G7 Meet to Stop Yen’s Dramatic Rise and the BLS Calls BS on its Broad CPI Measure

3/18/2011 Portland, Oregon – Pop in your mints…

The G7 Central Bankers have called an emergency meeting to "do something" about the "skyrocketing Japanese Yen."  This meeting is simply their latest attempt to combat reality.  The reality of the situation in Japan is that they are dealing with a catastrophe.  When one is dealing with a catastrophe, the next prudent step, after all of the immediate crises have been contained, is to take stock of the situation.  By taking stock, we mean that one takes note of what was lost and, more importantly, what one will need in order to restore things to an acceptable level of comfort.

Comforts cost money.  In Japan, to replace these comforts the average person needs Yen.  They will either get this Yen by making a claim with their insurance company or selling assets to raise cash.  With damages of nearly $15 Trillion Yen (roughly 3% of Japan's GDP) and counting you can imagine how the demand for Yen is, well, about to skyrocket.

The Japanese people are still dealing with the catastrophe.  Speculators in the currency markets are, as always, one step ahead of what must happen and are sapping liquidity, in terms of Yen, at a rapid pace.  This activity, taken at face value, will presumably wreak havoc for Japanese Government Bond prices, the prices of stocks traded on the Nikkei, and the US Dollar.  These three markets will crash if nature is allowed to take its course.  You see, in the tipsy turvy world of currencies, to buy a yen more often than not means that a US dollar, a JGB, or a stock listed on the Nikkei is sold on the other side of the trade.

The most sought after currency in the world, at least until the G7 meet tomorrow

The accelerated selling of dollars, as Jim Rogers points out, could cause the endgame scenario for the US currency to swiftly come upon the world.  Mr. Rogers goes so far as to call this a "Moment of Truth for the dollar."

You can see the brief interview by clicking here.

Of course, as Mr. Rogers points out, it may be time to buy the dollar, if for some reason it is to survive as a top tier currency.  We have lived just long enough to know that anything is possible.

The G7 meeting today is VERY IMPORTANT.  It should not be, if only the world had not left the embrace of sound money 40 years ago, but unfortunately, it is.  For the G7 will essentially decide whether to keep the Dollar on life support or to pull the plug.

What will they do?

Meanwhile, the Bureau of Labor Statistics (BLS), the legion of bureaucrats who are charged with cranking out data in order to support FED policy, appears to be starting its own form of political protest against the loose dollar policies followed by the Federal Reserve.  After faithfully cranking out the core CPI, a key statistic here at The Mint, for years and watching it slowly become distorted into the puppet statistic that it now is, they came out with a data point in 2002 called the "Chained Consumer Price Index" which takes into account a rolling average of food and fuel costs, which the core CPI now blatantly ignores.

This index hit a record high in February, confirming what most average Americans already know:  It has never been more expensive to live in the Land of the Free.

Will we be Brave enough to return to sound money?  You, fellow taxpayer, can take a step in that direction with just a few simple keystrokes.  APMEX, our affiliate, is running a contest.  They are giving away one 1 oz gold eagle coin each month.  All you have to do to enter is register by clicking this link and filling in the blanks.  You can register to win once per month.  If you so desire, click here and Register at APMEX.com Today!

By definition, the black hole of debt will always grow at a more rapid pace than the worthless currency that is printed in an attempt to fill it.  If the black hole collapses (i.e. widespread default occurs), hyperinflation will occur quickly.  If currency becomes scarce, people will find another medium of exchange, likely gold and/or silver.

Either way, the world will be out of this mess before long, so hold on to your hats, it is bound to be a wild ride to the other side!

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 18th, 2011

Copper Price per Lb: $4.32
Oil Price per Barrel:  $103.11
10 Yr US Treasury Bond:  3.25%
FED Target Rate:  0.14%

Gold Price Per Ounce:  $1,404

MINT Perceived Target Rate*:  4.25%
Unemployment Rate:  8.9%
Inflation Rate (CPI):  0.5%
Dow Jones Industrial Average:  11,775
M1 Monetary Base:  $1,843,500,000,000
M2 Monetary Base:  $8,974,000,000,000

*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.

