An article on the emergence of new trading and commerce platforms in the Orient and middle east: http://www.silverdoctors.com/jim-willie-the-coming-isolation-of-usdollar/
Tag Archives: US Dollar
Should You Accumulate Gold Like China?
According to reports on Chinese imports of gold from Hong Kong, the People’s Republic is on track to import more gold bullion in 2012 than the entire official holdings of the ECB. What does it mean for us, fellow taxpayer? Our guest contributor Brad Evans, who is writing on behalf of BullionVault, explores this economic trend and possible implications for your portfolio in the following insightful editorial. Enjoy and stay fresh!
Should You Accumulate Gold Like China?
In recent years, much has been written and speculated about the idea of Chinese authorities buying up massive amounts of gold bullion. Indeed, the amount of gold going to China has increased notably over the course of the past few years, and it certainly seems as if the country is making a concerted effort to accumulate a great deal of the precious metal resource. Is this just a passing trend, representative of independent economic movements, or a greater strategy with implications for the worldwide economy? Ultimately that remains to be seen, but one result of China’s accumulation of gold bullion is clear.
With many of the world’s dominant economies located in the United States and the Euro zone, the U.S. and countries that use the Euro generally prefer to keep the cost of gold low, if possible, so as to avoid the strengthening of the resource against their respective currencies. As things stand now, and have for some time, the U.S. dollar and the Euro are generally seen as popular reserve currencies, meaning that people in other economic zones frequently turn to the U.S. dollar and the Euro as the ultimate safe haven. As long as the price of gold remains relatively low, the dollar and Euro remain strong as reserve currencies. Therefore, it is plain to see why China buying up massive amounts of gold bullion may lead to an unwanted shift in gold prices that could take the focus away from the reserve currency status that U.S. dollar and Euro enjoy.
Perhaps more important for many people is how this economic strategy of China’s could affect your finances. World economic trends will come and go, and economies will strengthen and weaken accordingly – but can you benefit from buying up gold bullion in your personal life, on a smaller scale, in the same way that China hopes to benefit in the long run internationally? While you certainly can’t hope to influence any worldwide economic trends on your own – accumulating gold bullion may not be a bad strategy to consider if you feel that the price of gold will be rising relative to other assets in the coming years.
Buying gold bullion is simple enough. You just need to head to a precious metal trading site such a s BullionVault, where you can buy and sell gold as you please according to constantly updated world prices. These sites also offer you various convenient and secure storage options, meaning that if you want to you can easily accumulate a great deal of gold bullion. However, before making this or any investment decision it is important to formulate a sound investment strategy. For example, if you are looking for short-term stability or gains, gold investment may be risky at the moment, as the dollar is strengthening and gold may be weakening. But for long-term gains, this may be a strategy worth considering.
This has been a guest post on behalf of BullionVault, written by freelancer Brad Evans.
No Love for Greece, The latest casualty of central planning
2/15/2012 Portland, Oregon – Pop in your mints…
The fruits of Central Planning, via the socialized monetary and credit system which is currently managed by the World’s Central Banks, are beginning to ripen, and the whole world is witnessing the latest social harvest of this doomed philosophy in Greece.
From the Associated Press:
“Tensions between Athens and other European capitals have hit new highs this week. While the European Union is officially still warning of the far-reaching dangers of a disorderly default by Greece, some politicians have in recent weeks downplayed the effects of such an event.
… While the Parliament in Athens faced down violent protests over the weekend to approve a far-reaching new austerity package, the cabinet of ministers remained locked in talks Tuesday evening over how to save an extra euro325 million demanded last week by the eurozone.”
It seems that the Greeks are having trouble accepting the well intended budgetary advice which their credit “counselors” (read overlords) in the north are so generously imposing upon them. Now that the Greeks appear to be balking at their inevitable slide towards a vassal state, the folks in the north are getting restless as their banking syndicates have quite a bit riding on the events unfolding on the shores of the Aegean Sea.
On the other side of the Atlantic, it appears that the similarly indebted US government will escape the fate of externally imposed austerity which Greece is now suffering. The Federal Reserve has made it clear that it will print money to monetize the deficits of the US Government for as long as necessary, and the Republican budget hawks have had their wings clipped with their latest capitulation on the extension of the Payroll tax holiday.
These two events, taken together, indicate that the US intends to go for broke and fully embrace the Keynesian dream of printing its way to full employment.
The obvious solution, then, would be for the Greeks to reject the Euro in favor of not the Drachma, but the infinitely flexible US Dollar.
Unfortunately for the US, and the Greeks, should they choose to join them, the Keynesian dream is quickly becoming a nightmare as the folly of central economic planning begins to express itself in the form of runaway inflation. The policy tools used in the past have succeeded only in stripping the earth and its people of the ability to make productive economic decisions. What now awaits the world is the inevitable adjustment which is likely to lead to a lower standard of living.
At this prospect, Athns burned on Sunday night, and it appears that the last bastions of austerity in the US capital threw in the towel and, for the moment, Washington is not burning.
The tragedy unfolding in Europe is a painful reminder that the power to mint money was never meant to be given, by edict, to an elect few.
Will the rest of the world learn this valuable lesson before it is too late?
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for February 15, 2012
Copper Price per Lb: $3.80
Oil Price per Barrel: $101.93
Corn Price per Bushel: $6.27
10 Yr US Treasury Bond: 1.93%
FED Target Rate: 0.12% ON AUTOPILOT, THE FED IS DEAD!
MINT Perceived Target Rate*: 1.00% AWAY WE GO!
Unemployment Rate: 8.3%
Inflation Rate (CPI): 0.0%
Dow Jones Industrial Average: 12,781
M1 Monetary Base: $2,274,500,000,000
M2 Monetary Base: $9,653,000,000,000
Bernanke Sends the US Dollar on a Suicide Mission
2/7/2012 Portland, Oregon – Pop in your mints…
We have been cooking up a project here at The Mint and have been remiss in our faithful correspondence to you, fellow taxpayer. For this, we offer you our humble apologies.
With our mission partially accomplished, we are back in the saddle and riding the monetary range. The days have been uncharacteristically sunny here in the Northwest, and it should come as no surprise that the outlook has cleared up, along with the skies. While Europe remains in the dual grip of debt and cold, the US is once again tying its shoes and heading out to dance.
Official unemployment is down and inflation is nowhere to be seen according to the government.
Yes, fellow taxpayer, all signs indicate that a Keynesian socialized monetary system has saved the day.
