Wednesday, February 2, 2011

A Cry for Freedom in Egypt!

2/2/2011 Portland, Oregon – Pop in your mints…
We are watching, along with the rest of the world, the recent events in Egypt with much excitement and anticipation.  What does it mean?  Why, after 30 years of rule and relative calm, has Egypt suddenly exploded, demanding the removal of Hosni Mubarak, their leader of 30 years?
Was it the incessant corruption?  Corruption happens everywhere, with the possible exception of Singapore and Hong Kong.  We are ruling that out.
The flagrant nepotism?  Castro, Bush, Kennedy, Clinton, Cuomo, again, it happens everywhere.
The fact that 40% of the people live below the World Bank's definition of poverty earning less than $2 per day?  We're getting warmer…
The fact that Egypt now consumes all of the oil that it produces?  Warmer…
The fact that the 40% of the Egyptian population mentioned above rely on government subsidies (largely funded by revenue from oil exports) to eat?  Warmer…
The fact that Egypt has to import 60% of its wheat?  Hot!  Really Hot!
The fact that the price of wheat has tripled since mid-2009?  Bingo!
While there may be a myriad of secondary reasons for the revolution that is sweeping not only Egypt but the entire Arab world, all of which you can hear endlessly analyzed by Fox News, CNN, and your local paper, here at The Mint we offer the rise in the price of wheat and other basic food items in general as the trigger of this revolution.
Could the Recent Food Price Spike be the Reason for the Revolution in Egypt?
Surprised?  Hang on, there is more!
The obvious question that should follow this revelation is: Why are the prices of basic food items rising so rapidly?  For the answer, we need to take you back to the lazy days of the summer of 2007 and certain events that took place in order to "save the US financial system."  While this salvation took many forms (think bailouts, incredibly low interest rates for banks, loan guarantees, "stimulus funding"), there was really only one thing going on:
The world was and continues to be flooded with dollars.
Like rain after a drought, the first few drops are welcome and necessary.  Perhaps even a prolonged period of rain, once a day for a month, would solve the problem.
But the folks in Washington think big.  They wanted to go all out.  Instead of the steady rain that the current insane monetary system needed to survive, Congress and the FED essentially turned on the sprinklers, then called the fire department to open the hydrants and let them run, then, as the rain continued to intensify, called in the aerial fire fighters to douse the financial system with their Super-Tankers!
All of this water has left the world financial system looking like Queensland, Australia and, similarly, the financial system is about to weather another monster storm.
The nature of that storm should be obvious if you have been following The Mint for any amount of time.  For those that haven't, suffice it to say that every key indicator below indicates that the throttle is wide open for more, much more money to enter the system and consequently much more inflation of any and every kind.  From food prices to stock prices, there is not an asset that will not get soaked in this torrent.  Some may even drown.
Poor Mr. Mubarak.  Not even he, for all of his political and diplomatic acumen, could withstand the monetary flood that is cascading to every corner of the earth, hitting the poorest corners first.
Tunisia, Egypt, Yemen, now there is word that Jordan and Palestine are changing governments in a lame attempt to appease their angry populations.
What Mr. Mubarak and the rest of the Middle Eastern leaders, as well as Trichet, Bernanke, and the rest of the world's central bankers are learning is that what people really need is to be Free.  Free to invest, produce, consume, save and spend as they please.  Often the most violent opposition to Freedom comes from those who purport to protect it.  This is a paradox that is hard to understand let alone to explain.  We will sum the concept up in the following phrase and allow you, dear readers, to ponder it:
Any Power, be it Governmental or otherwise, that does anything beyond protecting its citizens lives and private property from harm or theft is doing material harm to its citizens.
So once the protests are finished in the Middle East, perhaps they would do us a favor and protest outside the FED in Washington until we have a truly free banking system.  Until then, all who live in the dollar system are in slavery.
Stay Fresh!
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Key Indicators for Wednesday, February 2nd, 2011

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.