Japanese, Euro and US FEDs Go Green for St. Patrick's Day, Quadruple Witching Ends Tomorrow

3/17/2011 Portland, Oregon – Pop in your mints…

Quadruple Witching is upon the markets.  For those of you who are wondering, Quadruple witching is a market term for the third Friday in the months of March, June, September, and December when stock market index futures, stock market index options, stock futures, and stock options all expire on the same day.  In other words, everyone must either take their medicine or look for an escape hatch from undesirable market positions.

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This quadruple witching phenomenon is set to occur tomorrow which may be one reason that the US and Euro FEDs are printing money like there is no tomorrow.  The only refuge from this monetary disaster are to hold wealth in silver and/or gold coins and possibly real estate.  

Avoid getting pinched!  Get a start on putting your wealth into gold and silver this St. Patrick's day, click here and Register at APMEX.com Today!  There is no obligation and you can register each month for a chance to win a 1oz gold eagle, worth $1,402 at today's prices.

Meanwhile, events continue to spiral out of control in northeastern Japan.  Things are spiraling out of control in the Middle East as well, but what normally would be front page news simply pales in comparison to the havoc that nature has wrought on the Land of the Rising Sun.  While tens of thousands wait anxiously in freezing temperatures as water and heating fuel run low, the world sits on edge waiting for confirmation that there has been a meltdown at the Daiichi nuclear plant.


In the face of such an obvious humanitarian crisis, one that will mark a turning point for Japan and possibly the world, the Japanese, American, and Euro FEDs are unleashing a virtual Tsunami of cash into the world wide financial system.  This system is broken beyond repair.  It has been broken by the same FEDs who purport to save it from certain catastrophe.  

Like the devil who has been unleashed to roam the earth before he is thrown into the lake of fire for eternity, the FEDs are no longer making use of deception in their counterfeiting operation.  The US Government is broke, half of the European Governments are broke, and the Japanese Government's balance sheet is not to be believed.  They can no longer "bail each other out" as has been the case ever since WWII.

At this point all of the money shoveled into the self destructing financial system is being vaporized almost immediately by the black hole of debt that the FEDs are trying to fill.  This game was innocent enough while it was only the banks and financial companies getting shellacked.  Now that this funny money is baking its way into food and energy prices, it is literally a problem for everybody on the planet.

The good news is that the economy appears to be picking up.  As long as people have needs, there will be people working to fulfill those needs.  The people with the needs will work to fulfill others needs to be able to pay for the fulfillment of their own needs.  This is how a natural, organic, healthy economy works.  Once the Government and Banking cartel begin to interfere, you can see how things could quickly go wrong.  Yet for some amazing reason, the Government and Banking cartel are believed to be essential to the healthy working of the economy.

They are not, and the sooner the world wakes up to this fact, the better.

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 Thursday, March 17th, 2011

Copper Price per Lb: $4.18
Oil Price per Barrel:  $98.26
10 Yr US Treasury Bond:  3.21%
FED Target Rate:  0.14%

Gold Price Per Ounce:  $1,402

MINT Perceived Target Rate*:  4.25%
Unemployment Rate:  8.9%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  11,613
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.

Japan Experiencing the Unimaginable, making all other matters trivial

3/15/2011 Portland, Oregon – Pop in your mints…

As nearly everyone with a television, radio, computer or smart phone is aware, within 72 hours the main island of Japan suffered a major earthquake, a major tsunami, and a nuclear disaster which has evoked comparisons to Chernobyl.  All of these events continue in a drama that is unfolding as the aftershocks, tsunamis, and associated consequences for the nuclear power plants continue.

We respectfully ask our readers to observe a minute of silence in honor of those perished and those who continue to be affected.

Silence is powerful.