Yet no matter what the official statistics say, there is something much more important occurring as we write, something that will adversely affect every person who is long the current US Dollar via holding the currency directly or indirectly via some vague promise to have the currency delivered in the future (Read: Bonds, MBS, and any derivative of such).
The fateful occurrence is this: The US Dollar is about to carry out its suicide mission.
Suicide mission? Wouldn’t the Government inform us of something as important as the severe devaluation of the currency?
Yes and no.
Allow us to explain. First and foremost, the Government, who, behind the banks in the Federal Reserve system, gain the most from a weak dollar, have a tremendous incentive to devalue the dollar as well as a tremendous incentive to hide this fact.
However, the truth can easily be deduced by simply observing what the stated Federal funds rate is at any given time and waiting approximately three years for the effects of that rate to hit main street.
39 months, to be exact, but here at The Mint there are no extra points given for accuracy.
Where were we, something about a suicide mission, ah yes…
Join us, fellow taxpayer, on a journey back to the lazy days of August and September of 2007. The world could not have been brighter. Everything seemed to be turning up roses, which in retrospect should have been the first sign of trouble.
In early September, Ben Bernanke, the Chairman of the Federal Reserve, has just parked his avatar, “Benky” and logged off of World of Warcraft after completing a quest during his third day of “work” after a much undeserved vacation when the phone in his office rang.
“It’s time,” said the voice on the other end, and Bernanke slowly hung up the phone. Nothing more needed to be said.
The Federal Reserve was finished; it was only a matter of time. 100 years of subtle confiscation was about to go into the history books, and it was time to execute the plans which had been laid for its chief agent, the US Dollar, to go out in spectacular fashion.
Mr. Bernanke and his colleagues held a cursory open market meeting to say a tearful goodbye to the currency which they had been sworn to defend. They then set in motion a series of rate cuts which to this day have not been reversed.
The US Dollar was off on its suicide mission.
It had been on many similar missions before, all with overwhelming success in what were increasingly high risk operations against multiple targets, and it had always returned to its home shores with the spoils of war in its train, stronger and more arrogant for the experience.
But this mission was unheard of. Delving into short term interest rate depths never before attempted by a currency its size. Infiltrating foreign bases and confiscating wealth on an unimaginable scale. Only this time, it was not foreseen that it would return. A bigger, stronger, and more efficient model was waiting in the wings to swoop in and bring the spoils, which the US Dollar was to so painstakingly confiscate, home.
The mission, as in the past, was to take three years. Beginning at the FED, it would make a slow and steady descent through the short term funding markets and then plunge, in the span of 15 months, to the unexplored bottom. There it would lurk, setting mines and nets for the next 39 months which would confiscate the wealth of not just individuals and corporations, but of nations and multinationals as well.
It would be a grand climax to an illustrious career.
For their part, Bernanke and his colleagues at the FED would provide all of the cover fire they could muster in order to give the US Dollar as much time as possible to carry out its terrible work. In the end, however, there was little doubt that the currency would be found, tried, and executed during this tour of duty.
So certain was this fact, that neither provision nor measure was to be taken by anyone at the FED to rescue the US Dollar. No further resources would be used in its rescue, save the empty words of Bernanke and his colleagues.
The US Dollar’s orders were clear: To remain at the ultimate depths of short term funding markets, laying as many traps as possible, until it expired in this effort.
It is a grim mission, to be sure, with a grim outcome for those who are long the US Dollar and, ultimately, for the dollar itself.
Circa February 7, 2011, it appears to the greater world that the US Dollar has descended to the 1% level, the exact level it had been perceived to be at on that fateful day in late summer of 2007 when Mr. Bernanke got the call. For most people, it feels that all has returned to normal after four years of what can only be described as an economic nightmare.
Nothing could be further from the truth.
For in one short month, it will be clear that the US Dollar, rather than returning to base at the FED, as it has for nearly 100 years, has gone deeper and further into the pockets of the world than any currency has ever dared go before.
And it is about to pick each and every one of them.
If there was ever a time to own real assets instead of US Dollars, it is now.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for February 7, 2012
Copper Price per Lb: $3.85
Oil Price per Barrel: $98.55
Corn Price per Bushel: $6.42
10 Yr US Treasury Bond: 1.99%
FED Target Rate: 0.11% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,742 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 1.00% DROPPING LIKE A ROCK INTO MARCH!!!
Unemployment Rate: 8.3%
Inflation Rate (CPI): 0.0%
Dow Jones Industrial Average: 12,881
M1 Monetary Base: $2,198,400,000,000 RED ALERT!!! THE ANIMALS ARE LEAVING THE ZOO!!!
M2 Monetary Base: $9,686,800,000,000 YIKES UP $1 Trillion in one year!!!!!!!
Losing even blind faith in the Euro and USD, remembering Pearl Harbor
12/7/2011 Portland, Oregon – Pop in your mints…
Today we continue to watch the relative calm in both the stock and bond markets with our jaw hanging just inches from the floor. In our estimation, the calm, or homeostasis, is perhaps the only thing that is completely inexplicable under the current state of affairs.
Just what is that state of affairs, you ask? A few off the top of our head:
– Downgrades or the threat of downgrades to nearly every sovereign bond on the planet
– A resulting dearth of quality assets to be used as collateral in the financial system
– A debt based economy collectively attempting to live within its means
– The resulting collapse of the debt based economy
– An imminent war in Persia
But these are simply large events that are leading to a great number of small decisions which are in turn causing more unforeseen large scale events, etc. The result being that, much to the chagrin of the financial authorities, a majority of the world is embracing frugality.
A quick recap for those are joining us for the first time, the powers that be, the current currency regime, rely on an ever expanding amount of debt in order to continue to function. It is a system that is based on trust and blind faith, for it offers nothing of lasting value.
In the short term, the system, if functioning properly, allows a great deal of power to be centralized. It also encourages, albeit indirectly, nearly every sort of vice and shuns virtue. The system tends to reward bad behavior and to promote into leadership those who are least likely to possess a moral compass.
The system is no longer functioning as designed. The reach of the currency regime is shrinking and will continue to shrink until the only ones who maintain faith in it are the most morally decrepit individuals and institutions on the planet. They will continue to trade their increasingly worthless paper until they realize that they are simply shuffling paper amongst themselves, long after they have completely lost any semblance of control that they had on the situation.
Much of this paper shuffling is running through the stock and bond markets, and seemingly these markets are calm. However, the illusion of stability is being maintained at the cost of trillions of new dollars and Euros being created which are rapidly losing value against anything tangible.
