Bernanke fires up the Helicopters and Precious Metals Blast off!

7/13/2011 Portland, Oregon - Pop in your mints…

Today Bernanke went before the US Congress and gently laid down the gauntlet. If Congress fails to raise the debt ceiling soon (by August 2^nd, we are told), it could have catastrophic effects on the economy.

Given that nearly the entire banking system on the planet depends upon the US Treasury being Grade A debt, Mr. Bernanke may again be credited with the understatement of the year!

We pity Mr. Bernanke. He is like a pilot flying an Airbus aircraft that is stalling at extremely high altitute. We don’t know much about aircraft but we understand that Airbus aircraft, with their European design slant, do not give a pilot much freedom to override the plane’s automated systems. It assumes that all of the necessary corrective actions can be pre-programmed and, if the plane begins to stall, the computers take over to attempt to correct the problem.

Actual Airbus pilots are free to dispute the merits of our oversimplification. We just needed a metaphor.

Back to Bernanke, with the autopilot mechanism failing, the pilot does not know what to do. If the US Congress had dutifully raised the debt ceiling as it had 94 times in the past, as the Airbus autopilot manual said it would, Bernanke’s reaction to the most recent US jobs report would have been to simply propose a third round of quantitative easing (read: money printing or counterfeiting of currency).

On the Airbus, he would get on the intercom and say “please fasten your seatbelts until we pass through this patch of rough air.”

However, the failure of the US Congress to reach a deal to raise the debt ceiling has thrown a wrench in his plans. What is his plan now? Think helicopters, Zimbabwe, Gideon Gono.

Mr. Bernanke is going on a safari!



Yes, fellow taxpayer, with each day that passes, it is becoming clearer to the majority that Mr. Bernanke is unwittingly following in the footsteps of none other than Gideon Gono. Some may recall that Mr. Gono, the Governor of the Reserve Bank of Zimbabwe, was forced to “do extraordinary things that aren’t in the textbooks,” meaning that he oversaw the printing of large amounts of his country’s currency which produced an amazing modern example of hyperinflation.

In an interview with Newsweek in early 2009, Gono offered an explanation for his actions and predicted that the US would do the same, as it has:

“I've been condemned by traditional economists who said that printing money is responsible for inflation. Out of the necessity to exist, to ensure my people survive, I had to find myself printing money. I found myself doing extraordinary things that aren't in the textbooks. Then the IMF asked the U.S. to please print money. I began to see the whole world now in a mode of practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”


The hyperinflation in Zimbabwe led to shortages of real goods and destroyed the economy. Why would Mr. Bernanke’s experiment end any differently?
Meanwhile, over in the Eurozone, the Airbus is in rapid descent and everybody on the plane is offering ideas as to what went wrong and how to fix it. Its auto-pilot has not been programmed to deal with the failures the plane is experiencing and as the pilots and passengers engage in a heated debate, none are able to grab the controls much less safely land the aircraft.

it will not be long before impact and the smarter passengers are starting to grab for the parachutes made of Gold and Silver. Gold closed up almost 1% to a record of $1,583 and Silver gained nearly 6% on the day.

Back in the US, whether or not Congress passes legislation to raise the debt ceiling is irrelevant. The US Treasury will borrow and the FED will print even without Congressional approval. That is what makes modern Government fun, if you don’t like a rule, just ignore it and claim that you were exercising “Leadership.”

All of the countries in the Eurozone will soon surrender their sovereignty to Germany and the IMF in exchange for the “privilege” of using Euro as currency. The ideological divide that is being exposed in the US may eventually lead to civil war.

But these events may be small compared to what is occurring in the Middle East. Iran opened its own international Crude Oil exchange today which is akin to declaring war on the western governments and banking interests.

And keep your eyes on Palestine. The UN vote on Palestinian statehood in September is eerily similar to the vote 62 years ago when the UN accepted Israel as an independent state. Our guess is that this vote will spark events there that will capture the attention of the whole world.

Stay tuned and Trust Jesus.
Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S. If you enjoy or at least tolerate The Mint, please share us using the buttons at the top of this post. If you feel that you can’t go another day and risk missing The Mint, please register by clicking here. Thank you!

