The Mint: 2011-07-03

Friday, July 8, 2011

Don’t be Fooled! June Unemployment Numbers cooked to keep interest rates and wages down

7/8/2011 Portland, Oregon - Pop in your mints…

Sound the alarms! The today the BLS took the pulse of the labor market today and market observers jumped back, aghast that the patient, the US labor market, should be so weak. According to the charts, he was well on his way to recovery. After being in a coma for the past three years, it appeared that he would be back to his old self and dancing in the halls in a matter of months.

Now, the prognosis has taken a turn, albeit a small one, for the worse.

Here at the Mint, we take numbers with a grain of salt. We have nothing against numbers; on the contrary, we are rather fond of them. They give one the ability to appear to make sense of extremely complex phenomena. They make mankind appear intelligent, cunning, even clairvoyant at times.

It should come as no surprise, then, that mankind, specifically those bent on “improving the world,” should place so much faith in them. To understand and interpret numbers and then act on the data gives man a power rush that is exhilarating.

It is a fatal conceit.

It is illogical, perhaps insane, to think that something as complex as creation and the countless phenomena that occur every nanosecond can be adequately expressed (much less understood) in numbers.

On a small scale, such as a family farm, a small town, or even a remote island, numbers can prove very useful. They can provide accurate, timely information about productivity and relative scarcity. In these instances, numbers can be invaluable.

Begin to aggregate theses numbers and try to use them to understand phenomena on a large scale and they become not only devoid of meaning but dangerous.

Why does this happen? Simply because the farther removed that the decision maker reviewing the number is from the processes on the ground, both in space and time, the less able he or she is to react in a coherent manner. This, in a nutshell, is why Socialism, Communism, and any other form of Centralized planning or “world improvement” does not work on a large scale.

With this in mind, we will interpret today’s BLS unemployment numbers for you. Economic observers have been trained to understand that 9.2% unemployment is bad for the economy. Why it is bad, few stop to wonder, but that is a rant for another day.

It is simply understood to be bad, and since the economy needs to be “good,” the world improvers must do something. What will they do? First, they will use this as an excuse for the FED to keep the short term rates insanely low for a longer period of time. This will not create employment but will create hyperinflation.

Second, the US Congress will raise the debt ceiling and resort to the Bush era style of stimulus, they type where every taxpayer gets a check in the mail from the Treasury.

Third, and most importantly, this announcement is a desperate attempt to keep domestic inflation in check. Inflation, and then hyperinflation, will begin once wages increase. The rise in unemployment sends the subliminal message to the working classes that they cannot demand raises because they are just “lucky to have a job.”

Are you really lucky to have a job? The not so subliminal truth is that YOU ARE IRREPLACEABLE AND ARE WORTH MUCH MORE THAN YOU ARE CURRENTLY MAKING!

Lives and economies were never meant to be measured in numbers. Numbers used to make large scale policies generally do more harm than good. Numbers produced by a central authority often are done so either with the intent to deceive or are so untimely and incompetently compiled that they become deceptive as they do not accurately reflect present circumstances.

“Fear not, therefore; you are of more value than many sparrows!”

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

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

Key Indicators for July 8, 2011

Copper Price per Lb: $4.36
Oil Price per Barrel: $96.20
Corn Price per Bushel: $6.72
10 Yr US Treasury Bond: 3.02%
FED Target Rate: 0.07% JAPAN HERE WE COME!
Gold Price Per Ounce: $1,544 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.2%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,657 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.

Wednesday, July 6, 2011

Huddled Masses of European Capital Fly to US Shores

7/6/2011 Portland, Oregon - Pop in your mints…

The crisis in the Eurozone is getting too big to ignore. The gig is up, the Greek Government is in default, and Portugal and a host of private lenders, amongst them the ECB itself, are on their way there as well. So certain is this fact that Moody’s even went on record and took the small step of downgrading Portugal’s debt.

Naturally, the Europeans can’t believe it. Don’t they pay good money for these ratings?

Whatever Moody's reasons for stating the obvious, the news is having the effect of sending money fleeing across the Atlantic to US Markets any which way it can. Commodities, Stocks, Bonds, even Real Estate are being bid up today as the European Bond Market collectively exhales capital.

For the moment, inflation on this side of the pond is only moderately accelerating as much of the cash is trapped on the Ellis Island of the US Banking system at the FED member banks.

Send me your tired, wadded up Euro capital looking for a home!