In the United States, the dollar will begin to significantly deteriorate sometime in March, according to our crude calculations. The Euro, whose handlers have been late to start the game of shameless currency debasement, is more likely to implode with the European banking system as they gag on the sewage of assets that are on their balance sheets.
The great irony of the current currency regime is that a currency which has attempted to maintain its value will become extinct, shunned for one whose value is plummeting.
The Euro and US Dollar are showing the world the two paths that a currency regime can follow to destruction. It will be interesting to see which car ceases to operate first, the motor that runs out of gas or the one that has its gas tank overflow and goes up in flames.
Either way the economy, which is the motor of the vehicle in the metaphor we have just jumped to, is currently being retooled to run on another type of combustible, one that will last much longer than the current blend of currency gasoline which is nothing more than flammable vapors. If the currency, and the assets which back it have real value, the economic motor will be allowed to run at a more even pace.
Gold and Silver, ready or not, here we come. Until then, the economy is sputtering and running on fumes.
Pearl Harbor
We cannot let today pass without a few brief words about Pearl Harbor. Like 9/11, Pearl Harbor served as a national wake-up call. Both served as the justifications for the largest military actions and suppressions of freedom (which seem to go hand in hand) that America has known.
As this day that lives in infamy passes, we pause to honor those who perished in these events and the subsequent military actions which occurred as a result of these events. May they rest in peace, and may mankind learn to avoid the suffering and sacrifices they had to endure at all costs.
War is not necessary and must be undertaken only after every other attempt to engage and deter an aggressor has been exhausted. It is an act of desperation, not a form of economic stimulus, and it troubles us that the widespread loss of life and property has been referred to as the force which lifted the US out of the great depression.
Those who hold to such a theory are not only following an indefensible logic, they are hurling the ultimate insult to men and women who have fought to defend Freedom throughout history. For any “stimulus” which has been observed is not the result of the decision of a politician to go to war, rather, it is a result their tireless efforts and indomitable spirits which lifted this and many other countries from the ashes of war.
We pray that more of these heroic efforts and indomitable spirits will not be squandered in Persia.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for December 7, 2011
Copper Price per Lb: $3.53
Oil Price per Barrel: $100.51
Corn Price per Bushel: $5.82
10 Yr US Treasury Bond: 2.12%
FED Target Rate: 0.08% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,742PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 8.6%
Inflation Rate (CPI): -0.1%
Dow Jones Industrial Average: 12,020
M1 Monetary Base: $2,155,200,000,000 RED ALERT!!! THE ANIMALS ARE LEAVING THE ZOO!!!
M2 Monetary Base: $9,627,300,000,000YIKES UP $1 Trillion in one year!!!!
Sumo Wrestling in Europe, Can America afford to be Frugal? Not as long as Debt = Money
10/5/2011 Portland, Oregon – Pop in your mints…
In Europe, the sumo wrestlers have resumed their battle royal on the edge of the cliff. In this metaphor, the wrestlers conveniently represent the various banks, semi-sovereign governments, central banks, and other unproductive, parasitic organizations with the words “Monetary Fund” in their name.
Up until now, with the exception of some jeering from the spectators, the battle royal has been good natured fun. Each time one of the wrestlers has tumbled towards the cliff, several of his benevolent fellow competitors have come to his rescue.
First Greece, then Ireland, Northern Rock, Anglo-Irish, and The Bank of Ireland. Now Alpha, Spain, Caja del Sol, Portugal, Italy, and Dexia.
Each time, they get up, dust each other off, and go back at it.
But the competitors are getting weary, as are the spectators. With each new stumble towards the cliff, more competitors and even some spectators are required to jump in to avert certain disaster. If this continues, when one of the weary wrestlers finally tumbles over the cliff, it is increasingly likely that he will take the rest of his competitors and a decent number of well meaning spectators over the edge with him.
Now things are starting to get interesting as BNP Paribas, SocGen, and France herself began to stumble towards the edge. Who will save them? Certainly not the Swiss National Bank, which last month stumbled to the edge of the ring and ironically may be the first to fall off.
Any sober observer will quickly point out that this is an insane pastime. Why would a group of sweaty fat men repeatedly try to push each other from a ring along the edge of a cliff?
We can only venture a guess, and our guess is along the lines of “they somehow believe that they must.”
It doesn’t make sense, neither do a great number of things that occur in the current, insane, “debt is money” currency system in which we live.
People and institutions are trained to make decisions regarding money based on the assumption that money in and of itself has value. This assumption, under which the world currently toils, was debased along with the US Dollar back in 1971. Money today has very little in common with the money our fathers grew up with. Peter Schiff, the outspoken CEO of Euro Pacific Capital, has gone as far as to call modern currencies the “hidden portfolio risk.”
Our father’s money was based on the assumption that men were dishonest, and what they used as money (gold and silver) served to keep them honest. Today, money is widely assumed to be honest, a fact which has served to make a great number of men dishonest.
Debt is not money, the proof
The only way that the illusion that debt is money can be perpetuated is when debt, and therefore the perceived money supply, is increasing. First of all, who has ever been known to turn down free money? When the exponential increase in the perceived money supply is occurring, it creates the welcome illusion of wealth.
Second, people quickly learn that the easiest way to make money is to position oneself as close as possible to the creation of new debt. This is essentially the business model of Goldman Sachs and every other consumer and investment bank on the planet.
The money is so easy that no one stops to consider what would happen if aggregate debt were to begin to decrease, in turn decreasing the money supply by the same multiples with which it was created.
It will never happen, right? People will never turn down free or almost free money.
Yet they are. It turns out that people have a propensity for austerity when they have no choice. If money were based on something real, austerity would be extremely healthy for the economy which would be accumulating a capital base from which to make the next series of technological advances.
In the current, insane, debt is money currency regime austerity (the reduction of aggregate debt) removes the life blood from the monetary system and causes the underlying economy to die a slow, then sudden and altogether painful, death.
The mirage of the debt fueled economy quickly vaporizes and the debtors and creditors in the system find themselves in the middle of an economic desert with a long road ahead of them.
There will be much struggle along the way, and their only hope is to walk together.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for October 5, 2011
Copper Price per Lb: $3.13
Oil Price per Barrel: $79.51
Corn Price per Bushel: $6.05
10 Yr US Treasury Bond: 1.91%
FED Target Rate: 0.08% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,640 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 10,940
M1 Monetary Base: $2,052,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,511,300,000,000 YIKES!!!!!!!