Key Indicators for July 13, 2011

Copper Price per Lb: $4.35
Oil Price per Barrel: $97.83
Corn Price per Bushel: $7.26
10 Yr US Treasury Bond: 2.89%
FED Target Rate: 0.07% JAPAN HERE WE COME!
Gold Price Per Ounce: $1,582 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.2%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,492 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.

Italians to join Europe’s needy, the parable of the Chiropractor

7/11/2011 Portland, Oregon - Pop in your mints…

Investors woke up today and wasted little time in marking down Italian sovereign debt, along with Spanish and Portuguese debt issues.  Why?  The story of the Italians is eerily similar to that of the Greeks, the Portuguese, and the Spanish.  Their government spends more than it takes in.

At this point, all readers of The Mint know that it is impossible for any Government to produce value.  Yet somehow, in our upside down, insane monetary system, it has become acceptable for the western governments to run a reasonable deficit to help pay for their role as the Robin Hood in the current welfare state model.  The European Union even went so far as to attempt to define what constitutes a reasonable deficit as 3% of a nation’s GDP per year.

Now if the government takes in 25% of national income in the form of taxes, which is not an unheard of (if anything it is a low estimate) and then borrows an additional 3% (which has proved an elusive target), then 28% of the welfare state’s economy is devoted to income “redistribution.”

While the term “income redistribution” does not fly well with most voters, the Government’s "investment" decisions are cleverly disguised as Social Security, Health Care, Defense, and Education.  Most will recognize that these are important investments, which leads us to the logical question:
Why leave these investment decisions up to the Government?

This question is rarely asked, and most seem content to let the Government continue in their collective role as Robin Hood.  It should come as no surprise, then, that a great deal of time and what would otherwise be productive energy goes into influencing Robin Hood’s decisions as to whom the poor are at the moment.  Bill Bonner at The Daily Reckoning calls this outsized effect of Government in the economy a “Zombie Takeover.”

With the Zombies creatively destroying a minimum of 28% of GDP in a modern welfare state, perhaps it is a testament to the resilience and productivity of the citizenry that any real progress can be made under such circumstances.

Fortunately (or unfortunately for those in the zombie class) the insanity is coming to an end.  As the government’s destruction of wealth accelerates, even elected officials will have to admit that the bad decisions that all of this accumulated debt represents do not go away just because one denies that they exist.

In fact, attempts to solve the problem of too much debt by creating more currency are futile, as each unit of currency creates a unit of debt which must be dealt with at a later date.  This is the glory of modern monetary theory.  It binds the world together in slavery.  It is also its Achilles heel, which is now exposed, waiting to be stricken.

How and when will this finally occur?  It will be like the man with back pain who finally goes to visit the chiropractor.  The gradual spinal realignment that he had hoped to achieve by doing simple stretching exercises (austerity) is not taking place, in fact, his back problems have gotten worse.  Once in the exam room, he will be laid down swiftly on the chiropractor’s table.

Then chiropractor will move into place, interest rates will rise, and a series of pops will go off in the patient’s spine.  Naturally, the popping sounds are the troubled EU nations defaulting on their sovereign debt in unison, which is what is about to occur.

Will the patient then get up and go on his way, sore but better off for the treatment?  Or perhaps the better question is; do zombies even use chiropractors?

Meanwhile in the US, the political theater that is the debt ceiling negotiations may be the catalyst that sends the US Treasury market into a much deserved tailspin.  We have speculated about this almost incessantly and still cannot believe that it may happen.

But while the EU goes to the chiropractor, the US may prefer to rely on the prescription drugs of fiscal and monetary stimulus for as long as they appear to work in a futile attempt to reassure the zombies that all is well.

The US will simply destroy the value of the currency, completely and irreversibly.  Why else would they pick a fight with Iran at this point?

That makes each dollar that one holds like holding an M80 firecracker with a lit fuse.

How long will you hang on?

