The First of December: A poem, a memory, and a lesson

12/1/2011 Portland, Oregon - Pop in your mints…

The first of December has come.  Contrary to “political” belief, the first of December would have arrived even if the large European bank which caused all the global fake money shuffling amongst western Central Banks to occur yesterday had been allowed to fail.

Nature cares not whether a man or woman in New York or Frankfurt raise a finger to populate a spreadsheet with a number representing something that does not exist but as a figment of the popular imagination.  The sun would have set and a great majority of the world would have been none the wiser, and likely better off.

Make no mistake, the actions taken by Central Banks are made for the benefit of very few to the detriment of a great many.  For this reason, we have called it Man’s Greatest Catastrophe.

The first of December always brings with it a fond memory from our youth here at The Mint. 

Some 20 years ago we were in the midst of our junior year of high school.  Like many our age, we preferred hanging out with friends to completing our assigned homework.  A winter’s evening of that year found us doing the former while ignoring the latter.

On that particular evening, however, we were concerned.  We had to write a poem for a class in which we were struggling the next day.  At the time, it seemed a monumental task, made all the more impossible by leaving the task to the last minute. 

We shared the dilemma with our friends that evening as we were excusing ourselves early in order to work on the poem at home.

A dear friend of our spoke up:  “What does the poem need to be about?”

“Nature,” we replied.

“Hang on a minute,” replied our friend as he gathered pencil and paper and began to write.  Within five minutes, he handed me the draft of a poem and said, “There, now you can stick around a bit longer!”

We were stunned, not only at the unselfishness of our friend, but at the eloquent words which he came up with in such a brief time.  Our teacher, failing to see the genius and beauty in the poem, gave a merely average grade and forced us to revise and extend it.  The subsequent revision, as we recall, severely diluted the beauty of the original five stanzas and attempted to resolve something that was better left to the reader to resolve.

Courtesy of Wildlifearchives.com

Like so many things in life, an abundance of solutions robs people of the opportunity to think for themselves.  Between television, sermons, university lectures, and government policies, life is diminished for many by listening to the voices of men in place of the sacred dialogue between a man and his God.

Our friend’s poem allowed for this dialogue.

We hope to one day be able to locate the manuscript of his masterpiece to share it with you.  It is appropriately titled “The First of December” and is a moving description of a wintry scene witnessed by a man who is soon caught up in the wonder of it all.  He then abruptly realizes that all that he is witnessing is occurring and will continue to occur, without his intervention, long after he is gone.

The realization humbles him.

We leave you with the last stanza which is forever etched in our memory:

“Now I must go,
But I’ll always remember,
Life in the cold,
On the first of December”

Stay tuned and Trust Jesus.

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 December 1, 2011

Copper Price per Lb: $3.53
Oil Price per Barrel:  $100.14

Corn Price per Bushel:  $5.95  
10 Yr US Treasury Bond:  2.12%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,744 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.0%
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:  $9,627,300,000,000 YIKES UP $1 Trillion in one year!!!!!!!

Central Banks Coordinate USD Funding actions, the final act of currency homogenization is underway

11/30/2011 Portland, Oregon - Pop in your mints…

Living on the West Coast, there are two things which we take for granted here at The Mint.  First, that viewing Twitter is the quickest way to take a pulse of what is going on in the financial world.  Second, that we are, by virtue of our location, jumping into the financial news of the day when it is half over in New York and finished in Europe, allowing us not only to see the news but also the effect of the news on these markets.

With these two givens, we often pen our thoughts as a sort of digestion (or indigestion, as the case may be) of the events which are currently unfolding.  Such is the case today.

The Final Act

We’d barely had time to collect our scattered thoughts as news came that the final act of the tragedy that is the world’s financial system circa 2011 appears to be underway.  This morning, numerous tweets announcing that coordinated action amongst western central banks, specifically the Federal Reserve and its counterparts in Canada, Japan, Switzerland, and England, had been taken.  The action was taken to rush a fresh supply of cheap US Dollars to the ECB in time for the ECB to prevent a major European bank from imploding today.

Our guess is that the yet unnamed bank is BNP Paribas and by extension its many counterparties.  Any large French bank would be a candidate and we are just guessing that it would be the le grand chat.

