Economy to suffer Rolling Blackouts, A Flare up in Palestine, Does the FED have an Expiration Date?

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

Summer has arrived in Portland.  We had hoped that it would arrive months ago but as with 41% of our predictions here at The Mint, we were early, which is a polite way to say that we were wrong.

In the financial markets, it continues to rain.  The authorities have done everything in their power to stop the effects of the rain, hoping to simply ride it out.  They are now exhausted and the ominous prospect of rising flood waters to accompany the constant drizzle adds to their misery.

The storm began innocently enough and that was the problem.  Despite the dark clouds forming on the horizon, most people thought that they simply needed to stay indoors for a while, maybe move the patio furniture inside, and wait it out. 

As it turns out, loading up the wagon and moving to higher ground is the only thing that can save them.  In a practical sense, this means paying off debts and moving assets into precious metals or anything else real.  It means cutting ties with any and all counter-parties because the probability of default is increasing and can strike without warning.

This financial storm did not necessarily require the divine insight afforded Noah in his day but to adequately prepare for it one needed to at least have in mind the possibility that this storm was no ordinary storm.

Yes, fellow taxpayer, the world economy is not in a recession or a depression (unless you are trying to describe a certain level of misery and not an economic phenomenon).  The economy is in the process of being completely retooled.  Bill Bonner at the Daily Reckoning calls it the "Great Correction."  We do not have a name for it here at The Mint but Mr. Bonner's term seems a bit mild to us.

Now that the FED's firepower and credibility are completely expended, the economy is set to experience something akin to random "rolling blackouts."  As the cash and credit that flowed steadily downstream for the past 50 plus years begins to dry up, a wall of water in the form of stimulus and monetary accommodation is barreling down the canyon and is literally destroying everything in its path and is PERMANENTLY changing the river's channel.

Beyond the wall of water is a dry riverbed.  This has been confirmed as the FED's credibility is shot.  Even if they could continue sending what water is left down the canyon it wouldn't even come close to filling the new channel or be capable of forming anything that resembles the river that once was.

It is difficult to imagine a more desperate state of affairs.  This is one of the miracles of central planning, that it always and in every sense is a failure for everyone.  In some rare cases the planners benefit but for the most part, in the long run, even they are poorer for their efforts.

So what awaits the economy are unpredictable rolling blackouts as the lack of water causes random and unexpected defaults and quasi-defaults to occur until all participants learn to not trust each other.  Oddly enough, only then will something resembling organic growth begin anew.

An interesting idea was brought to our attention yesterday.  The idea is that the FED's charter as America's Central Bank is set to end on December 21, 2012, which nicely coincides with the final date on the Mayan Calendar.  We then further investigated and saw that someone with the Youtube user name "Man of Truth" predicted that the FED would be bankrupt in December of 2012 back in 2009.

While back in 2009 the Man of Truth may have sounded like a lunatic, circa 2011 his prediction seems not only possible but highly likely.  While the December 2012 date is arbitrary, all of this taken together with the fact that many people believe the Mayan Prophecy may be enough to disrupt life as we know it for an extended period of time.

Courtesy of http://bizarrocomics.com/

 While we at the Mint do not personally believe in the Mayan Prophecy or the FED for that matter, we have a feeling that enough people do believe to warrant being prepared for an extended period of random rolling economic blackouts which will probably begin early in 2012, making the best time to prepare for them, well, now.

How to prepare?  First and foremost, accept Jesus Christ as your personal savior.  Then, not matter what happens, you have absolutely nothing to fear, not even death. 

Second, financially act as if a flash flood is coming down the canyon and get whatever you think you may need to ride out the blackout period close at hand because the probability of obtaining it later is diminishing with each passing day.

Third, help others to do likewise.  In the process of helping others, you will literally be laying the foundation for the bright future that awaits you.

Piece of cake, right?

Meanwhile, the security situation in Palestine the Middle East continue to deteriorate.  Will it be enough to distract the West from its own perilous situation?

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 7th, 2011

Copper Price per Lb: $4.15
Oil Price per Barrel:  $99.67

10 Yr US Treasury Bond:  3.01%

FED Target Rate:  0.10% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,545

MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!

Unemployment Rate:  9.1%  ITS NOT WORKING

Inflation Rate (CPI):  0.4%

Dow Jones Industrial Average:  12,071

M1 Monetary Base:  $1,949,300,000,000 THE CRACK-UP BOOM BEGINS!!!!