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 11, 2011

Copper Price per Lb: $4.32
Oil Price per Barrel:  $94.99
Corn Price per Bushel:  $6.81
10 Yr US Treasury Bond:  2.92%
FED Target Rate:  0.07% JAPAN HERE WE COME!
Gold Price Per Ounce:  $1,554 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.2%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,506 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.

A US Default? Into the Great Unknown

6/29/2011 Portland, Oregon – Pop in your mints…

Much has happened in the financial markets in this past week, and much will happen in the coming weeks.  But perhaps what is most notable is what has not happened.

Namely, the US Congress has not raised its self imposed credit card limit.  For an entity that is already $14.3 Trillion in debt ($4 Trillion of which reportedly comes due in the next 12 months) with no realistic plan to pay for it, this is suicide.  What are they thinking?

The two parties are in agreement one count, they need to save $2 Trillion dollars over 10 years.  Why this sum has been identified as the cure for what ails the country's finances is anybody’s guess.  Unfortunately, but not surprisingly, there is no agreement as to how to get there.

Where will they find $2 Trillion?  Tax the rich, screams Obama, repeating the eternal populist sentiment.  Stop spending, say the Republicans, using the circumstances to make a push for “limited government.”

Editors Note:  There is no hope for limited government with the current two party system in place, therefore the Republican’s stance is entirely a façade.

The President has taken the extraordinary step of asking Congress not to recess over the Fourth of July, as is their custom, calling their lack of agreement akin to his daughters not completing their homework.  While the President makes a quaint metaphor, we believe that Obama’s daughter’s homework is probably more challenging than Congress’s task of balancing the budget.

Obama tells the GOP to get their "homework" done

 Balancing a budget is simple.  It just takes courage.  It seems that courage is in short supply in Washington DC these days.

Without internal fortitude to press the Americans along, a little external pressure is beginning to be applied.  First, the Treasury’s latest 7 year bond auction did not go as well as planned as investors demanded 2.43% to hold US paper for a sabbath cycle.  Without the FED at the table, it is hard to imagine how it could have gone well.  Bond Market participants are beginning to wring their hands.

Then comes word that the IMF is beginning to apply pressure, eloquently reminding the Americans of what they should do and why they should do it.  It is worth noting that the IMF appears to be the last to know about such things so we will excuse their apparent surprise at the lack of inaction (they are most likely not informed MINT readers like yourself):

“…the federal debt ceiling should be raised expeditiously to avoid a severe shock to the economy and world financial markets,"

Yeah, tell us something we don't know.  And then, true to their holier than thou, infallible status, they give the Americans advice on how to do it:

"We see early political agreement on a comprehensive medium-term consolidation plan based on realistic macroeconomic assumptions as a cornerstone of a credible and cyclically appropriate fiscal adjustment strategy,"

Great!  Thanks for the incomprehensible and totally impractical advice.  This type of drivel simply solidifies our opinion that the IMF is a worthless institution and could be categorically ignored if it were not so insistent upon meddling in financial matters on a global basis.

Meanwhile, we are getting to see first hand what happens to a country that gives up control over its currency and then listens to the IMF for advice and is forced to take a loan from them.  Greece, is giving the world a glimpse at how popular austerity is with the masses.


The scene that was carried out in the Middle East in the Spring is set to take place in Europe and England over the summer months.


How long until it crosses the Atlantic?


Another event that may occur as interested parties begin to reduce exposure to US Treasury debt is a liquidity crunch that will start in early July.  Apart from the debt ceiling uncertainty, the Dodd-Frank financial reform rules are set to begin to do their damage to the financial system on July 15th.  

If they do not forestall these rules as many banks are begging them to do, the US and global economy will take their first tender steps into the great unknown, a world without political or real capital to act a a backstop for failures.


It will be dangerous and exciting.  And, just like a fireworks show, will be best enjoyed from a safe distance.  Keep your money close at hand, meaning out of banks and preferably in precious metals or anything tangible, and enjoy the show!

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Wednesday, June 29, 2011

Copper Price per Lb: $4.20
Oil Price per Barrel:  $94.93 A FAILURE TO INFLATE, WILL TREND LOWER

Corn Price per Bushel:  $6.98   MONETARY POLICY IS NOT WORKING
10 Yr US Treasury Bond:  3.11%
FED Target Rate:  0.08%  UH OH!