Reports of the FED as “Only” Lender of US Dollars, The Definition of a System Collapse
9/28/2011 Portland, Oregon – Pop in your mints…
We have taken a small breather here at The Mint. What has occurred in the past week simply boggles the mind. Precious metals have taken a beating and it is our guess that they will continue through tomorrow. The most interesting reasoning for the drop in Gold and Silver that we have heard is that there will be an announcement on October 4th limiting short positions on the COMEX.
Guess who has a huge short position in silver that needs to be covered this week? JP Morgan, to the tune of 121 million ounces. We can only guess at the machinations but needless to say, it would be very convenient for them to be able to cover their positions at a discount. Hence the increase in margin requirements at the COMEX last Friday which has shaken out the weak long positions this week.
Across the board in commodities, current prices reflect a rush to cash, not changing fundamentals.
Some interesting reading on the current, sorry state of employment in the US from US News:
15 Stunning Statistics About the Job Market
It is much worse than most imagine.
Other than that, chaos is reigning as the dollar funding markets for banks in Europe are apparently non-existent. As September 30, 2011 approaches, banks are holding on to cash in the absence of clear direction from the Eurozone as to how they intend to bail out their large institutions.
In the meantime, the FED has apparently opened up swap lines (read printing presses) to provide dollars to these banks. According to a report that we saw from Bloomberg, the FED has gone from its role as the lender of last resort to a role as the lender of ONLY resort.
We take this to mean that nobody is willing to lend US Dollars at any price to the largest banking institutions in the world.
Does this indicate that, at long last, the US Dollar system has technically collapsed?
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 28, 2011
Copper Price per Lb: $3.21
Oil Price per Barrel: $79.95
Corn Price per Bushel: $6.30
10 Yr US Treasury Bond: 2.00%
FED Target Rate: 0.08% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,610 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,011
M1 Monetary Base: $2,010,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,541,800,000,000 YIKES!!!!!!!
A run on BNP, Europe’s Financial Collapse begins in earnest
9/22/2011 Portland, Oregon – Pop in your mints…
While it was a rough day for equity markets everywhere, in light of what is occurring, they (the markets) were amazingly resilient. A testimony to how fast the monetary spigots at the Central Banks are running.
There are two events that appear to be on a collision course with destiny today (No, neither of them is the NASA space junk hurtling towards the earth). It feels as if the world is reaching a sort of inflection point in modern history. Perhaps a great awakening is about to occur. Will people’s faith in Central Banking finally be broken?
The colliding events are the Palestinian bid for official recognition by the United Nations, scheduled for tomorrow, and the emerging institutional bank run on BNP Paribas.
The Palestinian situation needs no further discussion. It is clear to most that it is an explosive topic to which the bid for recognition threatens to detonate, much in the way the Israeli Declaration of Independence ignited war in Palestine in 1948.
The Institutional run on BNP Paribas is an event that is occurring as we write and it is unclear how it will play out. Reggie Middleton at the BoomBustBlog, is chronicling this event in real time. If you are interested, we highly recommend following the event there.
We have read reports of Lloyds of London, the famous Insurance Marketplace, pulling a great deal of its deposits out of banks on the continent. We have also read reports of Siemens pulling deposits and parking them directly at the ECB.
Then there was the report of the ECB making an emergency loan of $500 million US Dollars to an unidentified bank (read BNP) with similar loans to other institutions in the cue. It is clear that the banking crisis in France is dwarfing the ability for the French government to deal with it.
There is no use pointing out the many lessons that society will learn from this, for only one is expedient at the moment. That lesson is that digital bits on a computer screen or numbers on a bank statement are worthless if the counterparty cannot make good on their commitments.
The run on BNP will intensify the focus on Western Central Banks, which have balance sheets that make BNP, BAC, and all of the other large sinking banks look good by comparison. This is important because a good part of the world is to some extent a counterparty to the Central Banks.
Need proof? Open your wallet. If you have US Dollars or Euros, you are a counterparty to (owed money by) the Federal Reserve or the ECB, whose management is currently buying every worthless paper asset on the planet with leverage that is unimaginable for mere mortals.
Dollar and Euros are about to become extremely hot potatoes, which makes trading them for potatoes, spuds, or anything real, a real good idea.
Let us pray for the peace of Jerusalem, and that tomorrow passes uneventfully on all fronts.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 22, 2011
Copper Price per Lb: $3.45
Oil Price per Barrel: $80.41
Corn Price per Bushel: $6.50
10 Yr US Treasury Bond: 1.72%
FED Target Rate: 0.08% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,736 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 10,734
M1 Monetary Base: $2,010,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,541,800,000,000 YIKES!!!!!!!
Markets go up, Slovenia goes down, Dissing the State, Embracing Anarchy
9/20/2011 Portland, Oregon – Pop in your mints…
The Stock market is absolutely resilient in the face of news ranging from bad to UGLY. Presumably, the slow motion debt market collapse occurring in Europe is priced in, and it may be this very collapse that is driving money into US equities. In the insane “debt is money” system, the money can only go so many places, and there is currently so much money sloshing around that it is a wonder everything isn’t going up in price.
Oh, wait, it is! The CPI came in at 0.4% for August. Nothing to write home about but at this pace the annual CPI could hit 5%, well above the FED’s 2% target.
And we haven’t seen anything yet. Tomorrow, the Federal Reserve will meet and be expected to “do something.” Lately, “do something” has meant that the FED offers to throw perfectly good Federal Reserve notes at various forms of bad paper issued by companies and governments who never intend to make good on them.
At this stage in the game, it is now a given that if perfectly willing market participants won’t buy the paper, surely the FED must do it. “So what?” say you, “Let the FED waste its own money!” If only it were that simple, fellow taxpayer.
Unfortunately, the FED’s money, by decree, is everybody’s money. Every bad decision by the FED reduces the purchasing power of every dollar holder on the planet, making nearly all of us involuntary shareholders of this worthless enterprise, and management at the FED has been making some very bad decisions with very large sums for about four years now.
As a concerned involuntary shareholder of the FED we are compelled to offer the following unsolicited advice: Why not just wait until January, when the 0% FED funds “trickle” their way down to Main Street? Then things will really be interesting. That is when the US Dollar in its present form will go the way of every other paper currency in the history of mankind.
Fellow taxpayer, prudence demands that one make immediate plans to replace anything that depends upon the value of the US Dollar with something real. By the time the FED gets around to doing it for you, by introducing a New Dollar, current inaction will have caused anyone with faith in the dollar to suffer horrendously tremendous losses in relative purchasing power.