M2 Monetary Base:  $8,985,800,000,000 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.

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.

The Bill for Club Med comes due (the concept of Central Bankruptcy eloquently explained), a Parable

5/31/2011 Portland, Oregon – Pop in your mints…

Today the focus of the financial world is on events around the Mediterranean where the Greek and increasingly the Spanish people again find themselves at odds with their respective governments and their IMF / ECB / German debt collectors. 

How did they get there?  The Greeks and arguably the Spanish have been living in the social equivalent of a Club Med ever since they joined the Euro.  The initial sting of higher prices was offset for most by lower borrowing costs.  Life was good.  The advent of the Euro along with a boom in tourism began to feed a property boom in Spain and a government spending boom in Greece.

Alas, as an economy slows, the government is usually the last to know. 

Like the father whose family takes a vacation to Club Med, he is content to let the family splurge with little worry as to how he will cover the bill.  "Just throw it on the credit card, we'll take care of it later" becomes the mantra.

Unfortunately for the father (who represents the Greek, Spanish, and arguably the US governments in our parable), his bank decides to cut his credit line just before the vacation is over.  The bill comes due and the man frantically negotiates with his bank (the ECB, IMF, and arguably the US FED) to extend his credit line enough to cover the bill.

Club Med - Paradise Lost!

To make matters worse, upon his return the man finds that the income from his job (the government's tax receipts in our parable) has been cut due to "the economy*."  He now has no realistic prospect of repaying his extended credit line and instead must now consider a painful reduction in the family's standard of living.

Naturally the family, who has developed some expensive habits while away at Club Med, rebels.  The father is now in a no win situation.  On the surface, he appears to have a choice between satisfying his family at the expense of his creditors or vice versa.

In reality, with his reduced income, he cannot satisfy either of them.  This is where the Greek and Spanish governments currently find themselves, and this is where the US Government will soon find itself.

There is, of course, an easy way out.  The man who is in this hopeless situation can declare bankruptcy.  Problem solved, right?  Not so fast.  You see, because of "the economy*," the bank cannot release the man from his debts and have enough money to make good on its own obligations.

At this point, the Central Banks of the world (which are represented by the bank in our parable) lack not only the credibility but also the practical tools to perform their make believe function as protectors of the value of their respective currencies.

Today we read a piece by Michael Pento of Euro Pacific Capital (run by Peter Schiff) which seems to give logical credence to what we have long suspected to be the case:

"In the end, any meaningful attempt to withdraw liquidity will not only bankrupt the institution (The FED) but also zero out their remaining credibility. That's why they'll never even make an honest attempt."

 The FED is helpless to remove the liquidity it has injected and will soon have to decide which of its member banks to sacrifice if the dollar is to continue as a functioning currency.  Our money is on the dollar and all who rely on it as a store of value to be the sacrificial lambs.

Back to our parable.  Both the man and the bank will continue to pretend to negotiate with each other, giving the illusion that what is now their mutual problem will supernaturally disappear.  The family will continue to pretend to debate which expenditures to cut back on as if it will make a difference.

Unfortunately, the likelihood of the problem disappearing is equivalent to the likelihood of the family being able to go back in time to cancel their trip to Club Med prior to departure.  Such is the nature of debt.

So the bank, the father, and the family find themselves clinging to a myth as they helplessly hurtle towards the unknown.

Where will they end up?

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

*Definition of "the economy", circa 2011 – A term used to describe the large scale collapse of Central Banking and the Socialist / Communist economic model that it has created over the past 100 years.  Generally used by politicians and others in authority to "explain" why they cannot pay their obligations.  This explanation is presented to the masses as a failure of capitalism when quite the opposite is true.  Thus, this simple two word phrase is used as an excuse to further the Socialist / Communist agenda and that of the police state that is forming all around the world.

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

Key Indicators for Friday, May 31st, 2011

Copper Price per Lb: $4.17
Oil Price per Barrel:  $102.83

10 Yr US Treasury Bond:  3.05%
FED Target Rate:  0.09% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,534

MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,579
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.

Grants for Democracy? It’s Getting Ugly in Spain, US Housing Capitulates, Greek Government to Default on Austerity and then Simply Default

5/27/2011 Portland, Oregon – Pop in your mints…

We've said it before, things are beginning to happen at a rapid pace and the authorities are absolutely and completely helpless to do anything about it.  Not for lack of money, have you, for they are second in line behind the banks to pick at the money tree.  No, the authorities lack the one thing that is indispensable to getting things done.  Credibility.