We have a second cousin who lives in Japan and is sending regular updates.  He and his family are safe and He appears to generally be amazed at how the media there initially was minimizing what had happened.  He is now marveling at the indestructible Japanese spirit.

Perhaps it has something to do with Japanese culture and/or national pride.  Japan is one of the most modern societies, in terms of technological advances embraced as part of everyday life, in the world.  Their society appears to run flawlessly on a scale and at a pace that is unparalleled.  On Friday, this society was blindsided by the twin natural disasters.

For us personally, the unfolding nuclear disaster immediately brought to mind the song "Red Rain" by Peter Gabriel.  For those who are unfamiliar, "Red Rain" was inspired by a recurring dream that Gabriel had in which he was swimming in a sea of red water.  While Gabriel himself does not appear to have linked the dream to a nuclear holocaust, others have and the imagery has stuck for us here at The Mint.

Imagery aided by the great Japanese Film maker Akira Kurosawa's depiction in "Dreams" of "Mount Fuji in Red":

These events serve as powerful reminders of the humility with which each of us must live.  No matter how powerful a person or company may be or how many disaster preparedness plans a government may have in place, they are no match for the natural forces which we are all subject to.

The Bank of Japan injected $15 Trillion yen, the equivalent of roughly $184 Billion dollars, in a vain attempt to prop up the various money markets that capitulated on the news.  While this, along with what will surely be a coordinated effort by G8 Central Banks to "provide liquidity" (read "get major insurers out of their debt and equity positions so that they can make good on their policy claims") may stave off the inevitable rout on global markets, it will not get things back to normal any time soon.

Will the Central Banks bankrupt themselves in the process?

While an investor would be wise to steer clear of Japanese and most G8 stock markets as the giant insurance companies are forced to become net sellers to meet policy claims, we would not be surprised to see that the Japanese stock market, and the Japanese in general, quietly leading the way in terms of economic growth for the next decade.

We suspect that this event has shaken the national psyche of the Japanese people and that things in the land of the rising sun will never be the same.  We also suspect that the people of Japan will rise from the ashes of these disasters like a phoenix.

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 Tuesday, March 15th, 2011

Copper Price per Lb: $4.10
Oil Price per Barrel:  $98.99
10 Yr US Treasury Bond:  3.35%
FED Target Rate:  0.14%

Gold Price Per Ounce:  $1,429

MINT Perceived Target Rate*:  4.25%
Unemployment Rate:  8.9%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  11,993
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.

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.

Say it Ain’t So! High oil prices cause FED Head to utter the words QE3 & The Best Article on Silver in Ten Years!

3/9/2011 Portland, Oregon – Pop in your mints…

Paradox:  A seemingly absurd or self-contradictory statement that is or may be true.

Today we are dealing with a paradox.  At least that seems to be the word that most closely resembles what Atlanta Fed President Dennis Lockhart said in his discourse this past Monday at the NABE. 

First, a lengthy disclaimer from The Mint.  We do not believe that Federal Reserve notes are money.  Therefore, what happens in FED land, while it must be keenly watched because a majority of people on the planet do believe that Federal Reserve notes (commonly called US dollars) are money, is really of little consequence in the grand scheme of things.   

In the grand scheme of things, it is more akin to a passing fad.  For example, the FED has been around longer than Cabbage Patch Kids but not as long as Coca Cola.  Rest assured that it too shall pass.

The current monetary system is based on at best a half truth and at worst and outright lie.  It then follows that those who are charged with perpetuating it must constantly utter paradoxes in order to make it sound legitimate.  These paradoxes are things that make sense on the surface at any given point in time.  However, once one endeavors to piece the puzzle together in the long view, the daily paradoxes which pass as enlightened economic thought become simply laughable.