Back in the rotting old world, to quote Nabokov, the Euro debacle just became more complicated as the Slovenian government failed a confidence vote. The President is now left trying to cobble together a government and the rest of the Eurozone will presumably have to wait at least 30 days to get Slovenia’s approval for the next round of good money to be thrown at Greece.
It is useless to point out that the Eurozone governments, like their American counterparts, are simply throwing good money after bad. As we have observed here before, throwing money at failing enterprises is their only solution. Besides, they have banking interests to protect. Soon they will be spreading propaganda that ATMs won’t spit out Euros and the world will end if the Greeks are not supported.
That may be true, but these unpleasant outcomes will eventually come to pass no matter what the Euro FEDs do.
This is how the State, which by definition can do nothing but destroy wealth, operates. Western societies, and dare we say, the entire world are now beginning to suffocate under the weight of the current form of welfare/warfare state which exists to make promises on behalf of its productive citizens to its unproductive citizens.
Then, after enslaving the productive citizens, the State then makes promises to support the banking and military interests in order to ensure that the productive citizens remain enslaved.
At some point, each citizen decides that they are either better off becoming an unproductive citizen, working for the State taskmaster as a banker or provider of “security”, or fleeing beyond the State’s ability to enslave them. Western society is quickly approaching the tipping point where a majority of its productive citizens will be forced to make this choice.
Faced with such facts, an intelligent fellow taxpayer such as yourself is surely asking (or should be asking, if we may prompt you), “Isn’t there a better way?”
In other words, is the State really necessary? Today we read a brilliant essay on this very subject by Stefan Molyneux. We encourage you to peruse it at your leisure. You can see it by clicking on the link below:
The Stateless Society – An Examination of Alternatives
If you are limited on time, it is enough to say that Molyneux lays out compelling, logical arguments about how the free market would more effectively take care of the tasks which are currently relegated to the State. Specifically, he examines three activities which pro-State apologists claim that the free market will not solve on its own, making the State’s existence a necessity: Dispute Resolution, Collective Services, and Pollution.
After reading Molyneux’s arguments, it seems that now more than ever that embracing Anarchy is the answer to what ails society.
Much more than simply the answer, it is clear that the true chaos in not created by the Stateless Anarchist model, rather the present chaos is a product of entrusting the State with too much power.
How else can one explain how every present effort the Government uses to ”improve” its citizen’s lives serves to collectively impoverish them?
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 20, 2011
Copper Price per Lb: $3.76
Oil Price per Barrel: $86.43
Corn Price per Bushel: $6.90
10 Yr US Treasury Bond: 1.94%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,805 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.4%!!! UP UP UP!!!
Dow Jones Industrial Average: 11,409
M1 Monetary Base: $2,101,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,540,500,000,000 YIKES!!!!!!!
The Disguise, Greece plays roulette with the Eurocrats, How inflation will express itself in USD Prices
9/12/2011 Portland, Oregon – Pop in your mints…
The moment of truth is approaching for Greece. Today the headlines flashed that the markets were pricing in a 98% chance of the Greeks defaulting on their sovereign debt. A great lesson is about to be learned. Is anyone paying attention?
The great lesson is the following: Reliance on governmental and/or central bank action to stave off a default is not a sound strategy. You may get lucky once, twice, even three times. If one is particularly unfortunate, the strategy may even work many times in succession.
The government reliance strategy is like idly watching spins a roulette wheel with all your chips on red. With enough spins, the ball will eventually drop on a black. Think of it as the governmental version of a black swan.
In the case of Greece, who abandoned its 2,000 year old currency to join the Euro club, there seems to be a lack of political will to ink the rubber stamp which approves the Greek’s next ration of Euros. The taskmasters of the Eurozone are starting to realize that each time the stamp is inked, the sewage of Greek finances leaks a little further into their well.
The populace is starting to get sick to their stomach, as are large banks on both sides of the Atlantic. The French banking giants are queasy because much of the Greek debt is on their books. In the New World, where about half of Greek debt is insured, the banking giants are getting nauseas. It is the nausea of a drunk man realizing he will be stuck with the bar tab after his buddies sneak out of the tavern.
Meanwhile, as the politicians and central banks continue to bungle their way through this information, the market has already priced it in.
“Priced in?” Astute, shocked, and astounded readers are surely thinking, “Then where is the crash in stocks and bonds?”
Astute readers, of course, are right. There is a crash occurring right now in stocks and bonds. However, bond yields are down and the stock market is up because the crash is occurring against the backdrop of rapidly depreciating currencies and as such, the debauched currencies are disguising the crash.
The Disguise
Astute readers now have a collective light bulb in their head illuminating as they clearly see that inflation in consumer prices is set to accelerate in the near future. Naturally, this obvious inflation would not be tolerable and as such must be masked in order for the general public to peacefully accept it.
For this acceptance to peacefully take place, the inflation must come in disguise. Here is what is likely to occur once the loosened up monetary policies of the FED, ECB, BoJ, and BoE are in sync (with apologies to the 1990’s boy band):
A new dollar will be introduced with a convertibility ratio from old dollars of 10:1. In other words, each current dollar will be the equivalent of a new dime.
Voila! No inflation here. The new and improved dollar now buys more than ever!
Why choose a 10:1 ratio? There are two compelling reasons for the US Currency to go through a reverse 10:1 split. First and foremost, it is simple. Since a majority of the world’s commerce is conducted in dollars, the disguise must be mathematically simple. What could be simpler than moving a decimal place?
The second reason is less obvious but perhaps more compelling from the point of view of the monetary authorities. The disguise would immediately eliminate the need for pennies and nickels and increase the demand for dollar coins.
At this stage in the game, it costs the US Mint more to create pennies and nickels than they are worth. While we are not certain of the exact numbers as of today, some estimates have the value of the metals needed to create a nickel valued at $0.07 while the metals needed to create a penny are valued at $0.012. This is before considering the energy and equipment necessary to strike the coins and distribute them.
At current metal prices, which are unlikely to drop in the near future, the US Mint is producing nickels and pennies at a loss.
This embarrassing detail makes the purchase of nickels and pennies a better risk free investment than US Treasury Bonds, the world’s current safe haven of choice. The metal premium for Platinum, Gold, and Silver coins is widely known. At some point, nickels and pennies will disappear from circulation and their metal premium will take precedence over their face value.
Still, one may ask, “What difference does it make? This 10:1 switch sounds like a great idea. I’m sick of pennies!”