Have things improved for you, fellow taxpayer?  Unless you are a banker, lobbyist, are a contractor who works for a banker or lobbyist, the answer is probably no.

And we haven't even begun to talk "austerity" on US shores.

But first, we are obligated to take a peek at what the G-8 is doing.  We suspect we know but it is important to confirm ones suspicions.

From the Associated Press:

DEAUVILLE, France (AP) -- Rich countries and international lenders are aiming to provide $40 billion in funding for Arab nations trying to establish true democracies, officials said at a Group of Eight summit Friday.

Officials didn't fully detail the sources of the money, or how it would be used, but the thrust was clearly to underpin democracy in Egypt and Tunisia -- where huge public uprisings ousted autocratic regimes this year -- and put pressure on repressive rulers in Syria and Libya.

We suspected more aid to someone but this appears even more misguided than we thought.  The first line of the second paragraph is especially laughable but you can see where this is going.  We speculated Wednesday about the events in Palestine getting ready to take center stage, largely as a distraction to the "utter and complete collapse" of the world's current financial system.

The G-8 is now throwing what is left of their credibility into extending their influence in the Middle East.  They have Iraq, Afghanistan, and now Egypt and Tunisia as footholds.  Will they be strong enough to hang on to this newfound influence?  Only time will tell if the new regimes can be bribed as easily as the old ones.

The credibility of the Western Governments and their worn out welfare state economic models is nearly spent.  In Greece, the IMF / Eurozone bailout participants are finding out that the Greek politicians don't have the collective stomach to play the repo man on their countrymen's future.

It appears that the government is refusing more austerity measures and is rethinking whether or not this whole Euro adventure is such a good idea.  Failure to agree now places the spotlight on the IMF / Eurozone plunge protection team.  Will they have the stomach to let Greece default?

The gauntlet has been thrown down, and what happens to Greece will set the tone for how the inevitable sovereign defaults of the Western Governments are likely to play out.  Are the Greeks the Lehman Brothers of Sovereigns?

On the other side of the world, Japan's sovereign debt was officially downgraded as if to underscore the fact that the world monetary system is hurtling towards a catastrophic failure.

Back in Europe, a sequel to the Greek experience is now playing itself out across the Mediterranean Sea on the Iberian Peninsula.  The youth in Spain are finally arising as they clearly see that the politicians have shamelessly "handed their future" to the nation's banks.

With protests in nearly every major city, their resolve grows with every passing day.  In Barcelona, one day before Barça plays for the Champions Cup against Manchester, the authorities attempted to clear Plaça Catalunya to clean it in anticipation of the celebrations that would surely take place there when Barça, led by the great Liionel Messi, wins the cup.

With over 100 persons injured between protestors and police officers, they will now have to clean up blood in the square.  The Spanish authorities, not unlike their western peers, just don't get it.  The old way of doing things is over, fini.  The youth are taking matters into their own hands.  With 45% of the Spanish youth unemployed, their sheer numbers, if they stay at it, will simply overwhelm the authorities.

All the same, we are pulling for Barça tomorrow.

A final piece of news to share with you here at The Mint, the US Housing Market has finally capitulated. In other words, it is now safe to buy a house.  The hope that the US Government and Central Bank could somehow revive this market has left town on the same train as the US Government's credibility.

The US Government lost its credibility most recently as it continues to bicker over meaningless spending cuts as the nation thunders towards an imminent default on its sovereign debt and by affirming the Unconstitutional Patriot Act, which essentially gave legislative authority for the US to become the wards of an international police state.

The brave souls who gave their lives to create and protect a free America must be rolling over in their graves this Memorial Day.

Will there be a generation brave enough to reclaim 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 Friday, May 27th, 2011

Copper Price per Lb: $4.16
Oil Price per Barrel:  $100.74

10 Yr US Treasury Bond:  3.06%
FED Target Rate:  0.09% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,537

MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,441
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.

Greece to exit Euro and Palestine to take Center Stage

5/25/2011 Portland, Oregon – Pop in your mints…

If the events of the past week have not convinced you that there has been a permanent, fundamental change in the financial markets, perhaps nothing will.  As much as the numbers seem to stay the same, one has the sense that something is very, irreparably, wrong.