But as any banker knows, if you can’t lend the money then excess cash begins to crush your balance sheet. This is why it is probable that the US will participate in a Eurozone bailout. Even the threat of US intervention should get this newly immigrated capital looking for a new home shortly after arriving.

The trillion dollar question is now begging to be answered, will the US avoid default and keep the mushroom shaped debt sponge intact or will the current stalemate in Congress finally put the squeeze on the debt sponge and unleash the 500 year inflationary flood onto American shores from which there is but on escape (buy gold, silver, or anything real)?

We may know the answer sooner than we think!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

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

Key Indicators for July 6, 2011

Copper Price per Lb: $4.30
Oil Price per Barrel: $97.21

Corn Price per Bushel: $6.47
10 Yr US Treasury Bond: 3.10%
FED Target Rate: 0.08% JAPAN HERE WE COME!

Gold Price Per Ounce: $1,529 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,626 TO THE MOON!!!
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.

Tuesday, July 5, 2011

What is so Complex about a Default? The Greek Bailout Highlights Shortcomings of Debt as Money

7/5/2011 Portland, Oregon - Pop in your mints…

Another day, another Euro. It appears that it is still all systems go for the Greek bailout. Athens will get another shot of hot money in mid July and the charade will keep going on.

In the old communist days, the joke went “we pretend to work and they pretend to pay us.” In the current socialized monetary system, the joke goes “we pretend to cut back and they pretend we will pay them back.”

As our astute fellow taxpayers are already aware, the Greeks have no intention of changing their ways. Parliamentary promises and austerity measures are of little value when 90% of the population is against them. It is doubtful that the money lenders in Germany and France will step out of their high rises to come repossess the Parthenon.

No, they will leave that to foreign militaries as they march on Palestine.

But we are getting ahead of ourselves. Our topic of the day is why the Euro/IMF and now, reluctantly, the private sector will be “thrashing” (which must be somewhat harsher than mere hashing) out an aid plan for Greece tomorrow in France. From Reuters:

International banks and insurers will meet on Wednesday to thrash out a plan for the private sector to contribute to Greece's bailout effort as fears grow that the proposal will be derailed.

The Institute of International Finance (IIF) lobby group said it will chair the meeting of private-sector creditors.

It needs to resolve how a deal can get past credit rating agencies without it being termed a default, and how accountants will deal with it.

A lot of work remains to be done and Wednesday's meeting will not be decisive, several sources said.

"It's a process. The new French finance minister said today it will take weeks, over the summer. It's complex. It can't be settled overnight," a French private sector source involved in the talks said.

He said there was unlikely to be a single "one-size-fits-all solution" but rather several options, given the number of different bondholders and stakeholders involved.

"The issue is so complex that we need more time," a German banking industry source added.

Of course, the issue is not complex. The Greeks have promised more than they can deliver. Anyone can do this for a time but if too much time passes, actions (overspending) speak louder than words (austerity measures).

Besides, for a socialist tax collecting entity such as the Greek government, austerity measures starve its customer base of revenue, lowering its own tax revenues, which in turn demand’s more austerity, etc.

For a generally unproductive country that has made the mistake of outsourcing its money printing operations like Greece, austerity is collective suicide. Even credit rating agencies and accountants can no longer ignore this dubious state of affairs.

Greece, where the Euro pays tourist prices

Yet paradoxically, the international bankers seem intent on forcing the Greeks, against their collective will, to starve themselves. Why? Even in the parallel universe of our current monetary system this course of action makes absolutely no sense.
And that is precisely why it must be done. Somehow, the banking cartel must put on the charade of solvency. Most people, accountants and ratings agencies amongst them, have a vague understanding that saving money is equal to solvency.

How right they would be, if silver and gold were still money. In the current insane “debt is money” socialist monetary system, savings remove the lifeblood of the currency regime.

Don’t be deceived by the Euro and IMF’s words, Greece is a lost cause. It has problems that not even Christine Lagarde and her $550K pay package cannot solve.

But that won’t stop them from trying! As the explanations become more and more ludicrous across the Atlantic and Mediterranean, keep your eye on The Mint’s Key Indicators, which are still pointing at raging inflation with no end in sight in dollar land.

The only protection for savings is anything real that is not a dollar (or a promise to pay a dollar in the future, such as dollar denominated bonds). How is that for investing made simple? So many options!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S. For more ideas and commentary please check out The Mint at www.davidmint.com
Key Indicators for 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