Oh, if only the switch were price neutral, it would make no difference at all. How, then, do the stock, bond, and almost every other market continue to rally in the face of questionable macroeconomic fundamentals?
Tune in tomorrow.
Trust Jesus and Stay Fresh!
Email: davidminteconomics@gmail.com
P.S. For more ideas and commentary please check out The Mint at www.davidmint.com
Key Indicators for September 12, 2011
Copper Price per Lb: $3.97
Oil Price per Barrel: $88.19
Corn Price per Bushel: $7.34
10 Yr US Treasury Bond: 1.93%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,814 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.5%!!! UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average: 11,061 TO THE MOON!!!
M1 Monetary Base: $2,181,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,456,000,000,000 YIKES!!!!!!!
Forgiveness, the FED, Bank of England, Bank of Japan, and ECB to coordinate actions, will they formally peg exchange rates?
9/9/2011 Portland, Oregon – Pop in your mints…
Much ink is being spilled today in anticipation of what may or may not happen as the 10th anniversary of the events that occurred on September 11, 2001. Here at The Mint, we take the somewhat radical view of the Amish in response to tragic loss. We must forgive. An important part of forgiveness is to avoid making or observing a memorial to the offense. Memorializing an event is to keep it present before us.
As the US Empire is now conducting at least three extremely expensive military adventures which have their origins in the events that occurred that fateful day, forgiveness is probably not on many people’s minds this weekend. Meanwhile, millions of dollars are being spent to memorialize it.
We must forgive. It is our opportunity to choose the tree of life over the tree of the knowledge of good and evil. To repair the fateful error made in Eden.
Under the cover of this memorial, we sense that an extraordinary event will occur which will impact the fortunes of many in the US, England, Japan, and Europe and others outside their borders with exposure to their respective currencies.
Debauchery
The Event which we refer to is the coordinated debauchery of their currencies.
For the past four years, the FED, BoE, BoJ, and ECB have been engaged in a desperate attempt to debauch (devalue) their currencies. They have had the predictably mediocre to poor results that one would expect from efforts made by this rare hybrid of an agency which combines the laziness of the banking class with the incompetence of the governing class.
The goal seems simple enough. Print money to pay existing debts and encourage people to spend and to take on new debt. So simple, that each of these Central Banks is currently running at their own pace down this calamitous path with little regard to how the outside world is reacting.
Guess what? The outside world is not reacting as expected.
What they did not take into account, at least until now, was that there is quite a bit of money to be made from the fact that they are all running at different paces down the same path. The nature of international finance is such that one Central Bank’s unbridled effort to debauch its currency leads to an opportunity to profit by borrowing in that nation’s currency and purchasing one of the other three currencies, which undermines the debauchery of the currency that is being purchased.
This is commonly known as the carry trade, and these large Central Banks have taken all of the guess work out of it for the past four years.
We suspect that these four Central Banks see the immediate need to eliminate interest rate spreads amongst their currencies which will force those who ply the carry trade to purchase currencies outside of this group.
In effect, this ultimate coordination of interest rate policies will cause these four currencies to “peg” to each other, which should assure that the debauchery of their respective currencies will continue unchecked and likely accelerate.
According to Bloomberg, there is speculation that this type of coordination, a de facto currency peg to the dollar, could begin this weekend at the G-7 Meeting.
Will another stealth disaster befall the US this weekend? If these Central Banks somehow coordinate their collective debauchery of the currency, the economic devastation of millions will march on.
Perhaps this is why Juergen Stark has suddenly stepped down from the ECB. It will be more than any caring Bundesbank official can stomach.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for September 9, 2011
Copper Price per Lb: $4.00
Oil Price per Barrel: $87.20
Corn Price per Bushel: $7.26
10 Yr US Treasury Bond: 1.92%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,856 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.5%!!! UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average: 10,992 TO THE MOON!!!
M1 Monetary Base: $2,181,100,000,000 RED ALERT!!!
M2 Monetary Base: $9,456,000,000,000YIKES!!!!!!!
The Move to a European Government, Caesar can keep his money!
8/16/2011 Portland, Oregon – Pop in your mints…
The markets seem to be enjoying a relative calm after the record setting volatility they experienced last week. It turns out that one would have hit a home run by buying the VIX as the debt ceiling debate was dragging on. We’ll keep that recommendation tucked away for a later date as the conditions which created last week’s tremors still exist and continue to intensify.
A headline caught our eye today, from Bloomberg: German, French leaders propose European ‘economic government’
This caught our eye because it is further confirmation of what we have long suspected here at The Mint. Specifically that giving up the right to coin currency (seigniorage) essentially means giving up a nation’s sovereignty. Any sort of puppet government may be set up to give the appearance of sovereignty. They may even give the people the right to vote for their own government. No matter how the government is chosen, the puppet will move in accordance with the way its strings are pulled.
In practice, the monetary authority becomes the sovereign.
We have further speculated that the current sovereign debt crisis in Europe would serve to erode the sovereignty of the governments being bailed out. It now appears that even wise users of the Euro, such as Germany and the Netherlands, will have to give up the illusion of budgetary authority to save the currency. Think of it as guilt by association.
What happens next in Europe will be the true test of the Euro’s ability to exist. Can Greeks and Spaniards manage finances to German standards? Can they alter their production and consumption patterns to the German standard? If the answer is yes, then we will have confirmation that a shared fiat currency (and by default fiscal policy) is all that it takes to break down borders and achieve world peace.
If the answer is no, then the Euro, the latest entrant in a long line of doomed experiments in fiat currencies is…doomed.
The leaders in the Eurozone are dealing with a problem that has no solution. What is unfortunate is that they are taking a considerable amount of time and other people’s money in a vain attempt to solve it.
The problem is simple enough. A fiat currency, such as the Euro, is a faith based currency. One needs faith that the currency will maintain its value and continue to be accepted in trade. The bedrock of this currency faith is that credits must be created which are repayable in the currency. This gives people, who naturally want to improve their circumstances by attending to the most urgently felt need, the incentive to productively trade in the currency.
If the currency is something tangible and can be produced in sufficient quantities, this is all that is required for something to be accepted as currency in society. Production and circulation of the currency would occur organically as the needs of the economy dictated.
- The Euro’s faith based currency is doomed
On the other hand, if the currency is a fiat, faith based currency, such as the Euro, much heinous effort is required for it to be accepted as currency. The first requirement is a decree that all taxes must be remitted in the fiat currency. This is what Jesus referred to when he told the spies of the Chief Priests to “give to Caesar what is Caesar’s and give to the Lord what is the Lord.”