The USD got torpedoed in today's coordinated action

As further evidence of the final act being underway, we see that the Federal Reserve suspended its POMO (Permanent Open Market Operation) for today until December 2^nd.  Not coincidentally, this latest operation was to withdraw liquidity from the US dollar system on a day on which apparently the system was calling for more.

To simplify what has happened for our fellow taxpayers we offer the following executive summary: 
Today is the final day of a calendar month, a day when accounts must be settled.  A large bank in the Euro zone did not have enough US Dollars with which to pay back its short term loans to other banks.  It turned to the ECB, which did not have enough US Dollars to backstop the large bank.  The ECB, then turned to the Federal Reserve, which quickly shifted gears from suck to blow and confirmed, once again, that it will print money any time there is a liquidity crunch, anywhere in the western world.

The FED will now wait until the dust settles on December 2^nd to see how much liquidity it can withdraw from the system without imploding it.  To them we say: good luck.

As longsuffering Mint readers are already aware, a debt based currency regime, which is erroneously referred to as a monetary system, relies on the infinite creation of debt along with its continued acceptance in place of money proper in order for the game to continue.  Once either of those conditions ceases to exist, it indicates that a majority no longer have confidence in the currency regime.  In other words, the currency regime has failed.

The western central banks appear to momentarily have their streams crossed, and in a pointless effort to homogenize interest (and by extension foreign exchange) rates, will increasingly take this sort of “coordinated action” until their currencies act and trade as one. 

A JP Morgan note on this most recent coordinated action highlights the fact that the Federal Reserve not only will lend dollars to these Central Banks at a discount, the foreign Central Banks will in turn lend their respective currencies to the Federal Reserve at a discount on demand.  This gives further credence to the fact that the system has already failed and is in retreat, with the Central Banks themselves left passing their currencies and credits amongst themselves and their member banks.

Once this is homogenization process is complete; a severe devaluation of the homogenized currency will take place which will leave any holder or the homogenized currency(s) as a savings device substantially poorer and the holders of real assets better off on a relative basis.

However, on balance, the world as a whole grows poorer every day that the centralized currency regime is allowed to continue its violently enforced monopoly on currency issuance.

Money proper was never meant to be centralized and controlled by a single entity, and the current system which engenders this centralization is exploding before our very eyes.  Yet it will not go without a fight.  Recent events in the Middle East and Iran indicate that yet another physical fight to expand this failed system may be at hand.

It is a further expression of the Might Makes Right ideology, and it is time to pray for the peace of Israel.
Stay tuned and Trust Jesus.

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 November 30, 2011

Copper Price per Lb: $3.56
Oil Price per Barrel:  $100.17

Corn Price per Bushel:  $6.01  
10 Yr US Treasury Bond:  2.07%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,747 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.0%
Inflation Rate (CPI):  -0.1%
Dow Jones Industrial Average:  12,046  

M1 Monetary Base:  $2,095,600,000,000 RED ALERT!!!  THE ANIMALS ARE LEAVING THE ZOO!!!
M2 Monetary Base:  $9,664,500,000,000 YIKES UP $1 Trillion in one year!!!!!!!

Rockaway Beach, Jaca, and the illusion of Market Homeostasis

11/29/2011 Portland, Oregon - Pop in your mints…

We are back from a wonderful Thanksgiving holiday spent with family in lovely Rockaway Beach, Oregon.  Rockaway Beach is a gem of a town on the Oregon coast which straddles Rock Creek as it descends from the Coastal Range and violently collides with the Pacific Ocean.

We were fortunate to awake each morning with a front row seat to this raging battle.  At low tide, the creek appeared to make headway as it made its final run into the great unknown.  The beach was immense and inviting, and seagulls roamed the sands to find what the sea had left behind as an appetizer.

At high tide, the sea was angry.  The creek’s advances were violently thrust back again and again as the full weight of the Pacific came in against it.  The beach and its inhabitants disappeared and we were glad to be looking down on the raging waves from the third floor of the townhouse.

We now understand why navigating the mouth of the Columbia River was a fool’s game for centuries.
The central Oregon coast is unique.  It is never quite warm enough, no matter what time of year one visits, to be a suitable substitute for the tropics.  Nor is it ever quite cool enough to be easily categorized as Nordic.  It permanently exists in a state somewhere between these two extremes.

