Tag Archives: ZIRP

The US Economy Turns Green in Time for St. Patrick’s Day

3/17/2015 Portland, Oregon – Pop in your mints…

1 oz .999 Fine Silver Round Irish Green Enamel Four-Leaf Clover With Display Box
1 oz .999 Fine Silver Round Irish Green Enamel Four-Leaf Clover With Display Box

A Happy early St. Patrick’s Day to our long-suffering readers of The Mint, who know we have an affinity for the color green, specifically the tone which can be found on the coin pictured to the left.

We have been buried deep in a classic accounting “busy season” of our own design, as, along with our regular duties, we have stumbled upon a vein persons ready to move their accounting systems into the cloud along with a cadre of brilliant entrepreneurs who need solid advice in terms of accounting and systems.  This work has gone nicely with our goal of mastering the tax trade this winter and spring.  We have also managed to produce our first audio version, What is Truth?  On the Nature of Empire (check it out here).

Together, it has made little time for reflection.  Alas,  this is the life of a farmer. When the season to work comes over us, we work day and night, knowing a season of rest waits.

Due to our numbers related tarries, the last time we took a glance at the US economy for long enough to write about it was October 3rd of last year, according to our records.

At that time, when the stated Unemployment rate was 5.9%, we sensed back then that it did not matter as the FED was set on continuing its Zero Interest Rate Policy until its member banks were safely in the clear, and that the US Labor market was getting extremely tight.

In case you are wondering, ZIRP and tight labor markets, taken together, is a recipe for explosive economic growth.  Five short months later, it appears that the feast is nearly ready, and the US economy is about to eat it.

First, let’s check in on Unemployment, which stands at 5.5%. According to the March 9th jobs report, US Job Creation has never been stronger:

US Job Creation
US Job Creation

And that momentum in the labor market is hotter than it was in 2005 – 2006:

Labor Market Momentum
Labor Market Momentum

And you have a labor market that has not been seen since the end of WWII.

But what about Wage Growth? It is tame, a 0.2% drop, in fact, if the BLS is to be believed. However, the NFIB Compensation Plans Indicator and the Employment cost Index are on the rise, meaning American workers are enjoying a rare (long overdue, we might add) post 1971 gain in real wages before the CPI, which clocked in at 0.7% (still well under the FED’s target), overtakes them.

Wage growth and Inflation
Wage growth and Inflation go hand in hand

And this chart seems to indicate that the tightening rental market may be the match that starts the Wage/Price spiral in motion:

Tight Rental Market
Tight Rental Market

We’re not sure about other metro areas, but rental and housing markets in Portland are ‘en fuego,’ with apologies to Dan Patrick.

What does it all mean? No one can be certain, but here are a couple of guesses:

1) The US Economy will once again become the envy of the world, despite itself. Yes, even with Obama care and other political and economic landmines strewn around it, the US economy is on pace to surpass the growth rates of developing nations, soon to be known as last decade’s darlings:

US to blow past emerging markets
US to blow past emerging markets

2) US Workers are likely to get healthy wages from healthy companies. Unhealthy companies will be gutted in this brain drain and fail.

3) Paradoxically, corporate profit margins will continue to increase as productivity gains continue.

4) Housing premiums, in terms of rent and home sales, are about to soar.

5) Interest rates will not go up until the markets yank them up by their shirt collar and hold them up against the wall, the FED will keep short-term rates low and allow the banks to recapitalize on the backs of the US economic miracle:

No Rate Hike coming
No Rate Hike coming

6) There will be no “Grexit” to spoil things.  Despite European claims to clairvoyance, it was the US who established the Euro zone (and its predecessor treaties) as the vital space for a revitalized German industrial base in the wake of WWII (more on this in our upcoming review of “The Global Minotaur” which was ironically written by a Greek economist).  Circa 2014, the Euro currency zone exists for the sole benefit of Germany and to an extent France.  The rest of Europe would be better off without it, which is why Germany and the pan euro banks will hold it together with an iron fist, not matter how futile the effort, or how far they have to bend the rules.

7) The Chicago River will turn green, and a record amount of beer will be sold tomorrow in honor of St. Patrick

Be safe out there as the Luck of the Irish and the ignorance of the FED paints the US Economy green for the foreseeable future!

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Key Indicators for March 16, 2015

Copper Price per Lb: $2.65
Oil Price per Barrel:  $43.68

Corn Price per Bushel:  $3.79
10 Yr US Treasury Bond:  2.10%
Bitcoin price in US: $289.87
FED Target Rate:  0.11%
Gold Price Per Ounce:  $1,154

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  5.5%
Inflation Rate (CPI):  0.7%

Dow Jones Industrial Average:  17,977
M1 Monetary Base:  $3,069,400,000,000

M2 Monetary Base:  $11,883,100,000,000

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%
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