Thursday, August 11, 2011

New Bans on Short selling in Europe, Margin Requirements for Gold, Money’s role in Climate Change

8/11/2011 Portland, Oregon - Pop in your mints…
Fresh injections of electronically printed cash from the US and Euro FEDs appear to have tranquilized a market in free fall.  That, along with a ban on short selling in Europe seems to be sufficient to continue the illusion that the financial system is operating normally.
Elsewhere, we see that margin requirement for Gold contracts were increased by the Chicago Mercantile Exchange in an attempt to arrest Gold’s parabolic rise over the past several days.  This must have been what Obama and Bernanke talked about last night at the White House.  They probably made a few revisions to the jobs numbers that were printed today while they were at it.
The ban of short selling in Europe is eerily similar to the ban placed on short selling large bank stocks in the US not so long ago.  The increase in the Gold margin requirement is eerily similar to the increase in Silver margin requirements by the CME last spring.
What is going on?  Nothing good, fellow taxpayers.  A tip, if you see the Government actively trying to stop something, it is good idea to be on the other side of the government’s trade.  In this case, sell European bank shares and buy gold.  Think of it as an indirect governmental subsidy to little old you.
The markets are desperately trying to correct nearly 40 years of errors that have been created since the US Dollar was officially de-pegged from gold.  The FED’s, who see currency that can be created on a whim without the inconvenience of having to either mine it from the earth or earn it in honest, fair trade as extremely convenient , are desperately trying to fight the correction. 
If the numbers just look normal, they think, people will continue to pacifically labor under the illusion that the Government has everything under control.
Nothing could be farther from the truth.
It occurred to us that we may need to clarify what the money problem is and why it, and not fossil fuels, are the cause of economic imbalance and may lead to what is popularly referred to as climate change.
Many deride the use of gold and silver as money because it must be mined from the ground, refined, minted, carried around, kept secure, etc.  It is inconvenient.  They see money created out of thin air as a simple net gain to society.
 Presto, you have, with a stroke of the pen, saved the miners from years of hard labor underground.  You have saved who knows how many trees, fossil fuels, and other elements required for the refining process.  And you have saved Jack and Jill consumer and shopkeeper from the inconvenience of carting around loads of heavy coins.
So what is the matter with instant money?  The problem, if you have not identified it, is precisely in the fact that it is easy to create.  When you remove the effort required to create money for trade, you free that effort to be spent in a lot of other ways.  That is great, except for the fact that no one considers that instant money would give people the time to scorch the earth in a thousand other ways which are much more harmful than mining.
By making money “free”, you throw the economy completely out of balance and perpetuate bad decisions for a much longer time than if the wrong speculations were limited by the need to back them with real money, acquired by difficult toil both under and above the earth.
The problem with “free” money is that it has no value, and it serves to devalue the production and lives of all who are forced to circulate it.  The longer it circulates, the more damage it does.
Worst of all, it concentrates power in the hands of those who create it out of thin air and enjoy it first.
The world has gone 40 years down this insane path.  How much more can it take?
Stay tuned and Trust Jesus.

Stay Fresh!



P.S.  For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for August 11, 2011

Copper Price per Lb: $4.03
Oil Price per Barrel:  $85.42
Gold Price Per Ounce:  $1,768 PERMANENT UNCERTAINTY