Trust that sense.

If you are trying to put your finger on what is causing the uneasiness you are feeling, allow us to offer our humble opinion.  The world is coming to the realization that all of the financial rescue programs that have been floated as the "cure" to the financial crisis by various Central Banks and Governments have done nothing useful.

To put it harshly, they have not only failed, they have made things worse.

What they have done is to buy time for the banks to sell out of their losing positions and be made whole at the taxpayers' expense.  Now, the gig is up.

The taxpayers see that the fix is in and are calling for the heads of their elected officials.  For the most part, the heads have been handed over peacefully via democratic elections.  Those that still have their heads are quickly backpedaling and distancing themselves from any Government sponsored bailouts.

With the resolve of the Governments of the west to continue "bailing out" the financial sector clearly in doubt, the heavy lifting is left to the ultimate and most deserving scapegoats, the central banks.

But what can they do?  Their only solution involves further exposing themselves for the fraud they are.  "If the central bank can simply print the money to pay debts, why should I work?" is the cry from the Proletariat.

That cry is being heard steadily in Greece and now Spain.

Austerity Protests in Athens today courtesy of occupiedlondon.org

It has taken a different tone in the Arab world, where revolution has increasingly been the rule ever since the Gregorian calendar turned to 2011.  The media explains what is happening in the Middle East as a "cry for democracy," as if all of these people would be appeased if they could simply have the pleasure of voting for their dictator, as we do in the west.

No, the Middle East is burning due to the confluence of 1,300 years of festering hatred which for the past 90 years has had the Israeli / Palestinian conflict as its flashpoint and rapidly rising prices for basic necessities, which have always been dear in the desert regions.

These rising prices, of course, are the direct result of the debauchery of the currencies by western central banks.

From our vantage point, it is clear that the central banks have no more room to maneuver and that they will soon throw in the towel as well.  Central banking as we know it is expiring.

So who will bail out the western governments and central banks?  The taxpayers who have grown to loathe them?  Don't count on it.  The simple answer is that no one will.  What logically follows is that the world is about to embark upon an amazing journey called "price discovery."  A journey that has been delayed for three long years by the meddling of the authorities will now begin without further delay.

One of the first discoveries will be to find out what are Greek Bonds are worth.  Nobody really knows, but unofficially the 10 year note is trading at 51 cents on the dollar.  And now the barbarians from the north are storming down demanding that the Greeks make good on their austerity measures or else lose their support which would mean an almost immediate default by the Greeks.

But with riots becoming a way of life, the Greeks are beginning to wonder aloud whether or not the pain is worth it.  Our guess is that the barbarians will relent in an attempt to save the Euro.  You see, the Greeks still hold the ultimate trump card, as do we all, of defaulting on their debt and doing business in another currency.  For the Greeks, it would mean a return to the drachma.

Will they play it?

With the utter and complete failure of the world financial system at hand, those who soberly decided not to heed Harold Camping's rapture warning and are looking forward to a world that will exist post October 21.  We believe that the world will increasingly turn their collective attention to Palestine.

We recently read The Haj in an attempt to beef up our understanding of the conflict.  You can read our review of this book at http://davidmint.com/?p=361.

The summary is that Palestine needs a miracle for there to be peace between the Israelis and the Palestinians.  This conflict will move to center stage as a distraction to the aforementioned utter and complete failure of the world financial system.

What has become crystal clear to us over the past two months is that if there is not peace in Jerusalem, there cannot be peace in the world.  Those of us who believe in Jesus (if you do not, please accept this as an invitation to believe) will not be raptured until there is peace in Jerusalem.   We do not know exactly why, we simply know that this is true.

For if there is peace in Jerusalem, there will be peace in our hearts.

Once we are raptured, the tribulation will begin, which is why we urge you to accept Jesus now.  You have nothing to lose and eternity to gain.

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our Affiliates!

Key Indicators for Wednesday, May 25th, 2011

Copper Price per Lb: $4.10
Oil Price per Barrel:  $101.47
10 Yr US Treasury Bond:  3.13%
FED Target Rate:  0.10% FED IN DESPERATION MODE!!!!
Gold Price Per Ounce:  $1,526
MINT Perceived Target Rate*:  3.25%
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,395
M1 Monetary Base:  $1,880,400,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $9,011,900,000,000 DESPERATION!!!!

 *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.