Once it is decreed that taxes will be remitted in the fiat currency, the fiat currency must be produced in sufficient quantities without the guidance of the free market signals (known today as monetary policy). Finally, the system of taxation and redistribution of the tax revenue (known today as fiscal policy) must be perceived as either inconsequential or fair in order for those subjected to the fiat currency regime to continue to assent to using the currency.
The Eurozone’s incurable ailment is that its single monetary policy cannot respond to the multitude of fiscal policies that are operating in the currency zone. If the currency were tangible, production in the economy would properly adjust and fiscal policy would be less pervasive and dictated by reality. But because the Euro is simply a faith based currency, fiscal and monetary policy have no chance of harmonizing themselves.
The Euro is doomed and its handlers must at least suspect it by now. Their only hope is to quickly form a unified fiscal government in the Eurozone which is what in theory they are doing. In practice this may be nearly impossible.
The US Dollar faces a similar problem which has been slower to manifest itself because its problem is on a global scale.
As Jesus said, the fiat authority only owns the coins, scraps of paper, or electronic bits that consist of money. True ownership of real things, and especially people, ultimately is the Lord’s.
How important this simple teaching will be in the years to come.
Stay tuned, Trust Jesus, and Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for August 16, 2011
Copper Price per Lb: $3.99
Oil Price per Barrel: $87.14
Corn Price per Bushel: $7.14
10 Yr US Treasury Bond: 2.21%
FED Target Rate: 0.10% TIGHTENING? NOT!
Gold Price Per Ounce: $1,787 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: 11,406 TO THE MOON!!!
M1 Monetary Base: $2,140,300,000,000 RED ALERT!!!
M2 Monetary Base: $9,404,000,000,000 YIKES!!!!!!!
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!
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.
Bernanke fires up the Helicopters and Precious Metals Blast off!
7/13/2011 Portland, Oregon – Pop in your mints…
Today Bernanke went before the US Congress and gently laid down the gauntlet. If Congress fails to raise the debt ceiling soon (by August 2nd, we are told), it could have catastrophic effects on the economy.
Given that nearly the entire banking system on the planet depends upon the US Treasury being Grade A debt, Mr. Bernanke may again be credited with the understatement of the year!
We pity Mr. Bernanke. He is like a pilot flying an Airbus aircraft that is stalling at extremely high altitute. We don’t know much about aircraft but we understand that Airbus aircraft, with their European design slant, do not give a pilot much freedom to override the plane’s automated systems. It assumes that all of the necessary corrective actions can be pre-programmed and, if the plane begins to stall, the computers take over to attempt to correct the problem.
Actual Airbus pilots are free to dispute the merits of our oversimplification. We just needed a metaphor.
Back to Bernanke, with the autopilot mechanism failing, the pilot does not know what to do. If the US Congress had dutifully raised the debt ceiling as it had 94 times in the past, as the Airbus autopilot manual said it would, Bernanke’s reaction to the most recent US jobs report would have been to simply propose a third round of quantitative easing (read: money printing or counterfeiting of currency).
On the Airbus, he would get on the intercom and say “please fasten your seatbelts until we pass through this patch of rough air.”
However, the failure of the US Congress to reach a deal to raise the debt ceiling has thrown a wrench in his plans. What is his plan now? Think helicopters, Zimbabwe, Gideon Gono.
Mr. Bernanke is going on a safari!
Yes, fellow taxpayer, with each day that passes, it is becoming clearer to the majority that Mr. Bernanke is unwittingly following in the footsteps of none other than Gideon Gono. Some may recall that Mr. Gono, the Governor of the Reserve Bank of Zimbabwe, was forced to “do extraordinary things that aren’t in the textbooks,” meaning that he oversaw the printing of large amounts of his country’s currency which produced an amazing modern example of hyperinflation.
In an interview with Newsweek in early 2009, Gono offered an explanation for his actions and predicted that the US would do the same, as it has:
“I’ve been condemned by traditional economists who said that printing money is responsible for inflation. Out of the necessity to exist, to ensure my people survive, I had to find myself printing money. I found myself doing extraordinary things that aren’t in the textbooks. Then the IMF asked the U.S. to please print money. I began to see the whole world now in a mode of practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”
The hyperinflation in Zimbabwe led to shortages of real goods and destroyed the economy. Why would Mr. Bernanke’s experiment end any differently?
Meanwhile, over in the Eurozone, the Airbus is in rapid descent and everybody on the plane is offering ideas as to what went wrong and how to fix it. Its auto-pilot has not been programmed to deal with the failures the plane is experiencing and as the pilots and passengers engage in a heated debate, none are able to grab the controls much less safely land the aircraft.
it will not be long before impact and the smarter passengers are starting to grab for the parachutes made of Gold and Silver. Gold closed up almost 1% to a record of $1,583 and Silver gained nearly 6% on the day.
Back in the US, whether or not Congress passes legislation to raise the debt ceiling is irrelevant. The US Treasury will borrow and the FED will print even without Congressional approval. That is what makes modern Government fun, if you don’t like a rule, just ignore it and claim that you were exercising “Leadership.”
All of the countries in the Eurozone will soon surrender their sovereignty to Germany and the IMF in exchange for the “privilege” of using Euro as currency. The ideological divide that is being exposed in the US may eventually lead to civil war.
But these events may be small compared to what is occurring in the Middle East. Iran opened its own international Crude Oil exchange today which is akin to declaring war on the western governments and banking interests.
And keep your eyes on Palestine. The UN vote on Palestinian statehood in September is eerily similar to the vote 62 years ago when the UN accepted Israel as an independent state. Our guess is that this vote will spark events there that will capture the attention of the whole world.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
P.S.
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Key Indicators for July 13, 2011
Copper Price per Lb: $4.35
Oil Price per Barrel: $97.83
Corn Price per Bushel: $7.26
10 Yr US Treasury Bond: 2.89%
FED Target Rate: 0.07% JAPAN HERE WE COME!
Gold Price Per Ounce: $1,582 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.2%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,492 TO THE MOON!!!
M1 Monetary Base: $2,020,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,112,300,000,000 YIKES!!!!!!!
*See the MINT Perceived target Rate Chart. This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy. This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.
72 Hour Call for July 5, 2011 (Adieu to the 72 Hour Call for now)
Today’s Call: NO CALL, taking a break as we revert to the mean.