Gold Price Per Ounce:  $1,511 BENEFITING FROM PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.25% 
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,261
M1 Monetary Base:  $1,895,400,000,000 RED ALERT!!!  
M2 Monetary Base:  $9,086,900,000,000 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.

Inflation set to Bloom, Bernanke Resorts to Desperate Pleas to Raise the Debt Ceiling

6/14/2011 Portland, Oregon – Pop in your mints…

The Rose Festival has dominated the city’s waterfront park for the past two weeks.  Carnival rides have been up since Memorial Day weekend and an assortment of ships from the US and Canadian Navy (affectionately known as the “Canavy”) arrived late last week.  After no fewer than four parades, the annual Dragon Boat Races rounded out the festivities. 

The Festival usually marks the beginning of summer, which is defined as the absence of rain for four delightful months, here in Portland.  While the rain seems to have done its part, the weather remains colder than one would expect.

This year was the first year that anyone can remember the roses not being in full bloom during most of the festival.  An uncharacteristically cold spring has caused many of the plants to hold back here from showing off their blooms.  When they do finally bloom, it tends to happen quickly and spectacularly. 

For some reason the plight of the roses has us worrying about inflation.  We have been certain that inflation is on the horizon for some time now, and while there has been an uncomfortable rise in food and gasoline prices, it is hardly the degree of inflation that we had been anticipating.

Are we early or just plain wrong about inflation?  The question is troubling.  What is certain is that many of the things that we have speculated would happen are coming to pass.  Most significantly, the US Government appears to be approaching a moment of truth regarding its dire finances.  The simple question of whether or not to raise the debt ceiling has opened a Pandora’s box of questions about the nation's spending priorities.

Now the 2012 election cycle is beginning and US lawmakers have rushed out the door to the campaign trail and have left Pandora’s box wide open on the Capitol floor with its questions racing about the room:

Should we cut entitlements?

Enact more economic stimulus?

Will the Government really go bankrupt on August 2^nd?

Is the activity on Twitter accounts really open to the public?

With the national political circus about to go into full swing, any hope of a serious discussion about a realistic budget or debt ceiling is gone.  What we are now left with are desperate pleas for action from none other than Ben Bernanke, the ace lobbyist for the nation’s largest banks. 

Today’s plea was made by Bernanke at the Committee for a Responsible Federal Budget’s appropriately titled annual conference: “The Debt Ceiling, Fiscal Plans, and Market Jitters, Where Do We Go From Here?”

Mr. Bernanke, in his classic, diplomatic style, told the Republican leadership in attendance that he appreciated what they were trying to do in trying to get the nation to live within its means, but that their use of the debt ceiling as a hostage was not an appropriate tool for the job.  Instead, he advocates deficit reduction goals which trigger automatic cuts if they are not met.

Leading Lobbyist for the Banking Sector

 The United States is one of the few countries with a congressionally mandated debt ceiling.  Contrary to Mr. Bernanke’s belief (which we must say defies logic), the debt ceiling is the perfect tool to use if a lawmaker wants to put an end to out of control spending but doesn’t have the time to gain consensus for a reasonable budget plan.  It is the ultimate way to “trigger automatic cuts.”

Perceptive readers will note that what Mr. Bernanke’s proposes is the same fiscal spending control model that has worked spectacularly in Europe. Just ask the Greeks!

Still, the question remains, where is the inflation?  Our simple analysis led us to believe that under current circumstances the FED would print money to give both to its member banks and to the US Treasury until things either got better or the dollar was completely worthless in exchange for goods.  Our money is on the latter passing before the former.

It now appears that the US government has temporarily thrown a wrench in those plans.

But this should come as no surprise.  As Henry Hazlitt so eloquently explains in his book Economics in One Lesson, government intervention in the economy always fails to achieve its desired ends and almost uncannily brings about results contrary to those that the government intended.

Would it not make sense, then, that the current efforts to produce price inflation turn out to be dramatic failures as well?

Then, long after the government has abandoned its inflationary policies, a tidal wave of cash will appear quickly and spectacularly, not unlike the rose blooms in Portland this year.   