Speaking of laughable, we now return to our topic, Mr. Lockhart uttering a paradox to the NABE, a group of diehard FED faithful.  According to CNN Money, Mr. Lockhart stated:

"If [the rising price of oil] plays through to the broad economy in a way that portends a recession, I would take a position we would respond with more accommodation,"

In  FED code, "more accommodation" (or QE / "Quantitative Easing") means printing more money to purchase US Government Bonds, which are proliferating at such a rapid pace that there are not enough purchasers at current prices.  This would be the third such announced counterfeiting adventure undertaken by the FED which would give it the colloquial title QE3.

And now for the Paradox:

Though he doesn't think current oil prices around $106 a barrel are a problem, he said the evidence is clear that oil spikes can bring about a recession.

"I think at the $120 range ... it's a manageable level," he said. "Around $150 it becomes a much more serious concern."

Mr. Lockhart, enlightened as he is, now thinks he knows at what price oil should sell for.  Do you see the Paradox?  Allow us to assist.  The price of oil is not really the price of oil.  Rather, it is an algebraic expression of a ratio.  The price of oil is the ratio of US dollars willing to purchase oil to barrels of oil for sale.  For simplicity's sake, this ratio is usually reduced to one barrel of oil.  Are you still with us?  Good, because there is more.

What Requires more effort?  Drilling for oil...

At this point we must think abstractly about the processes involved in the production of the factors on each side of this ratio.  We will start with oil.  Oil must first be located by a team of highly trained scientists with very expensive equipment.  Once located, negotiations must be made with land owners and the government to obtain the rights to extract the oil that has been located.  Then, highly sophisticated drilling and extraction machinery must be transported to the site to begin extraction while the back end logistics of the transport, processing, and delivery of the black goo to market all must be either negotiated in order to use existing distribution channels or to construct new distribution channels.

The production of US dollars?  Mr. Lockhart and his cohorts vote on a number, one of the FED's minions press a few buttons on a computer, and viola!  Instant "money."

...or Printing Money?

Do you now see the Paradox in Mr. Lockhart's statement?  He thinks that the problem of high oil prices can be solved by creating more FED funny money.  The reality is that the FED funny money that has already been created is what is causing the price of oil to skyrocket!  And these guys are in charge of the money supply?

When oil was selling for $150 a barrel two short years ago, we read a statistic that the US economy at that time was engineered to run on $20 per barrel oil.  We doubt that the required "organic" re-engineering of the economy has been completed in the past two years to allow it to accommodate $106 dollar oil.  Something has got to give.  According to PIMCO's Bill Gross, who indirectly manages $1.2 trillion worth of bond assets, the most recent oil price increase could in fact decrease GDP by 0.5%.

Do you see now how the FED's mission of fostering economic growth, maintaining stable employment, and maintaining stable prices is a complete and utter failure on all counts?

Fortunately, there is an alternative!  While we do not believe in Federal Reserve Notes, we do believe that God gave man Gold and Silver to use as money.  While this fact has been confused and obscured over the past 40 to 100 years, there are roughly 5,000 years of human history which testify to this fact.

The best part of this revelation is that in the US, you can still own physical Gold and Silver!

Along with the skyrocketing price of Silver, which is beginning to become regular headline news, we were further excited that people are starting to understand what money is by reading what is being hailed as "The Best Article on Silver in Ten Years!"  Please follow the link below to read nearly every compelling reason to own silver all in one place:

The Silver Bullet and the Silver Shield

Or paste this link in your browser, it is that important:

http://goldmoneybill.blogspot.com/2011/03/silver-bullet-and-silver-shield.html

While it is never a bad time to shun Federal Reserve Notes in favor of Silver, we recommend buying in the summer months of the northern hemisphere when Silver tends to be relatively less expensive, if you can find it!

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, March 9th, 2011

Copper Price per Lb: $4.32
Oil Price per Barrel:  $104.27
10 Yr US Treasury Bond:  3.54%
FED Target Rate:  0.14%

Gold Price Per Ounce:  $1,430

MINT Perceived Target Rate*:  4.25%
Unemployment Rate:  8.9%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,214
M1 Monetary Base:  $1,876,700,000,000
M2 Monetary Base:  $8,871,100,000,000

*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.