Rationale: The 72 Hour Call is being mothballed for the moment. It has been a great experiment and has led us to one inescapable conclusion: There are no sure things in the day to day gyrations of the markets. One is best off calling long trends and picking logical entry and exit points for trades, adjusting them as the data relevant to the long trends change. Please continue to watch our Key Indicators at the end of each Mint. Thank you for following and drop us a note if time permits!
Result of Call for June 29, 2011: Euro to fall vs US Dollar. Was $1.4311:1€., Currently $1.45336:1€. Good Call.
Calls to Date: Good Calls: 33, Bad Calls: 30, Batting .524
Key Indicators for Tuesday, July 5, 2011
Copper Price per Lb: $4.30
Oil Price per Barrel: $96.83 A FAILURE TO INFLATE, WILL TREND LOWER
Corn Price per Bushel: $6.80 MONETARY POLICY IS NOT WORKING
10 Yr US Treasury Bond: 3.14% WITH THE FED OUT, THE SKY’S THE LIMIT
FED Target Rate: 0.07% JAPAN HERE WE COME!
Gold Price Per Ounce: $1,516 BENEFITING FROM PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,570 WINDOW DRESSING FOR 401K PORTFOLIOS
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.
A US Default? Into the Great Unknown
6/29/2011 Portland, Oregon – Pop in your mints…
Much has happened in the financial markets in this past week, and much will happen in the coming weeks. But perhaps what is most notable is what has not happened.
Namely, the US Congress has not raised its self imposed credit card limit. For an entity that is already $14.3 Trillion in debt ($4 Trillion of which reportedly comes due in the next 12 months) with no realistic plan to pay for it, this is suicide. What are they thinking?
The two parties are in agreement one count, they need to save $2 Trillion dollars over 10 years. Why this sum has been identified as the cure for what ails the country’s finances is anybody’s guess. Unfortunately, but not surprisingly, there is no agreement as to how to get there.
Where will they find $2 Trillion? Tax the rich, screams Obama, repeating the eternal populist sentiment. Stop spending, say the Republicans, using the circumstances to make a push for “limited government.”
Editors Note: There is no hope for limited government with the current two party system in place, therefore the Republican’s stance is entirely a façade.
The President has taken the extraordinary step of asking Congress not to recess over the Fourth of July, as is their custom, calling their lack of agreement akin to his daughters not completing their homework. While the President makes a quaint metaphor, we believe that Obama’s daughter’s homework is probably more challenging than Congress’s task of balancing the budget.
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Balancing a budget is simple. It just takes courage. It seems that courage is in short supply in Washington DC these days.
Without internal fortitude to press the Americans along, a little external pressure is beginning to be applied. First, the Treasury’s latest 7 year bond auction did not go as well as planned as investors demanded 2.43% to hold US paper for a sabbath cycle. Without the FED at the table, it is hard to imagine how it could have gone well. Bond Market participants are beginning to wring their hands.
Then comes word that the IMF is beginning to apply pressure, eloquently reminding the Americans of what they should do and why they should do it. It is worth noting that the IMF appears to be the last to know about such things so we will excuse their apparent surprise at the lack of inaction (they are most likely not informed MINT readers like yourself):
“…the federal debt ceiling should be raised expeditiously to avoid a severe shock to the economy and world financial markets,”
Yeah, tell us something we don’t know. And then, true to their holier than thou, infallible status, they give the Americans advice on how to do it:
“We see early political agreement on a comprehensive medium-term consolidation plan based on realistic macroeconomic assumptions as a cornerstone of a credible and cyclically appropriate fiscal adjustment strategy,”
Great! Thanks for the incomprehensible and totally impractical advice. This type of drivel simply solidifies our opinion that the IMF is a worthless institution and could be categorically ignored if it were not so insistent upon meddling in financial matters on a global basis.
Meanwhile, we are getting to see first hand what happens to a country that gives up control over its currency and then listens to the IMF for advice and is forced to take a loan from them. Greece, is giving the world a glimpse at how popular austerity is with the masses.
The scene that was carried out in the Middle East in the Spring is set to take place in Europe and England over the summer months.
How long until it crosses the Atlantic?
Another event that may occur as interested parties begin to reduce exposure to US Treasury debt is a liquidity crunch that will start in early July. Apart from the debt ceiling uncertainty, the Dodd-Frank financial reform rules are set to begin to do their damage to the financial system on July 15th.
If they do not forestall these rules as many banks are begging them to do, the US and global economy will take their first tender steps into the great unknown, a world without political or real capital to act a a backstop for failures.
It will be dangerous and exciting. And, just like a fireworks show, will be best enjoyed from a safe distance. Keep your money close at hand, meaning out of banks and preferably in precious metals or anything tangible, and enjoy the show!
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for Wednesday, June 29, 2011
Copper Price per Lb: $4.20
Oil Price per Barrel: $94.93 A FAILURE TO INFLATE, WILL TREND LOWER
Corn Price per Bushel: $6.98 MONETARY POLICY IS NOT WORKING
Gold Price Per Ounce: $1,511 BENEFITING FROM PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.25%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,261
M1 Monetary Base: $1,895,400,000,000 RED ALERT!!!
M2 Monetary Base: $9,086,900,000,000 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.
72 Hour Call for June 29, 2011
Today’s Call: Euro to fall vs US Dollar. Currently $1.4311:1€.
Rationale: With the Greeks passing austerity measures in the face of widespread protests, the Euro got a temporary boost today. These types of jumps usually pull back in the short term. The Euro just double peaked on a triple top vs. the USD and is generally in a bear trend which should be reinforced post June 30th.
Result of Call for June 24, 2011: 10 year US Treasury Bond yield to fall (price to rise). Was 2.87%, Currently 3.108%. Bad Call.
Calls to Date: Good Calls: 32, Bad Calls: 28, Batting .543
Daily Default: PMI Group, Inc., third largest guarantor of US Mortgages.
Key Indicators for Wednesday, June 29, 2011
Copper Price per Lb: $4.20
Oil Price per Barrel: $94.93 A FAILURE TO INFLATE, WILL TREND LOWER
Corn Price per Bushel: $6.98 MONETARY POLICY IS NOT WORKING
10 Yr US Treasury Bond: 3.11%
FED Target Rate: 0.08% UH OH!
Gold Price Per Ounce: $1,511 BENEFITING FROM PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.25%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,261
M1 Monetary Base: $1,895,400,000,000 RED ALERT!!!
M2 Monetary Base: $9,086,900,000,000 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.
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