This inflation will occur when the US Government, whether on its own or under compulsion from the bond markets, turns its clumsy machinations towards austerity.  In other words, when it least wants or expects it.

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Tuesday, June 14, 2011

Copper Price per Lb: $4.16
Oil Price per Barrel:  $99.43

Corn Price per Bushel:  $7.55
10 Yr US Treasury Bond:  3.10%
FED Target Rate:  0.10%  FED STILL IN DESPERATION MODE

Gold Price Per Ounce:  $1,524

MINT Perceived Target Rate*:  2.25%Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,076
M1 Monetary Base:  $2,022,700,000,000 RED ALERT!!! M2 Monetary Base:  $9,005,800,000,000 STARTING TO DRY UP?  NOT!

*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.

The US House of Representatives, Unable to Function, Waffles on Derivatives Rules and Libya Resolution

6/1/2011 Portland, Oregon – Pop in your mints…

The leadership of the United States finds itself publicly handcuffed to the interests of the banks and defense contractors and at this point appears effortless to free itself.  Two glaring and pertinent examples have appeared in this week in what can only be described as an utter and complete failure to act on behalf of the people.  This inability to govern, as a QE program is evidence of the failure of a currency regime, is evidence of the very failure of a government. 

Both examples are from the US House of Representatives:

Exhibit A of House Dysfunction:  House Financial Services Committee Votes to Delay Derivatives Rules

For the uninitiated we offer a humble and intentionally oversimplified explanation of what this means. 

You may recall that In 2007, The United States gave a $700 Billion blank check to the financial services industry (commonly known as TARP) with few, if any, questions asked.  When the inevitable, albeit insincere political backlash from the masses began to surface, the taxpayer was pacified with a piece of legislation called the Dodd-Frank Act.

The Dodd-Frank Act is a fictional attempt to regulate the financial markets.  Its passage was meant to put to rest any doubts that the US Government knew what it was doing when it immediately and blindly ceded over 5% of GDP to the sharks of the financial industry.

Senators Chris Dodd and Barney Frank were going to make sure that the financial markets never put the US Government in the uncomfortable position of having to bail them out again. 

The main culprit was identified as the OTC derivatives market, presented to the people as a clandestine exchange where financial companies freely traded promises that they couldn't keep for money that their counterparties didn't have.  The whole thing was a fraud to begin with.

Unfortunately, passage of the Dodd-Frank Act has simply legitimized and encouraged this fraud.  Now, nearly two years later, Congress is having trouble implementing rules with teeth to apply the fairy tale derivatives market which is now reportedly worth $600 Trillion dollars, or roughly 10 TIMES GLOBAL GDP.

The failure to write rules for this worthless piece of legislation simply underscores how far the money lenders have infiltrated the US Government.

Meanwhile, large cap companies continue to raise large amounts of cash in preparation for a complete breakdown of traditional credit markets which could occur later this summer, no matter what the authorities do.

A New Sign Soon to grace the US Capitol Building?

 Exhibit B of House Dysfunction: House puts off Vote on Libya Resolution

In what is perhaps an even more shocking example of how far the defense contractors have infiltrated the US Government, we have this report of a House resolution being pulled for fear that it will pass.  From the Associated Press:

"The GOP leadership had scheduled a vote Wednesday on the resolution by Rep. Dennis Kucinich, D-Ohio, that "directs the president to remove United States Armed Forces from Libya ... not later than 15 days after the adoption" of the measure. The vote was delayed as the leadership and Obama administration realized frustrated lawmakers likely would support it."

If this is to be believed, there is widespread support in congress for the US to immediately cease and desist all military activity in Libya.  At The Mint, we had speculated that the US had no business intervening in Libya.  It appears that the House of Representatives agrees. 

But as appears to be the case with the Dodd-Frank Act, a mysterious force seems to be impeding the US Government from following the simple guidelines laid out for it in its own founding document, the long since forgotten Constitution of the United States of America.

With the government quickly running out of money and virtually impotent to do anything, let alone carry out its basic functions of protecting the life and property and its citizens, a time of "adjustment" (chaos in the financial markets) appears to be rapidly approaching on the horizon.