The State of Oregon declared the entire coast a state highway in 1913 and affirmed the beaches as public lands via passage of the Oregon Beach Bill in 1967.  These two actions have kept the coast both accessible to the public and in generally pristine condition. 

Essentially, these are no private beaches in Oregon   For this, we are grateful, as the coast may be one of the most peaceful and photogenic places on the planet.

A stunning sunset at Rockaway Beach

Our time in sleepy Rockaway Beach was pleasant.  Apart from seven miles of coastline, the town has a park and a number of antique and craft dealers.  On Friday evening we were treated to the annual town Christmas tree decorating and lighting ceremony along with an old fashioned sing-a-long led by the school choir.

Songbooks and cookies were passed around and the choir took requests from the crowd.  The last time we experienced such an expression of civic merry making was in the mountain town of Jaca in Aragon.  As we arrived in Jaca, it was dark and persons were flocking to the green in front of the Castle of San Pedro.  They appeared to jump at our car as if from nowhere.

A Family enjoying Rockaway Beach, Oregon

Once settled in to our accommodations, we joined them and were invited to a sing-a-long in the early autumn evening in the Spanish Pyrenees.  But that is a story for another day.  We are having a hard enough time returning from our vacation bliss.  If we reminisce on our time in Spain we may be on permanent vacation.

Homeostasis?

We love the word homeostasis.  It is a complicated way of saying that an organism, or in our case, an economic system, is in balance, in touch with its inner Chi.  We think of a frog sitting on a log, slowly breathing.  Perhaps it is an image burned into our minds by a biology text we once read.  Whatever images the word conjures in your mind, fellow taxpayer, it is unlikely to trigger a flight or fight response.

We seem to have returned from the raging coastline to a market which appears to have achieved a sort of homeostasis.  The rise and fall of equities, many times over 200 points a day as measured by the Dow, should evoke a fight of flight response from market participants.  Yet now commentators and participants barely blink an eye at such moves. 

After trillions of dollars of stimulus, dozens of government bailouts and guarantees, and collectively learning to think the unthinkable, the market must finally be achieving equilibrium, right?

Oh fellow taxpayer, if only it were true.  Unfortunately, the very perception that the market may be at homeostasis may be the indication that we are at an intermission before the dramatic final act of the play in which we all find ourselves unwilling participants, gets underway.

In the final act, the sovereign debt debacle that first appeared in Greece and is now enveloping France and perhaps Germany finds its way across the ocean to the United States of America.  At that point, the US will succeed where Europe, until now, has failed.

As the financial world trains its binoculars on the equity and bond market indicators, they will continue to declare that all is well, the homeostasis that the American authorities so desire will appear to have been achieved.  US bond yields will remain steady and the equity indices will steadily rise.  Even housing may begin to march forward after its long slumber.

No, the US will not default in the traditional way, as Europe is on the verge of doing.  In fact, perceptive fellow taxpayers will quickly point out that the US has been in the process of defaulting for some time now via quantitative easing (QE).

In markets as in a biological system, all of the actors are always pursuing a state of homeostasis.  Yet the rub of homeostasis is that it is impossible to achieve by unilateral force.  It is something that must collectively be achieved.  It is something that only Anarchy, the absence of the State, can bring about.

The final act of this play will be the ultimate display of unilateral force.  In an increasingly desperate attempt to keep bond and equity indices steady, the Federal Reserve will lose control of the currency in what historians will call a hyperinflationary blow off.

Then modern Central Banking, Western Governments, the warfare/welfare state, and all of its grotesque machinations will take a bow and exit stage left…or they will jump off the stage and attack the crowd.
Come to think of it, we may just leave after this intermission.

Stay tuned and Trust Jesus.

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 November 29, 2011

Copper Price per Lb: $3.38
Oil Price per Barrel:  $99.34

Corn Price per Bushel:  $5.98  
10 Yr US Treasury Bond:  2.00%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,715 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.0%
Inflation Rate (CPI):  -0.1%
Dow Jones Industrial Average:  11,556  

M1 Monetary Base:  $2,095,600,000,000 RED ALERT!!!  THE ANIMALS ARE LEAVING THE ZOO!!!
M2 Monetary Base:  $9,664,500,000,000 YIKES UP $1 Trillion in one year!!!!!!!