, If I had a trillion dollars
If I had a trillion dollars, If I had a trillion dollars
If I had a trillion dollars…
You’d be rich!

Seriously, to enjoy some real entertainment (and to get the tune in your head to sing along with Ben and the banks), check out the Bare Naked Ladies performing their 1996 hit “If I Had a Million Dollars” below.  As for tomorrow’s FED announcement, rest easy and wait along with the rest of the investment world to see if Ben & Co. really have the $1 Trillion dollars expected of them.  Of course they don’t really have it but at least it will be fun to see how they explain it this time, that is until those $1 trillion show up in commodity prices!


Stay Fresh!
David Mint
Key Indicators for Tuesday, November 2, 2010Copper Price per Lb: $3.77
Oil Price per Barrel:  $83.40
10 Yr US Treasury Bond:  2.63%
FED Target Rate :  0.19%
Gold Price per Oz:  $1,356
Unemployment Rate:  9.6%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  11,125
M1 Monetary Base:  $1,460,900,000,000
M2 Monetary Base:  $7,960,300,000,000
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.