Are you prepared?

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Wednesday, June 1st, 2011

Copper Price per Lb: $4.09
Oil Price per Barrel:  $99.82

10 Yr US Treasury Bond:  2.97%
FED Target Rate:  0.10% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,539

MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,290
M1 Monetary Base:  $1,892,800,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $9,036,600,000,000 MORE FUEL FOR THE CRACK-UP BOOM!!!!

*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.

US Government on the Brink of Shut Down, a Large Scale Debacle in the Making

4/7/2011 Portland, Oregon – Pop in your mints…

Oh fellow taxpayer, we are getting our money's worth, so to speak.  As of this writing, President Obama, House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nevada, who have become the key figureheads in what is essentially an ideological battle over an extremely small portion of the Federal Budget, still have not come to an agreement as to what the Federal Government's budget should be for a year that is already more than halfway over.  

To say that this is ridiculous is an understatement, but not for the reasons that may immediately come to mind.

At The Mint, we do not marvel that representatives of such ideologically divided constituencies should fail to come to an agreement as to how to spend money.  This is normal.  What is abnormal and what make these circumstances a "Debacle in the Making," as we like to call it, is the fact that these representatives hold the purse strings to roughly $3.6 trillion dollars, or roughly 25% of the nation's GDP.

The mere thought of it fills us with awe.  Imagine, sending 25% of your gross income to a group of 535 people (or 0.000174% of the US population) and expect it to be distributed in a manner that maximizes the general welfare of 308 million persons.  Wait a minute, those of us who live and work on American soil do not have to imagine it, this is our reality!

The implication of our insane system, then, is that these 535 persons are extremely wise, clairvoyant, and devoid of personal ambition.  As Yakov Smirnoff would say, What a Country!

Naturally, if someone is paying 25% of his or her income for something, they are likely to be somewhat demanding as to what they are getting for their money.  Some expect a pension in the form of Social Security, health care, education, food, road maintenance, and defense against foreign invasion.  Still others expect to land a large contract to build new housing or infrastructure or to launch a spaceship. 

And the list goes on.  With 25% of the nation's income theoretically at their disposal (in practice nearly 45% of it is borrowed or created out of thin air, as is now the case), one can imagine that the demands made of these 535 persons are numerous and incessant.

Yet what puts this house of cards in jeopardy, apparently, are disagreements over whether or not to fund abortions, regulate the very air we breathe, and frivolous warfare in far off lands.

Yes, with all of the pork at the disposal of the group of 535 which could be cut from the Federal budget, one side cannot cede funding Planned Parenthood and the EPA, while the other side cannot cede funding the Military.  At stake is a mere $12 Billion, or 0.003% of the giant albatross that is the US Federal Budget and the activities that it represents.

And they are already more than 6 months late?  With this sort of leadership, we may be better off if the entire thing shut down.

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Thursday, April 7th, 2011

Copper Price per Lb: $4.38
Oil Price per Barrel:  $110.31 SKYROCKETING!!!!
10 Yr US Treasury Bond:  3.56%
FED Target Rate:  0.09% FED LOSING CONTROL OF TARGET RATE!!!!

Gold Price Per Ounce:  $1,458  SKYROCKETING!!!!

MINT Perceived Target Rate*:  3.25%
Unemployment Rate:  8.8%
Inflation Rate (CPI):  0.5%
Dow Jones Industrial Average:  12,409
M1 Monetary Base:  $1,978,000,000,000 DESPERATION!!!!
M2 Monetary Base:  $8,961,500,000,000

*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.

US Government Fails to Reach Budget Deal, Bernanke Mumbles Rate Increase to Avert Widespread Dollar Dumping

US Government Fails to Reach Budget Deal, Bernanke Mumbles Rate Increase to Avert Widespread Dollar Dumping

4/6/2011 Portland, Oregon – Pop in your mints…

The past two days have been surprisingly calm on the currency front given what we are witnessing.  We have no illusions that reality will express itself in the currency markets anytime soon.  The currency market manipulation is the largest ongoing market intervention in the world.  Daily flows there dwarf the precious metals and US Treasury debt markets.  With so much riding on the currency markets (namely, the illusion of controlling the world), it should come as no surprise that this market, which moves $4 Trillion in daily volume, around 37% of it through London, is the most closely "managed" market on the planet.

What exactly are we witnessing?  At The Mint, we have our eyes trained on two events that, taken at face value, would cause generalized panic selling of the US Dollar.  This panic selling would first express itself in the FOREX, US Treasury, and Precious metals markets.  At this point, only the precious metals are sending a danger signal to the world.

On to the events.

The first event is the failure of Congress to take action on raising the US debt ceiling at this late stage.  Despite repeated calls from Ben Bernanke and Timothy Geithner that financial Armageddon will occur if this seemingly painless step is not taken.  This US Government's debt ceiling must be raised for the charade that is FED funded Government spending, via Quantitative Easing (money printing), to maintain the illusion of legitimacy.  Otherwise, the veil comes off and the Wizard of Oz is forced to leave the Emerald Palace.

What do you mean I've got to go?

The second is the failure to pass a budget more than halfway through the fiscal year.  Under normal circumstances, this would not be that big of a deal.  Strange as it sounds, the $3.6 Trillion dollar Federal budget has run on autopilot for longer periods of time in the past.  What is significant about this particular budget process is the dire straits in which the US Treasury finds itself.  Again, to keep the charade going, the government must make meaningful reductions in expenditures.  As if to underscore the point, Chuck Butler at the Daily Pfenning brought to our attention a glimpse of the fiscal insanity that passes as modern Government finances:

(CNSNews.com) – The US Treasury has released a final statement for the month of March that demonstrates that financial madness has gripped the federal government.

During the month, according to the Treasury, the federal government grossed $194 billion in tax revenue and paid out $65.898 billion in tax refunds (including $62.011 to individuals and $3.887 to businesses) thus netting $128.179 billion in tax revenue for March.

At the same, the Treasury paid out a total of $1.1187 trillion. When the $65.898 billion in tax refunds is deducted from that, the Treasury paid a net of $1.0528 trillion in federal expenses for March.

That $1.0528 trillion in spending for March equaled 8.2 times the $128.179 in net federal tax revenue for the month.

As you can see, the situation is extremely serious.  Yet the US Dollar remains the reserve currency for most of the planet, and the US Dollar index seems to be bouncing around on the floor.  The fact that this floor exists is a testament to the far ranging power of the Central Banks to control the FOREX markets.

But even the power of a Central Bank with the ability to print the world's reserve currency is not inexhaustible.  In a nod to inflationary pressures, Fed officials "raised the specter" of higher interest rates late Monday.

The Fed faces a grim choice, to sacrifice the US Dollar and most likely itself, by leaving interest rates low, or to sacrifice its Member banks, the US Government, and the US Economy (you and I, fellow taxpayer) by raising interest rates and saving the US Dollar to fight another day.

What will they do?  We do not pretend to know but that doesn't keep us from guessing!

Our 72 hour call at www.davidmint.com yesterday was for the US Dollar Index, which is completely a product of what occurs in the FOREX markets, to fall.  Check back on April 7 to see how we did.  We are currently 0 for 1, not counting our initial gimme, so currently it appears that one would do well to read The Mint's call and promptly bet against it.  In any event, we are glad to be of service, even if it involves frequently swallowing our pride.  Please share it with your friends.

If we continue on our current pace, the words "bet against The Mint" may become the akin to such sage advice as "don't bet against the Fed!"  Stay tuned at www.davidmint.com.

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  If you enjoy or at least tolerate The Mint please share us with your friends, family, and associates!

Key Indicators for Wednesday, April 6th, 2011

Copper Price per Lb: $4.23
Oil Price per Barrel:  $108.34 SKYROCKETING!!!!
10 Yr US Treasury Bond:  3.48%
FED Target Rate:  0.09% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,457  SKYROCKETING!!!!

MINT Perceived Target Rate*:  3.25%
Unemployment Rate:  8.8%
Inflation Rate (CPI):  0.5%
Dow Jones Industrial Average:  12,394
M1 Monetary Base:  $1,911,900,000,000 DESPERATION!!!!
M2 Monetary Base:  $8,980,000,000,000

*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.

Armageddon Scenario Unfolding in Bond Markets – PIMCO Total Return Fund Dumps Treasuries as Congress Plays Chicken with Debt Ceiling Vote

3/11/2011 Portland, Oregon – Pop in your mints…

What seemed an unbelievable yet probable event is beginning to unfold before our very eyes.  You won't see it make any headlines but if you put the pieces together, you will see that what The Mint affectionately calls "Armageddon" in the Bond Markets is beginning to unfold.

Apparently Bill Gross, founder of PIMCO and co-chief investment officer of its Total Return Fund, which happens to be the largest Bond fund in the world, sees Armageddon on the horizon as well.  The Total Return Fund dumped all of its US Government related debt holdings between December and February.  At roughly 22% of fund assets, this was a flood of roughly $53 billion into the already saturated US debt markets.

We use the term saturated loosely.  What we really mean is that the market is saturated at current prices, which are being artificially held up by the Federal Reserve via its various flavors of QE or in layman's terms, money printing.  If the FED were to stop printing money to buy Treasury debt it is anyone's guess what the market's clearing price would be, but we reckon it would be lower.  We do not, however, believe that the market for US Debt will cease to exist as people will always need toilet paper and fuel for fires.

But Mr. Gross's $53 billion bomb is not enough on its own to start Armageddon.  The US Congress and Treasury are doing a whopping one two punch to the nation's credit.

The Congress is doing its part by perpetuating an apparent stalemate on budget talks.  Now we have word that the Republicans want to "see how tax revenues come in" before taking up a vote on raising the Nation's debt ceiling.  This would push the vote out until April 18^th and probably a bit later which neatly coincides with the "MAYDAY" dates given as an ultimatum for action as the current debt ceiling is predicted to be reached sometime between April 15^th and May 31 of this year.  This is significant as both Treasury Secretary Tim Geithner and FED Chairman Ben Bernanke have given dire warnings of "chaos in financial markets" if action to raise the ceiling is not taken.

Mark Faber, author of the Gloom, Doom, and Boom report, sees the future unfolding into hyperinflation and then war:

Sounds like Armageddon to us.  On cue, the FED has already begun to speak of QE3, yet another round of money printing to absorb the unwanted Treasury debt.

While these two events alone would make for merely rough sailing, we believe that Armageddon may unfold primarily due to the sheer size of the deficits that are being run by a Congress that has no ability to act to curtail them.  On Monday came word that the US Treasury borrowed $223 BILLION dollars during the month of February.  This is a record. 

Admittedly, February is traditionally a month that the Treasury runs up the credit card because a majority of American's who are due an income tax refund receive them in February.  Theoretically, the Treasury pays this off in the month of April when those who owe tend to pay their taxes.  Unfortunately, this wasn't the case last year, and with the number of stimulus programs being collected upon by the general public, we have our doubts about the prospects of an April surplus this year.

If Congress cannot agree to act on the debt ceiling, we hold out very little hope that they will reach an agreement on any meaningful budget cuts or even to do something as elementary as pass a budget, no matter how much of a deficit it projects.  These people are truly out of touch with reality.

So with Congress literally unable or unwilling to act, it will be up to the markets to mete out the consequences of their inaction on both fronts.  Bill Gross has already made his move and the FED is preparing to fill the gaping hole with more quicksand.

Armageddon, Here We Come!

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  If you enjoy or at least tolerate The Mint please share us with your friends, family, and associates!

Key Indicators for Friday, March 11th, 2011

Copper Price per Lb: $4.24
Oil Price per Barrel:  $102.59
10 Yr US Treasury Bond:  3.39%
FED Target Rate:  0.14%

Gold Price Per Ounce:  $1,411

MINT Perceived Target Rate*:  4.25%
Unemployment Rate:  8.9%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  11,985
M1 Monetary Base:  $1,932,200,000,000
M2 Monetary Base:  $8,888,200,000,000

*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.